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BSBFIM601 Manage Finances
BSBFIM601 Manage Finances
Prepare budgets
1. Identify the current statutory requirements for tax compliance and list
and calculate the tax liabilities for Houzit Pty Ltd under taxation
legislation.
Income tax: this is the tax that every organization and individual has to pay on his net
income of the year.
GST: THIS TAX IS Paid by the business which provide goods and service. This tax could be
different according to the sort of goods and service and some things could be the free
from this tax.
Company tax: This tax is paid by the company on the assessable income and tax rate is
fixed which 30% of income is.
Superannuation: This tax is paid by the organization on the behalf of the employee and it
is calculated by the organization's payroll system
Following are the calculated tax of the organization
Income tax: 436,878
Payroll tax: 98,705
Superannuation: 187,020
Fringe Benefits Tax: 28,000
Luxury Car Tax: 12,00
cash.
3. Equity (or owners’ equity) – the owner’s rights to the business. It is what would be left
over if a business or organisation sold all the assets and paid off all liabilities.
The first three are reported on the Statement of Financial Position while the remaining two
are reported on the Statement of Financial Performance. Sales and profit budgeting applies
this account group principle in order to communicate the necessary budgetary information
to stakeholders.
Time period
The primary purpose of accounting is to provide the necessary information for sound
economic decision-making to take place. In the fast-changing world of business, decision-
makers need this information to be provided in a timely manner.
A timely manner might include:
authorities.
So, while a business may be in existence for a long period of time, stakeholders in the
business need the reports on business activities and financial performance to be provided
in shorter time periods. Stakeholders also require that these shorter time period reports be
regular and sequential so that comparisons can be made in performance with prior like-for-
like periods and business strategies can be changed in regard to any identified trends.
These time periods are known as accounting periods. The ‘accounting period’ is the
period of time over which net income/profits are calculated and reported. The common
accounting periods are months and quarters for internal stakeholders and years for
external stakeholders, either fiscal (Jul–Jun) or calendar (Jan–Dec). The accounting period
covered by the statements will be shown in the header area of each of the income
statement, statement of cash flows, and the statement of stockholders’ equity. (i.e. Income
Statement for the month ended 31 March 20xx or Statement of Stockholders Equity for the
year ended 31 December 20xx). As you progress through this workbook, the key principles
of accounting and how they relate to the management of finances will become more
apparent.
6. List the critical dates and initiatives that will require or generate
resources for Houzit Pty Ltd in the next financial cycle.
Purchasing new car that would replace 5 years old car
Reduction on loan on 31Dec 2011, will reduce interest payments
Manage the debtors, so as to encourage them to pay on time
Reduce expected profit which profit? By how much? What percentage?
Increase budget by 70,000 for advertising purpose
Increase sales and wages by 1725000. Not sales
7. List the items you would recommend for inclusion in the budgets for
Houzit Pty Ltd.
Once the budgets have been prepared and approved the finance manager will need to
ensure the information is circulated to senior management, peer leaders, consultants and
at times, employees. Effective circulation is quite often not an ‘either or’ decision but may
be a matter of utilising a combination of two or more methods such as:
● conference presentation
● phone/video conferencing
● staff meeting
● email
● a series of face-to-face meetings
Having completed the budgets in accordance with organisational requirements, the format,
structure and content will already have been predetermined and is likely to provide a level
of familiarity and understanding to the target audience.
However, there are likely to be items that cannot afford to be miscommunicated or
misunderstood and so it is important to effectively communicate to ensure the receivers of
the budget understand the:
Purpose of the budget – whether it is to increase production or sales or reduce costs, the
budget will communicate the goals of the business and provide benchmarks for which the
performance of the business can be evaluated.
Areas of responsibility – some managers or supervisor responsible for a department within
an organisation may have a departmental budget allocated to them and be accountable to
ensure financial targets are met. One of these areas of responsibilities can involve financial
delegation.
Financial delegation is the authority to approve expenditures or enter financial
arrangements that commit the organisation contractually. Delegation is a necessary part of
an efficient organisation where centralised control may make time delays unworkable and
lack of intimate knowledge of the day-to-day may make it prone to poor decisions.
Where possible, those individuals that have the responsibility to deliver results for an
organisation should have in equal measure the financial delegation to carry it out.
Typical financial delegations include the following:
● expenditure and investment approvals to a prescribed level
● sign off authorities relating to those with authority to sign documents (e.g. cheques)
● employment delegations relating to hiring, firing and remuneration negotiations
● corporate governance requirements relating to who is authorised to communicate with
regulatory authorities.
Tied closely with financial delegation comes accountability. In other words, those that are
entrusted with the rights to a financial delegation must also be made accountable for
actions and decision-making.
The items that are recommended for inclusion in budget sheets are listed below
Water bill
Transportation
Staff amenities
Office expenses
8. List the new or modified internal controls that could improve risk
management for Houzit Pty Ltd including the maintenance of audit trails
The modified internal controls that could improve risk management for the company are:
We need to follow rules and regulations
Also we have to apply and implement all the procedures
The time sheets and operating hours should be noted too