Assignment Sample on Financial Management
TASK 1
a. Changes made to Timber Solution’s procedures
Timber Solution Ltd is the manufacturing company which has faced fraud issues in the procurement management regarding the purchasing process. The changes needed to make based on the problems faced by the company in the process are discussed. The company is planning to appoint new employees in accounting department and for that the issues are explained by giving suggestions for internal control. Timber solution has faced the fraud issues in the schemes developed by Johonson Parry who is the manager for facility and the pat. He has arranged the company name of Bamber Services in the list of suppliers which was not needed in the business activities (Akhmetshin et al. 2018). The company has faced issues in the procurement management process for ordering and paying the services and it is focusing on preventing these types of issues in the future.
Comparison among several suppliers
The fraud issues can be developed among the buyer or a supplier for overcharging the organizations and to avoid the risks it is important to introduce the procurement process. It is important for the company to consult a lot of suppliers for getting more than one quotation in the supply procedure. As per the view of Barbera et al. (2020), three quotes can be defined by Timber solutions for different vendors in the market for the purchase of a good or a service. This process can reduce the fraud opportunities in the procurement management process comparing offers in the market.
Duty segregation
The duty is needed to segregate in the procedure of procurement in Timber Solution including the payroll, payments and the sales. The roles are needed to assign among different people in the company to avoid any issues in the future. As per the view of Belousov et al. (2017), the purchase requester is therefore responsible for identifying the needs of purchase including the quantities, specification as the person act as the purchase beneficiary. Purchaser is responsible for requesting the purchase quotes and for selecting the best among the suppliers based on the financial aspect answering the needs of the requester. The other role can be decided by the warehouse manager or administrator who can take the responsibility for receiving the goods or service.
The individual is therefore responsible to make sure the received goods and the invoices of these are according to the requirement. This segregation can avoid the issues faced by Timber solution in the previous procedure for avoiding the purchase of fictitious goods or services which are not needed in the operation process of business (Alimohammadlou and Bonyani, 2018). The information system of the company is required to determine the strong and powerful procurement system in the company for identifying the responsible person for the procurement request. The individual responsible for the purchase order, request of purchase and the receipt of the material can be identified in this system. The Prices quotes can be kept safely and securely in this procedure for the future needs and expectations.
Indicator implementation
A few indicators can be applied in the business operation for controlling the procurement procedure by the company. The KPI decision can be helpful to the controller for identifying any abnormal or uncertain position for any supplier or in the process of purchasing flows. The analysis procedure can be decided based on the business size of Timber Solution by the controlling department and the audit. As opined by Bentley et al. (2017), the indicators that can be decided in the controlling process can be the market share of the supplier. For example, the huge market share of any supplier for a competitive product can be a warning sign. The amount which is ordered by the supplier is needed to be analysed all together reflecting the changes in the department of purchasing. Evaluation of the unit process and the analysis of the purchase order is important for comparing with the limits and authorization.
Whistleblower listening
Whistleblowing procedure can help the company to identify any fraud case in the buying process of procurement. The Purchasing fraud can be reduced by the company implementing the powerful process including the number of quotes, whistleblowing and the traceability (Egbunike and Okerekeoti, 2018). This whistleblowing process can allow the customers and the suppliers to predict the unfair competition by any suppliers.
b. Problems with the proposed personnel situations
Leena Barker who is the chief accounting officer in the Timber Solutions Ltd. has decided to hire her cousin Rose for the accounting office. She will be responsible for the training and reviewing the performance for her in the company. Following issues can be faced in the proposed situation in the accounting department;
Diversification of skill
The rule based skill of accounting and the traditional procedures for the accounting system for financial strategy are reduced in the market. The forecasting and analysis is needed to be managed by the new accounting experts as the advanced features are needed.
Automation and AI
The traditional job series are taken over by the automation procedures and the artificial intelligence system in the companies for the accounting section. The transactions and the complex statement handling procedure can be done by the company with technological advancement which is increasing the turnover (Eze, 2018).
c. Suggestions for internal control
Access to finance
The most useful and important accounting software which can be used by the company is needed to restrict the ability of editing. This can reduce the chances for any false entries and to cover the tracks in the accounting procedures. Review for deleted and credited transactions can be reviewed and the procedures can be adjusted according to the requirements.
Oversight increment
The internal control is needed to be associated with oversight from a trusted resource in the company and Timber Solutions can monitor bank reconciliations, payment registers and the bank statements. Payroll statements for the expenses and the unapproved raises can be reviewed and observed impressing the need among the employees (Hughes et al. 2019). Regulations and policies are needed to follow by the company for reviewing and making the financial reports based on the financial data.
Duty division
The job roles and duties are needed to be divided among the employees including the check preparation process, invoice approval, reconciling bank accountants and the check signing system. These duties selected for the individuals can be rotated according to employee performance in the firm as it can reduce chances of risks (Ishaque, 2020).
It can be concluded that the procurement management procedure can be conducted by the Timber Solution to reduce the fraud cases. The company can manage the accounting department hiring process with personnel strategies and internal control can be developed with suggested steps.
References
Alimohammadlou, M. and Bonyani, A., 2018. A comparative analysis of dynamic and cross-sectional approaches for financial performance analysis. American Journal of Finance and Accounting, 5(3), pp.253-275.
Barbera, C., Guarini, E. and Steccolini, I., 2020. How do governments cope with austerity? The roles of accounting in shaping governmental financial resilience. Accounting, Auditing & Accountability Journal.
Belousov, A.I., Mikhailova, G.V., Uzdenova, F.M. and Blokhina, V.G., 2017. Accounting engineering tools in the research of economic costs and benefits.
Bentley-Goode, K.A., Newton, N.J. and Thompson, A.M., 2017. Business strategy, internal control over financial reporting, and audit reporting quality. Auditing: A Journal of Practice & Theory, 36(4), pp.49-69.
Egbunike, C.F. and Okerekeoti, C.U., 2018. Macroeconomic factors, firm characteristics and financial performance. Asian Journal of Accounting Research.
Eze, B.U., 2018. Corporate entrepreneurship and manufacturing firms’ performance. EMAJ: Emerging Markets Journal, 8(1), pp.12-17.
Hughes, R.A., Heron, J., Sterne, J.A. and Tilling, K., 2019. Accounting for missing data in statistical analyses: multiple imputation is not always the answer. International journal of epidemiology, 48(4), pp.1294-1304.
Ishaque, M., 2020, January. Cognitive approach to understand the impact of conflict of interests on accounting professionals’ decision-making behaviour. In Accounting Forum (Vol. 44, No. 1, pp. 64-98). Routledge.
TASK 2
a. Procurement strategy
Procurement strategy is reflected as the long term policies and plans in a cost effective way to develop the required supplies from the vendors. The best practises of strategic approaches in the procurement strategies can include risks management, green purchasing, global sourcing and training of the procurement skill. As opined by Lai et al. (2020), the priorities in procurement can include risks management system in supply chain management, improvement of sourcing activities, CSR practise and the cost reduction system. Royal Dutch Shell Plc has adopted the principles of suppliers for working with the suppliers and the contractors that can contribute to sustainable development. The company is focused to develop transparent relationships with the vendors that are socially, economically and environmentally responsible.
The suppliers that are engaged to build the non-metallic materials are chosen by the company as the products of the organizations are not used to be made with carbon steel. The strategic approach of procurement of the company has focused to introduce the local suppliers with the global suppliers. This process has created a sustainable procurement procedure that can offer business opportunities to both parties. As per the view of Leal et al. (2019), the company introduces these relationships as a positive connection among the suppliers organising the supplier forum which is conducted in India, China, Nigeria and Mexico. Shell has invested in Canada greater than $1 billion in the last six years for the project of Athabasca Oil Sands on the contractors. This has helped the company to develop the vendor management strategy development in a global perspective. Primary suppliers are selected based on the specific goods and the services which are dependent on the benefits developed in the large orders and sale.
b. Relationship with suppliers
Suppliers are the important and essential factors of a company and the relationship with the suppliers is needed to develop in a positive way. The relationship management process with suppliers is important to implement in any company to enhance the competitive advantages. Important contributions can be made by the suppliers for the new product development procedure in the company. Based on specific contracts suppliers are responsible to deliver products and raw materials in a firm to enhance profitability (Li and Zheng, 2018). Shell is engaged in a sustainable supplier relationship development to ensure growth in market share and increment in productivity. The company has built strong relationships with suppliers and contractors for delivering new projects and to develop business operation system.
The company has established sustainable principles and rules for the suppliers in the market that are engaged in contributing for the continuous development of economic, social and environmental perspectives. As per the view of Patrucco et al. (2017), the contracting and procurement management of Shell is developed for every activity in the upstream, project and technology and downstream procedures. The relationship with suppliers is created focusing development of the automated commercial supply chain process. The working process with suppliers is simplified by the company as the interaction with them is enhanced efficiently (Shell.com, 2021). The company offers suppliers important tools for SAP platforms that are useful in the achievement of an effective collaboration. Performance of the suppliers is driven by the company with the strong relationship developed in the market (Palaniappan, 2017). The relationship has helped the company to obtain dedicated whistle blowing process which is connected with the following aspects;
Business integrity
Laws and regulations for suppliers are maintained and implemented to help them in a transparent practise of supply chain. This practise has helped the relationship to build without any unethical or corrupted practises, without the permission of engaging in any bribery (URINOV, 2017).
Health and safety
The contractors and suppliers are committed to protect society and the environment following laws and regulations. Shell has ensured that suppliers are engaged in protecting the environment and health of the community along with practises of supply chain (Rao and Ibrahim, 2017).
Human rights
Shell has developed positive approach of not using the child labour and any force working process in the environment for the suppliers. Contractors are engaged in developing a healthy workforce following required guidelines of human rights (Torabi et al. 2019).
c. Organisation performance objective
The procurement strategies are engaged to obtain objectives including the relationship building process with suppliers and to manage the supply base. Operational requirements of companies are supported by the companies in this system with strategic approaches. Shell is focused to increase the quality of the goods and services with procurement strategy and the objective to maintain safety is developed. As per the view of Sakun et al. (2020), it is effective in maintaining cost effective procedures and quality for the technical innovation process in production. As the company is focused to operate in the global marketplace including Denmark, Germany, Brazil, UK, Nepal, Egypt any more, the strategy is developed to control quality.
The company is aimed to enhance and improve the quality of hydrocarbon products with an effective supply chain management process in market. There are a lot of companies in the market which are in a hard competition with Shell for delivering the products and services including Dell and Wal-Mart (Shu et al. 2018). Therefore, this strategy of procurement management of this firm is responsible to develop the competitive advantages in market. Favorable opportunities can be grabbed by the company as set in objective of performance enhancement by this approach. The strategy has helped the company to develop the products in a cost effective way and with managing the environmental safety. As per the view of Shu et al. (2018), the laws and regulation regarding the environment and society has been focused in this strategy to maintain by the company in this approaches. Shell has developed a sustainable supply chain management process to enhance the market share in global market. Therefore the company has developed the strategic approaches to increase the productivity with improving visibility and enhancing the supplier relationship. Easier contract management procedure has been developed by the company in this approaches and the objective of reducing error in operation system can be maintained.
References
Lai, S.M., Liu, C.L. and Chen, S.S., 2020. Internal control quality and investment efficiency. Accounting Horizons, 34(2), pp.125-145.
Leal Filho, W., Skouloudis, A., Brandli, L.L., Salvia, A.L., Avila, L.V. and Rayman-Bacchus, L., 2019. Sustainability and procurement practices in higher education institutions: Barriers and drivers. Journal of cleaner production, 231, pp.1267-1280.
Li, Z. and Zheng, L., 2018, September. The impact of artificial intelligence on accounting. In 2018 4th International Conference on Social Science and Higher Education (ICSSHE 2018). Atlantis Press.
Palaniappan, G., 2017. Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry. European Journal of Management and Business Economics.
Patrucco, A.S., Luzzini, D., Ronchi, S., Essig, M., Amann, M. and Glas, A.H., 2017. Designing a public procurement strategy: lessons from local governments. Public Money & Management, 37(4), pp.269-276.
Rao, K.V. and Ibrahim, F., 2017. Financial Performance Analysis of Banks–A Study of IDBI Bank. International Journal of Research in IT and Management (IJRIM), 7(1), pp.64-72.
Sakun, A., Hilorme, T., Perevozova, I., Reznik, O. and Khaustova, Y., 2020. Accounting model of human capital assessment within the information space of the enterprise.
Shell.com, 2021. About Us. Retrieved From: https://www.shell.com/business-customers/shell-for-suppliers/about-shell-for-suppliers.html [Accessed on: 05.05.2021]
Shu, W., Chen, Y. and Lin, B., 2018. Does corporate integrity improve the quality of internal control?. China journal of accounting research, 11(4), pp.407-427.
Torabi, M., Borhani, F., Abbaszadeh, A. and Atashzadeh-Shoorideh, F., 2019. Ethical decision-making based on field assessment: The experiences of prehospital personnel. Nursing ethics, 26(4), pp.1075-1086.
URINOV, B., 2017. Evolution of corporate management of the personnel in national economy. In 2nd Student Conference of MDIS Tashkent (p. 39).
TASK 3
a. Report on advantages and limitations of an annual budgeting system
An annual budget system can be defined as a system which creates a plan consisting of all the expenses and revenues of the company for a particular financial year (Penning, 2012). It helps in achieving a targeted spending and income for a specific financial year. A balanced budget is when the spending and incomes are equal. When the company is unable to meet its expenses and it has to take loan from others to meet its expenses then the company is said to be deficit. When the revenues exceed from expenses then the company is described in surplus. A budgeting system aids in tracking all the financial activities of the company. It is planned by companies, individual entities and governments and all other organisation to keep a track on their activities (Donovan, 2006). The CEO of Brooklane ltd. has delivered many new ideas and one among them is the idea of eliminating use of annual budgets. The following report prepared by the CEO of Brooklane ltd. will explain the advantages and disadvantages of using annual budgeting system in the company.
Advantages of annual budgeting system
- Budgeting aids in coordination of all the departments of the organisation. It means all the activities happening in the departments are well coordinated with each other and there is efficiency in their work (Penning, 2012).
- Budgeting helps in achieving all the strategic plans of the company (Donovan, 2006). That is the plans are actually come in force.
- Budgeting provides a proper record and keep a track on all the activities of the company (Penning, 2012). There is transparency of all the activities of the organisation.
- In order to facilitate better communication between the staff and employees of the company, budgeting plays a very big role. (Budgeting, 2013).
- There are many resources in a company and it should be efficiently used. Budgeting makes such plans which helps in improving the distribution of the resources in a better manner as the resources are used with better justification and clarification (Donovan, 2006).
- Budgeting also acts as a tool for correction via reallocating the resources of the company (Budgeting, 2013)..
Disadvantages of budgeting system
- When the company uses budgeting system very strictly and mechanically, then the problem happens in the company. This is due to the fact that the employees fail to meet some budgeting aims and then it creates problem in the company (Budgeting, 2013).
- It also discourages the staff of the company as they fail to participate in the activities of company. It is due to the fact that budget is always created by top to bottom management. The employees could not understand the budgeted expenses of the company and hence they are not committed to the plan (Anon, 2021).
- A budget also creates an environment of unfairness. This is because the budget usually created from top management to bottom staff. So there is lacking participation of the employees so it is considered as unfair (Budgeting, 2013).
- As there is allocation of resources in budgeting system, there is competition among the departments for the resources and hence it creates politics in the company (Anon, 2021).
- Budgeting system forms a road map for the company. A budget is usually considered as rigid in nature. Due to this there is discouragement of formulations of innovations at bottom level. Also there is no initiation taken by the employees (Anon, 2021). Thus it becomes difficult to gain money for innovative ideas in the company.
- Report regarding the measures of performance for each ward.
| Wards | 1 | 2 | 3 |
| Number of beds | 12 | 10 | 20 |
| Total Number of patients | 48 | 32 | 108 |
| Total Ward staff (excluding consultants) | 8 | 8 | 12 |
| Ward staff- full time equivalent | 5 | 4 | 6 |
| Variable Costs for period | £ 58,000 | £ 66,000 | £ 98,000 |
| Operating Fixed Costs | £ 85,000 | £ 67,000 | £ 88,000 |
| General Overhead | £ 40,000 | £ 40,000 | £ 40,000 |
| Patient turnover per bed | 4 | 3.2 | 5.4 |
| FTE Staff per bed | 0.4166667 | 0.4 | 0.3 |
| FTE Staff per patient | 0.1041667 | 0.125 | 0.0555556 |
| Variable Cost Per bed | £ 4,833 | £ 6,600 | £ 4,900 |
| Variable Cost Per Patient | £ 1,208 | £ 2,063 | £ 907 |
| Fixed Cost Per bed | £ 7,083 | £ 6,700 | £ 4,400 |
| Fixed Cost Per Patient | £ 1,771 | £ 2,094 | £ 815 |
From the above calculations we can observe that patients per bed is highest in ward 3 that is 5.4 patients per bed as compare to ward1 (4 patients per bed) and ward 2(3.2 patients per bed). So ward 3 is out performing in this aspect. Then FTE Staff per bed and per patient is also good in Ward 3 which is 0.3 FTE staff per bed and 0.05 FTE staff per patient as compare to Ward 1 and Ward 2. In this aspect also the Ward 3 is outperforming. Now while looking into variable cost per bed and per patient, Ward 1 is outperforming in variable cost per bed that is £4833 per bed but in variable cost per patient ward 3 is outperforming with £ 907. Now looking into aspect from fixed cost point of view again Ward 3 is outperforming as compare to other wards with £4400 fix cost per bed and £815 fixed cost per patient.
So from the above analysis we can conclude that Ward 1 and Ward 2 needs to reduce its cost while maintain the benchmark as ward1 but also take into the consideration the non-financial consideration also. While ward 1 should still strive to control its cost and at the same time take into consideration the non-financial aspects also.
References
Anon, P. (2021). Retrieved 27 April 2021, from.
BPP Learning Media Ltd. (2013). Budgeting.
Penning, A. (2012). Budgeting. Osborne.
Donovan, S. (2006). Budgeting. Lerner Publications Co.
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