Managing Finances - Organization Budget - Report Writing Assessment Answer

Managing Finances

Table of Contents
TOC o 1-3 h z u Introduction PAGEREF _Toc3378788 h 4Resource Allocation PAGEREF _Toc3378789 h 4Estimates of new budget item PAGEREF _Toc3378790 h 5Organizational policies and requirements PAGEREF _Toc3378791 h 6Conclusion PAGEREF _Toc3378792 h 6Reference List PAGEREF _Toc3378793 h 8

Executive Summary
Budget is an important part of the operations and business of an organization. Budgets include various items which are required in the daily activities and operations of a company. Estimation of all the items for being included in the budget is quite necessary. With the growth and development of a business, consideration of different and new resources is quite important. When a requirement for different resources is identified, a business is required to produce estimates so that costs can be calculated and their usage can be justified. The following assessment focuses on the allocation of resources by using previous data, estimation of budgets items and the policies and procedures required while preparing a budget.
IntroductionThe Woolsworth Group Limited is a large Australian company involved in the retail industry. It serves in Australia and New Zealand. In terms of revenue, the company is the second largest in Australia after Wesfarmers. The company was found in September 1924 by a group of five people. Currently, Gordon Cairns is the Chairman and Brad Banducci is the CEO of the organization. With a total of 205,000 employees, the firm is able to earn annual revenue of 55.669 billion (Woolsworth Group, 2018). The products and services delivered by the firm are petrol, liquor, supermarkets, general merchandise, hotels and gambling and finance.
Resource AllocationIn the income statement of the Woolsworth Group, the total net operating income before operating and impairment expenses amounted to be 26,132 (Woolsworth Group, 2018). The net profit before tax amounted to be 13,420. The cost of total tax expenses was 4026. Finally, the net profit derived after deduction of taxes from the continuing operations of the business was recorded at 9394 for the financial year 2018.
On assessing the balance sheet of the Woolsworth Group for the financial year 2018, it was analyzed that the total assets and the total obligations of the firm were valued at 975,165 (Woolsworth Group, 2018). The total liabilities for the financial year 2018 were recorded at 907,305 and the amount of the equity of the shareholders which was attributable to the organizations equity holders was valued at 67,306. The total non-controlling interests that were incurred by the organization for the year 2018 amounted to be 554 which made the value of the total shareholders equity 67,860 for 2018.
The asset value of the Woolsworth Group was located on the basis of defined benefit portion backing. The assets have been allocated on the basis of the fair value for the previous year of the organization. Cash and cash equivalents were valued at 81 million for 2018 and 144 million for 2017. The Australian equities were valued at 253 million and 307 million for 2017. The overseas equities have been recorded as 570 million for the year 2018 for the previous year it was 520 million. The value of the government bonds was recorded to be 679 million and the same of the semi-government bonds of the organization was 1179 million (Woolsworth Group, 2018). Both the items previous year values were 648 million and 1107 million respectively. The other corporate and related bonds were priced at 79 million (and 62 million for the previous year) where as the value of real estate and derivatives were recorded to be 334 million (367 million for 2017) and 17 million (0.5 million for 2017). Other assets are valued at fair value and were recorded at 197 million which in 2017 were recorded at 199 million. The total fair value of the allocated assets amounted to be 3355 million. The same for the previous year, that is 2017 stood to be 3336 million.
The above numbers make it clear that previous years financial data can be used for the determination of the allocation of resources. This can be done by putting all the indirect costs and expenses into one single cost pool since the percentages of allocation can help in the derivation from an individual direct cost item. Such a direct cost item is also called a cost base. These days, business companies usually allocate the cost pool or the total of the indirect costs on the basis of the designated resources proposition which can be measured directly. One item can be used as a prerequisite for the determination of value or allocation of the cost of the other.
Estimates of new budget itemA new item that could be added to the budget in the business is an item of in-kind. Such an item is related to volunteer labor and expected donated items (Cunha, 2014). The primary objective of a budget is the creation of a realistic picture of the future of an organization or business (Hofstede, 2012). Any narrative that is developed by your business for going with the budget is translated by the same picture into words. Hence, the budgets as well as the budget narrative are two different descriptions of the same plan. One description is mostly related to the numbers and figures and the other one is about words and explanations or justification to the former. When both these descriptions are mixed together, they provide the best insider anticipation of the future, better known as the budget.
The cost of in-kind items would be budgeted at 500 approximately per month which might fluctuate by a 50-100 every month. The assignment of cost figures to such cost objects is one of the primary tasks in budget, financial reporting and planning. As such, costing might involve both financial accountants as well as cost accountants would use various different approaches of cost allocation to the items of budgets. For estimating the cost of the new item, methods of direct costing should be preferred. In case the resource usage cannot be measured directly, the indirect method like allocation can be used for estimating the cost. The upfront costs included in the new budget item would be related to costs of taxation and insurance costing 99 and 500 respectively, each charged annually.
Organizational policies and requirements
There are various organizational policies and procedures that should be followed while preparing budgets of a company. Budgets are important for the success of financial management of an organization as they help in keeping the finances well-organized and also help in limiting the activities of corporate spending (Libby and Lindsay, 2010). Business companies have specific procedures and policies when it comes to departments requesting additional financing and setting their own parameters related to finance, because budgeting is considered as an organization wide process. Several external circumstances like economical changes, affect the review and renegotiation of budgets less or more frequently (Ramey, 2011).
The Woolsworth Group follows various Australian regulatory obligations and statutory requirements. The Responsible Sourcing Policy program is followed for responding to overseas best programs, regulations and legislations such as the Modern Slavery Act (Woolsworth Group, 2018). The Cyber Security Policy is set out of management and security of company data. The Business Continuity Management Policy guides the companys responses to business disruptions, major incidents and recovery plans. The Compliance Framework of the Woolsworth Group helps its management in managing the regulatory and legal compliance. The Code of Conduct and training programs of the organization promotes awareness of its core internal, regulatory and legal policy requirements. The Treasure Policy governs the management of the organizations financial risks, usage of derivatives and foreign currency risks.
ConclusionIt can be concluded that for the determination of resource allocation, previous financial data is required. This is because the performance of a business and determination of the level of available funds for allocation of resources is revealed by its previous data. The financial data which can be used for making decision related to allocation of resources would include profitability, sales figures, resource usage, and cost of resources, expenditure and efficiency. Inability to understand the old financial information might be a sign of underfunding or overfunding. Also, failure to understand previous data means resources can be under-allocated or over-allocated.
Reference ListCunha, J.M., 2014. Testing paternalism Cash versus in-kind transfers. American Economic Journal Applied Economics, 6(2), pp.195-230.
Hofstede, G.H., 2012. The game of budget control. 3rd edition. Abingdon, UK Routledge.
Libby, T. and Lindsay, R.M., 2010. Beyond budgeting or budgeting reconsidered A survey of North-American budgeting practice. Management accounting research, 21(1), pp.56-75.
Ramey, V.A., 2011. Can government purchases stimulate the economy. Journal of Economic Literature, 49(3), pp.673-85.
Woolsworth Group, 2018. Together. Annual Report 2018. online Available at https//www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf Accessed 13 March 2019