Mange Finances

BSBFIM601 Assessment – 3
Submitted to: CIARA O’ HALLORAN

Submitted By: MOSAM PATEL (S73458)

Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

 Part – 1

B. Develop budget notes:

 The Houzit Pty Ltd has anticipated the similar growth of 8% with every year as respectively
with previous financial year.
 The company have just redeveloped their each departments and their financial department
structure.
 The company just upgraded their financial software for better financial management.
 4% of inflation on the annual budget
 Not all assets in the stores had unique codes fixed to the asset.
 Job roles are not clearly defined so that responsibilities and liability can be identified.
 Sometimes the service invoice for some item of equipment were not signed or linked to a
purchase order. There was no check that the work had actually been carried out.
 Houzit is increasing their budget by $70,000 for promoting their service and products with
local community magazine advertisement.
 The fringe tax is remaining similar to the previous financial year and that also distributed
equally among the each quarter.
 The Houzit got the slight reduction in their interest charges for the bank loan.
 The Houzit Pty Ltd is trying to invest their money in repayment of the debtor values o
remove the financial burden.

 Part – 2

1. Identify the current statutory requirements for tax compliance and list and calculate the
tax liability for Houzit Pty Ltd under taxation legislation.
 The current statutory requirement for the Houzit Pty Ltd is the goods and service tax for the
tax compliance. The current statutory requirement is recorded as 10% of the amount
recorded in sales.
 There as some required statutory are listed below for the Houzit Pty Ltd:
— The company is paying the income tax form the net profit of the company with 30%.
— Pay the superannuation to the workers which is about 9% of the wages and salaries
and it is distributed with 20%, 24%, 26% and 30% respectively in each quarter.
— Payroll tax is 4.75% of wages and salaries for each quarter that distributed as
$19741, $23689, $25663, and $29612 respectively.
— There is $7000 of fringe benefit tax which is equal for each quarter.
— Paying the worker compensation which is 2% of wages and salaries for each quarter
as $8312, $9974, $10806, and $12468.
 There are some taxable liabilities are listed below for Houzit Pty Ltd under taxation
legislation:
Statutory Qtr1 Qtr2 Qtr3 Qtr4
Requirements
Income Tax 311 106878 135861 193828
GST 56513 100456 114927 143870
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

Superannuation 37404 42725 48625 56106

PAYG Tax 19741 23689 25663 29612
Fringe Tax 7000 7000 7000 7000
Worker
compensation 8312 9974 10806 12468

 The Houzit Pty Ltd have total liabilities of $1,860,400 in 2009/10 and for 2010/11 is
$1,879,445, once they added with bank loans in each year liabilities we found $3,468,859
and $3,387,904 respectively by 2009/10 and 2010/11.

2. Identify the current compliance requirements and liabilities for this organisation under
the corporation Act 2001.
 There are some compliance requirements and liabilities are covered under the corporation
Act 2001 for this organisation.
 The most important requirement for them is to make sure that all the relevant accounting
standards are being followed. There can be an instance where the firm does not have to
necessarily comply with the overall accounting standards. These types of leverages are only
provided to the smaller entities and some of the conditions under which it might be
happening are:
— The reports were prepared keeping in mind the requirements and needs of
shareholders as described under the section 293 of the corporate act 2001.
— Another instance where compliance might not be very necessary when it is pre-
specified that the information that is being provided does not comply with the
accounting standards. As the company is limited by a guarantee, there are some other
considerations as well as far as compliance with the accounting standards is
concerned.
— For instance, the reports are prepared for a member that is under the direction of
294A and there are well defined specifications that report should not be complying
necessarily. All the items and the liabilities should be treated under the corporate act
of 2001.
— To maintain the inquiry of the taxation or any issues, the Houzit need to keep all the
related documentation towards the financial for up to 7 years which include the
transaction receipts, taxation details, paid tax receipts, major purchases, and wages or
salaries reports.
— Houzit need to maintain the all related documents for ATO to provide any evidence
for any future errors accordance with the Tax payment.
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

3. Review commercially available financial management software to select the most

suitable software for Houzit Pty Ltd.
 Every business have different requirements from the financial management software, so
while choosing the accounting or financial management software consider the following
things:
— Does the system calculate all payroll requirements
— Does the system track stock, work in progress, orders, jobs and other task
management requirements?
— will the system be able to handle multiple bank accounts
— Does the system need to handle foreign currency?
— Does the system track separate financial records for each business or department
within the business?
— Does the system allow for interface with other computer systems such as online
payments?
— Does the system keep detailed records on customers including what they buy, how
often they buy and when they buy
 There are some common commercially available software in use for managing financial
information such as; MYOB, QuickBooks, Peachtree, NetSuite, Cougar Mountain,
Bookkeeper, Simply Accounting, and Bottom Line Accounting.
 Comparison between two commercially used software are outlined below:
MYOB QuickBooks
 Things that software can do:  Things that software can do:
— Keep track of revenue and — Handles payroll and wages
expanse management for employees
— Produces basic financial reports, — Keep track of revenue and financial
such as profit & loss reports and expense
balance sheets — Produces a wide range of financial
— Provides your account with and business management reports
everything they need to do your — Everything you need to do your
end of year tax end of year tax
— Calculates GST and prints out — Calculate GST and prints out
business activity statements business activity statements
— Generates invoice for customers — Keep track of inventory levels
and tracks how much you are — Include Google desktop, making
owned transaction searches and queries as
— Allows more than one users to easy as possible
access on it — Lets you email invoice and supplier
remittances
 Things that software can’t do:  Things that software can’t do:
— It doesn’t keep track of inventory — It doesn’t offer advanced inventory
— It can’t track separate jobs or cost features, such as backordering or
centres unit assemblies
— Doesn’t offer sophisticated — It doesn’t offer foreign currency
reporting, nor the ability to send features
report to Excel — It doesn’t include advanced job
— Doesn’t keep track of how much costing analysis
you own suppliers — It doesn’t allow for multiple users
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

— It doesn’t have any payroll

features

4. Explain how you can apply the following principles of accounting in developing the
budgets required for the task:
a) Matching principle
b) Account group
c) Time periods
 Matching principle:
— The matching principle is provide a way to company to report an expense on its
income statement in the same period as related to the revenue.
— Earned profitability of the business always demonstrates the financial strength,
sustainability and growth capacity of the business.
— The profitability is calculated as the amount remaining after revenues have been
offset by all the expenses incurred in earning that revenue. So that, it is become an
important to identify the all sales revenue.
 Accounting group:
— The accounting group is allocating its financial transactions between five groups
which are listed below:
1. Assets: organisational item values; the cash or the items which can be
convertible onto cash.
2. Liabilities: money or any values that the organisation needs to pay to the
other organisation. Such as, debtor payments, bank loans, wages or salaries.
3. Equity: the equity is the any payments or what would be left over if the
business sold out or shut down for any reasons and all the assets.
4. Revenue: all forms of the income and profit
5. Expenses: money or cost that occurred in the organisation
 Time period:
— Providing the all required information on the time for making any economical
decision is a primary purpose for the accounting department.
— There is some important documentation that needs to be provided on the designated
time period for example: daily sales report, weekly gross profit reports, statement of
financial performance report, half year statements of finance report.

5. Explain and discuss the implications of probity when preparing and revising budgets.
 The financial probity is refers to the accountability and transparency of the money
transaction between organisation and stakeholders. It prevents the illegal behaviour that
affects the client also the organisation’s reputation.
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

 The organisation has the policy to keep and maintain the previous documents and any
financial receipts safe. If the information is changed or destroyed, it may lead to the legal
action and breach the corporation Act for taxation.
 The organisation needs to maintain the policy of code of conduct to maintain the safe
workplace or to ensure that the company workers are working in a manner of the
organisation and they follow the proper procedures. If the policy is breached by anyone, the
person needs to pay the penalty in accordance to the organisational standard.
 For the organisational analyses the reports or any stored documents should be correct and
authorised by the organisation for further inquiry.
 The financial probity can provide the assurance of the company for other partner companies
to establish a business.

6. List the critical dates and initiatives that will require or generate resources for Houzit
Pty Ltd in the next financial cycle.
 List of the critical dates and initiatives that will generate the resources for Houzit Pty Ltd to
demonstrate the future financial cycle are:
— The anticipation that coming financial year would maintain the same sales growth as
the growth that took place between 2007/08 to 2010/11.
— To budget for an increase in inflation to 4% per annum and that all costs subject to
inflation should incorporate this particular increase
— A new luxury car costing $97,466 including GST has been planned for in the coming
period to replace the five year old vehicle currently used by the chairman. Because of
the fuel inefficient car will attract a luxury car tax.
— The budgeted amount of the organisation can be increased by the additional expenses
of the store supplies.
— Reduction on the principle of the loan by payment of $100,000 on the 31 December
2011 from the profits generated by the business.
— Involve an analysis of the debtors to identify the ways to reduce the amount of cash
tied up in outstanding debtors.
— Increased amount of the advertising cost or budget by $70,000 over the next period
of budget.
— Increased the value of the wages and salaries with 172,500 over the 2010/11 amount
in the hope to earn the commissions on sales and which help to the organisational
profit.

7. List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd and
suggest methods to be used to circulate and communicate budgets.
 The finalised budget of the Houzit must be approved under the authorisation of the
company’s head staff members from the financial department and need to be circulated by
the authorised person from the financial department.
 To circulate the financial information of the company or an approved financial budget to the
staff members, you need to use some of the specific methods such as;
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

— Conference and presentation: arrange the organisational conference or meeting in the

designated place to deliver the relevant information about the financial prospects.
This is the best way to provide the information to the all people without missing any
employees.
— Communicate the purpose of the budget: communicating the main purpose of the
budget is the main element to ensure the employees or team members are working
accordingly the organisation’s budgeted finance target. Also the company can
analyse the variance between the actual budget and previous budget.
— Staff meeting: arrange all employees together and deliver the relevant information
about the budget values and financial information to them. The company can held
the meeting on a quarterly basis to demonstrate and analyse each quarter budget.
— Email or intranet: emailing the employees or team members is the most effective
method to promote any important information not only regarding to the finance but
much more. Also the one more similar way to deliver the finance information is the
company intranet, where every employee can access the whole database of the
finance to work on the financial goals of the organisation.

8. List the new or modified internal controls that could improve risk management for
Houzit Pty Ltd including the maintenance of audit trails.
 Financial probity, internal controls and the way they are used assist in allocating financial
responsibility as well as managing the risk in an organisation. By preparing and monitoring
budgets the finance manager introduces a degree of internal control but must be vigilant in
pursuing other internal control processes that manage the financial risk of an organisation.
 The Houzit Pty Ltd need to focus on some aspects to reduce the internal control risk for the
organisation development:
— The Houzit is developing an accounting information system that would agree to all
administrative and statutory necessities as their past system was not that efficient and
accurate. This implies that they have to do an acceptance or preparing for the staffs
that need to utilize this system effectively. They may need comprehension of
utilizing this system which would influence the organisation’s money related
records. The organisation’s induction program will ensure that all the staff utilizing
the information would have legitimate information. This does not include all the staff
individuals but rather the ones who should approach it and are considered as
responsible person or the person accountable for.
— Cash controls: it is essential that the received money is stored into the organisation’s
financial balance as quickly as time it received, just because to prevent it from any
mistakes. This will ensure that all the transactions of money is appeared out the bank
archives and everything is recorded. Internal cash can be controlled by the monetary
chief with the assurance that every one of the receipt are kept secure for preventing
any miss behaviour act.
— The Houzit Pty Ltd should give the obligation of keeping up the petty cash receipt to
a particular individual who is accountable or can take the responsibilities for any
losing of receipts and it liable to any inquiries raise while tracing any relevant data.
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

— The general duties of the employees should be illuminated and characterised with the
goals that the duties don’t get stirred up and liabilities can be recognised. While
isolating the general duties can discover the mistake or any problem that where it
happened and why.
— Audit trails: an audit trails can prevent the miss leading or any problems regarding to
the payments for wrong person. As an example, if in the rostering system, the worker
may sign in for another person and this will prompt an additional payment or
expense which implies additional cost for the organisation. To keep away from this
you may need to think back and follow the documentation through you accounting
system. An assigned individual might be considered in charge of watching out for
the sign in sheet.
Name: MOSAM PATEL (S73458)
Manage Finance
BSBFIM601 Assignment – 3

References
Manage Finances (1st ed.). (2015). Melbourne: Innovation and business industry skills
council Ltd.