AAF044-6 Accounting and Finance
AAF044-6 Accounting and Finance
1. Introduction
In this report, the automotive sector has been taken as Bentley for the overall discussion to create the study. This company is the leading manufacturer in the overall world from the perspective of cars. Based on the data of the UK it has been shown that this company has provided the opportunity to work for more than 4000 people throughout the overall world. This company can also make design, hand build, and overall marketing and selling of the manufactured cars. This company has been set up by W.O.Bentley in the year of 1919. The headquarter of this company is situated at Crewe in Cheshire.
Key features of the organization
New models of Bentley have made some offers of the most important technologies and features which are available in a current manner. From the services of infotainment to the safety tech of the advanced drivers which has been designed the life in an easier manner. This company has also made an app name “My Bentley” which has made a concession to the convenient services. The network has also provided access to the globe of digital services and the community of Bentley owners exclusively (McGoun, 2019, pg. 04). The company has also made some cars by which the storage of Mulliner Biometric can be available by making activation of the storage compartment. It would allow people to keep confidential items inside this.
Corporate objectives of the organization
The main vision of the Bentley Company is to make a creation of wonderful journey for the consumers. The most important mission is to make inspiration consumers with a magical way of craftsmanship, sustainability, and innovation. The strategy of Bentley100 has been pledged to lead in the mobility of sustainable and luxury factors. The company would transform the old luxury car of 100 years into a sustainable, new, and full role model of ethics within a decade. The main aim of the company is to become a luxury car by neutrally keeping carbon by the year of 2030 which would be underpinned by a sustainability program structural manner (Bailey, et al. 2022, pg. 041).
Identification of main resources
The significant five resources of the automotive sector are financial resources, emotional resources, human resources, physical resources, and educational resources. Apart from these the actual resources of the Bentley company to make the fashionable and new models of various cars are the finest type of wood, metal and stone, Oak copper, and so on. The wide range of the Veneers of Bentley has been made in a possible manner by the experts of wood to seek the varieties of trees around the overall globe with various types of materials and colors. Moreover, aluminum, rubber, and steel can also be the usable and most important resources to make a car.
Statement on the issues of management
In the overall timing of the long term the company can be successful if it would make the actions with the integration, compiles the provisions of statutory, and has been stand by the undertakings of voluntary manner and principles in an ethical manner. The training of the comprehensive sector has made a conduct code for the business partner and the employees also. It has also been noticed to the faulty icons of the dashboards of vehicles. It has to need to make a determination about the reason for the electrical issues and actions in an immediate manner. Sometimes the drivers would not be pleased with the repeated changes and the overall requirement has also been made to make replacement of the brake hoses because of the sophisticated design of the company which has required care in a premium manner.
2. Budget
Budget can be said as the significant factor which has been used by the management of the upper levels to evolutes the actual performance of the business. The budget can also be said as the main and important factor which would also help to control the overall organization (Renda, 2022, pg. 04). The budget can also be able to help to keep the main business in its actual track of finance factor. The budgets can also be perceived to create an existence for different types of objectives of the finance-related issues to bring their actual numbers and figures related to budgets. These numbers and figures can be able easily to perform the overall procedure.
Budgeting is a detailed plan that is made for the future in term of income and expenditure. The company budget begins with the sales that made up master budget. The company ewlationship and planning in involves in the process of budgeting. The object of budget is key assumption, sales forecasting, and help to made a plan of production. There is many briefs budgets are set together in the financial plan and then made a statement of conventional accounting such as loss account, budget profit, balance sheet and cash flow statement. These are together called the master budget. The steps involves in making the master budget are very rigid and complex. Budget involves making estimation for the future. The steps of forecast is starts with planning and then preparing budget.
Different methods of budgeting to measure the actual performance
Mainly three important methods have been analyzed to evaluate the actual performance or the main position of the business.
- Recognition of the important variances:
A budget variance can be able to make the actual distinction between the amount of budgetary control and the actual amount of the expenses or revenue. The budget variance can be able to include the cost differences by enhancing or reducing the sales or profits. The variance can also be bad or good and in this manner, their favorable and unfavorable budget has also been understood (Wanna, 2021, pg. 04). If the actual variance of the budget can be more than the actual budget amount then it can be said to be a favorable result of the variance of budget. Again these whole factors can be changed and in that manner, if the budgeted amount would be less than the revenue then it would be an unfavorable result of the budget variances. It has also been referred that the projects of the budget have made a requirement to make a review as it cannot be able to create a sustainability factor successfully. Moreover, the budgets can also make a requirement to observe the overall business by which it can be looked into and then managed.
- Evolution of the budget variance
The evolution of the variance of the budget is very much important to identify the significant variances in the overall budget. No extra factors can be provided from those factors without creating changes to the budget variances then it would not be made to improve or eliminate the overall factors of variances (Biggadike, et al. 2022, pg. 04). It has been done to understand the actual viability and sustainability of the complete project of the business. The main reason for the b budgeted variances have been investigated and then to make the addressing factors it can be said as a chance for the activities of the business to improve overall the main performance.
Through the variance analysis in the budget, the organization would decide the issues based on short or long-term factors which would make a requirement of the overall solution in a permanent manner. The retail price of the services or the business profit can be increased to resolve the issues of unfavorable variances. The sales can also drop due to the various factors of economic activities which have reduced the customer demand outside the business control. The cost of input can also be enhanced into the product or the services due to the various conditions of economic factors by which the overall arrangements can be under the requirement in a different manner. All the patterns of buying can also be c rated as the identification of the variances in budget. If the monitorization can be made for the complete variance then the identification would be more effective. The budget variance can be evaluated as the accurate actions which have to be made as the maintenance of the variance and its overall improvement of the organization.
- Ascertainment of the revised budget
After ascertaining the significant variances it would be the actual timing to evolutes the whole information from other factors to revise the required budget. The evolution has been made to create the issues in an explanation manner and then all of these have been investigated and then analyzed. The revised budget can be said as the process which has allowed managing the management team of the budget to make different types of changes v to the budget. A revised budget has created a need to implement to get the overall budget back on track which has made a dependency on the assertion of the different issues.
Investigation of the mainly favorable variances
The adverse variances have been able to create the attraction of making the problem indication. It has also been agreed to understand the overall investigation of the overall variances by which the organization can be able to learn from all the factors of budget variances (Qamar, et al. 2022, pg. 04). The organization can also be able to make investigate the variances of both favourable and unfavourable factors which are large. The actual reason behind it is that it would create an income effect on the overall businesses. If the standard set has not created any type of accuracy then it would not be able to lead to the utilization of different resources of the business in an overall manner. It has been done with proper manner in a detail way to understand the actual favourable factors of the business.
There is many persons involve in the making budget, they are called budget committee. It includes senior manager who make the strategies for the company, functional managers. They help company to meet the changes by suggesting properly and motivate the employees to accept the changes. The budget process starts with operational managers who assist and advice to prepare staff, also involves accounting staffs. The sequence of process of budget are as follow: communicating strategy and objective, communicate process, evaluate the factors that are critical, make an initial draft of budget, negotiate budget with manager, review and coordinate budget, consider final form of budget and last the ongoing review of the budget.
There is many advantages of budgeting such as it help business to look for the future growth, help to analyse the actual and planed budget. It help to find the variance.
- Discussion of the reason for investment proposals
As the study has taken the topic of international financial and contractual management. And the company which has been chosen for the report is Bentley Motors (Arundel et al. 2022, p.13). The company is a UK-based company; it comes under the automotive industry. The company was established in the year of 1919, which shows that the company is 104 years old. The reports show that the company is well-performing, but the different financial reasons naked the performance of the company down. The Rolls Royce company acquired the company in 1931, and now it is a subsidiary company. The investment of any company is one of the main reasons for the financial stability of the investment decision. The investment decision should be based on the different investment appraisal calculations. The different investment appraisal methods are NPV, IRR, and the payback period. The major issue of the company is the less capital resource, the company merges to another company which can only be held for making the organizational financial structure more stable. It is process to analysis of quantitative that provide to manager the guidance to take decisions as to whether the investment is profitable or not.
The Bentley Motors have the different issue being a subsidiary company it has a less market influence. The company’s products are only preferred in respect to the popularity of the holding company (Xu et al. 2023, p.13). The company needs to introduce more capital to their organization. TO expand the capital it needs to invest in the markets. The company should also issue equity and debts that would be helpful in the capital collection. The company should also invest in different business proposals that could be beneficial for the company.
For choosing the profitable investment the company needs to analyze the different investment proposals through different methods on the investment appraisal. The investment appraisal is the different methods that calculate the return of the company (Stobbs et al. 2022, p.13). It also calculates the time period within which the company would recover its investment. The investment appraisal calculation is important to better understand the future return of that particular investment. The company should always do the different calculations of the investment appraisal as the company makes huge investments and the main reason behind those investments is achievement of the organizational goals and increasing the profitability of the company. The different companies use different methods to make the calculation for making good investment decisions. The different companies like Bentley Motors who need the huge funding for improving their companies’ situation. There is four kind of method of investment as stated below:
Payback-period
The payback period is one of the methods of the investment appraisal, it can be defined as the method of calculating the time period of the investment returns. In other words, it can be said that the payback period calculated the actual time period in which the investment could be returned to the company (Ahdal et al. 2022, p.13). It can be calculated by considering the different year’s return of the investment.
The advantages of pay-back period are it concentrate on the proposal that help to give cash flow return fast. The limitation of this is it ignore the “time value of money”, ignore the cash flows that arise after the payback period and the earned cash flows needed to return the invested capital and also the interest.
NPV
The NPV ” stands for the “Net Present Value ‘‘, the net present value method are another method that helps to analyze the value of the investment returns (Mardjono and Chen, 2020, p.16). It includes the calculation of the net present value of the investment in the future, and it helps in analyzing whether the investment in a particular project is profitable and valuable or not. It is calculated through calculating the present value of the different investment returns.
It consider the all cash flows of the proposal over the life time of the project and also allow the “Time Value of Money”. The NPV of the project is equal as the net present cash inflows minus the net cash outflows.
IRR
The “IRR” stands for the internal rate of Return; it helps to calculate the actual rate of the investment return. It finds the percentage of the return, which is calculated by dividing it by the total return from the total period of the investment. It helps in finding out the organization that the investment that is going to be made will give an accurate amount of profit to the organization.
The calculation of IRR involves the steps of repeated assuming the discounting rate of the net present value of cash flows that is equal to the capital investment. It limitation is it not consider the time value of money.
ARR
The “Accounting Rate of Return” is rate of return gain from the investment. It is calculated by considering the annual profit in average expected from the proposal as a percentage of invested capital. The main disadvantages of this are it is not shows the profit same as the cash flow. In this straight line approach of depreciation is follow assuming the residual value as zero.
The advantages of this are it consider all the profit calculation, it is very familiar to use. The disadvantages are it ignore time value of money.
4. Audit Committee
Identification of the main functions of the audit committee
The Audit committee of the company is important to supervise the performances of the different departments of the organization. There are many functions that an audit committee of an organization does. The different functions of the auditing committee have been described below.
Financial Reporting
One of the main functions of the auditing committee of the organization is to do the financial reporting. The financial reporting includes the different aspects of the financial books of the company. It cross verifies the different business transactions and addresses the mistakes of the statement. After completely analyzing the financial statement of the company, the audit committee makes the financial reports of the business.
Governance and Compliance
Governance and compliance are other important functions of the audit committee. As the committee makes the financial reports of the company, in which they find out the different mistakes that have been made in making the financial statements of the company (Alabdullah and Ahmed, 2020, p.16). Therefore the audit committee also governs the performance of the different departments of the company. It also helps in the compliance of the different tasks of the organization.
External Auditing
Another significant function of the audit committee is doing the external audit of the company. Audits the different external business factors and its performance report, provides the solution mentioning the different issues of the organization.
Internal Auditing
Internal auditing includes the different functions of the auditing committee. The auditing committee also does the internal auditing of the whole business organization, which includes the auditing of the books of account and different accounting statements of the business.
Risk and Internal Control
The auditing committee also performs the function of controlling the risk and internal factors of the bitcoins. As it supervises the different activities of the business, it audits the different aspects and finds out the mistake, which helps the organization to control its risk and the different internal factors of the business organization.
Membership of the Committee
The membership of the auditing committee would always be provided to the experienced and highly posted employees of the company. Generally, the auditing committee includes the high level personals like the CEO, members of the board of directors, and the different highly qualified personnel experts of the auditing process (Al and Hashim, 2022, p.16). The number of personnel in the auditing committee is up to three or four.
Issues of the Committee
There are different issues that arise in between the auditing committee of an organization. There are different issues such as disconnecting the decision maker, directionless committee, etc. The different issues of the auditing committee of Bentley Motors have been discussed below.
Disconnection of decision-makers
One of the major issues of the auditing company is the disconnection of the decision makers of the committee, As it has mentioned before that the different persons who are the parts of the company are the CEO and different highly qualified personals. Hence they don’t have the proper connection as they come from different departments and companies, which cause a delay in the decision-making of the company.
Directionless Committee
The other issue of the auditing committee is a directionless committee. Sometimes the auditing committee of the company is not an insider of the company, they have been hired for auditing the company’s financial and non-financial activities (Mishra and Kaushik, 2021, p.16). But if they are new to their work and the company does not provide them with correct directions. Hence it will not work properly, which may cause several losses to the organization.
Overload of the information
The other issue of the auditing committee is the overload of the information. In case if the members of the committee will get the excess information for auditing a single task. Then it may cause that the auditor would not be done properly.
Suggestions for the improvements
- The auditing committee should be able to understand the different members’ points of view in the committee. It should always be comfortable with the other members of the committee.
- The company should always hire different auditing personnel who have accurate knowledge of it.
- The company should also provide directions to the auditing committee.
- The company must provide them with accurate and sufficient data, the excess data could not be helpful in effective auditing.
5. Reflective Conclusion
The above-mentioned topics have well explained the whole concept of the study. In the study, I have mentioned the different aspects that are related and relevant to the topic. It includes a detailed introduction that conveys different information regarding the company which is Bentley Motors. The introduction includes key features, objectives, key resources, etc. The other point is the budget in which we have seen the different aspects related to the budget of the Bentley Motor Company. In another point, we can understand about the different investment proposals of the company and the reason behind them. One of the important topics which have been shown in the study is the concept of the auditing committee. In the audit committee section, we could see the different aspects of the auditing committee of the Bentley Motor Company. It has mentioned the different issues of the audit committee, solutions to those issues, identification of the functions of the auditing committee, and the concept of the membership of the audit committee.
References
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