Question 8:explaining why it is necessary for all business organisations to have effective financial management systems and explaining how the information held in financial management systems contributes to ongoing business performance and business planning.

Question 9: Establishing budgets, allocating funds and implementing budgets

Answer each of the following questions in detail:

1. What is a budget, why is it necessary, how is it used?
2. How does analysis of previous financial data impact on projected resource estimates and allocations?
3. How do profit and loss statements, cash flow and aging summaries contribute to new budgets?
4. How can you ensure that managers and supervisors in the organisation understand the budget and understand their reporting requirements with regard to financial management?
5. Budgets are used to identify and track discrepancies between agreed and actual allocations. Explain.
6. How do budgets contribute to analysis of existing financial management approaches?

Question 10:Reporting on financial performance

Scenario:

Your organisation, which has a number of different cost centres, is conducting an internal audit. You have been asked to act as a project manager to assist with data collection, to provide data, ensure that any other assistance is provided and to collaborate with regard to writing the audit report.

During the year the organisation transacted a number of mergers and acquisitions. You have been asked to pay special attention to the acquisitions and to check the due diligence processes. You also need to determine whether any changes or adjustments need to be made to the current budgets.

Explain what all this means and how you would manage the audit process.

In answering those questions, you will need to also address these questions:

1. What is an internal financial audit?
2. How does this help to mitigate the risk of mismanagement of funds?
3. What data do you think will contribute to the audit and what financial reports might contribute to an audit?
4. What structure and formats might financial report take?
5. Are there particular statutory requirements that should be followed?
6. What does due diligence mean in terms of finances and financial reporting?
7. Under what circumstances might budgets need to be revised?
8. To whom might you circulate reports and why would you circulate them to these people?
9. What reports might be prepared for the ATO?