Bsbfim601 Manage Finances-Accounting Software Assessment Answers

Houzit Pty Ltd is located in Brisbane and they are running retail chain of 15 stores. They are the leader in the retail sector of home ware and provide the new and renovated furnishing all over the Greater Brisbane area. over the past five years they have grown from a single store to the 15 chain store. They are well known for their superior after sales service and this is the crucial reason behind their growth in sales and increase in profit.

Financial statements

1. Sales and profit budget

Cash flow analysis – GST

Debtors ageing analysis

Budget notes:

The main issue related to the budget is that the performance of Houzit greatly depended on their gross margin viability and maintenance of finance. The impact on the retail segment is biggest as the company is going through the recession period. however, the revenue from sales are in a growing trend and that is visible from the budget. To achieve the level of sales the company is spending a big amount towards discounts. The fluctuating interest rate is also affecting the company adversely. Moreover, the payment term of debtors also working as a barrier for the cash flow.

Statutory requirements for tax compliance:

Houzit is liable to pay 4.75% on the the total wages as the payroll tax if the amount exceeds $850,000. Moreover, the organization is liable to pay a fringe benefit tax and luxury car tax that are charged by the Australian government to minimize the dishonest activities taken up by the firm. The tax rate applicable on the luxury car is 33% as prescribed by the Australian government.  

Calculation of tax

Compliance under Corporation Act 2001:

Under the Corporation Act 2001, the Australian firms are required to comply with the following regulations:

• The financial statement of the company must be prepared with respect to the accounting standards.
• The firm is liable to state the actual financial records of the firm to the debtors, which will enable the debtors to understand their financial viability
• The capital of the firm must be utilized in an efficient manner to pay off their liabilities

 Appropriate software for Houzit Pty Ltd

The current software that are used by the firm are not able to provide the sufficient analysis of expenses and revenues and made the estimation of profits tough for the company. Therefore they want to use any other software or upgrade the existing software for better management of the accounts over the long run. One option is to use the MYOB software as Houzit is a small business firm. This is a cheap and easy to install in simple situations. Moreover, it has low risk of failure and back-up is easy.

 Critical dates for generating resources in the next financial year

The most appropriate time for preparing the budget for next financial year is just after the publication of previous year’s financial year. It will give an idea about the income and expenses from the last year’s record. The proposal could be as follows:

• The budget may be prepared with the newly installed software that will be useful for preparing more accurate budget.
• The accounts are suggested to take the assumptions more appropriately to minimize the gap between the actual and budget and turn the unfavourable variances into favourable.

Recommendation for new budget

• Increasing the privacy and safety level to minimize the exploitation in preparation of budget.
• Implementation of proper authorization to access the budget will improve the conrol level.
• The budget must be prepared taking into consideration the previous year’s result, so that, the budget can be prepare more realistically.
• The budget must be prepared through the implementation of an system of accounting that will enable to prepare the budget accurately and easily.

List of modified internal control to maintain the audit trail

Audit trail is the system through which the transactions related to the items of accounting records are traced. To maintain the internal control, the following things are recommended:

• Audits must be carried out physically on the available stocks of the company to prevent the theft of stocks
• Duties of maintenance of records and preparation of financial statements must be segregated among two or most employees to minimize the manipulation of data.
• All the transaction must be documented properly to have access at the time of requirement.
• The financial record must be reconciled regularly to detect the loopholes in theinitial stages
• The access over the financial records must be allowed after proper authorization from the approval authority.

References

Akinboade, Oludele Akinloye, and Mandisa Putuma Mokwena. "Understanding the tax compliance culture of private sector tax practitioners in South Africa." Journal of Economics and Behavioral Studies 6.3 (2014): 202.

Andre, Sean M., Marco Lam, and Mark O'Donnell. "budgetary slack: exploring the effect of different types, directions, and repeated attempts of influence tactics on padding a budget." Academy of Accounting and Financial Studies Journal 20.3 (2016): 147.

Berman, Larry. The Office of Management and Budget and the presidency, 1921-1979. Princeton University Press, 2015.

Chen, Cellina. "For personal use only." Change (2015).

Curtis, Veechi. MYOB Software for Dummies-Australia. John Wiley & Sons, 2015.

De Simone, Lisa, Matthew S. Ege, and Bridget Stomberg. "Internal control quality: The role of auditor-provided tax services." The Accounting Review 90.4 (2014): 1469-1496.

Hassan, Nadiah, Mohd Mohid Rahmat, and Zakiah Muhammaddun Mohamed. "Internal Control Systems, Management Support and Public Sector Internal Audit Effectiveness In Malaysia." ASIAN JOURNAL OF ACCOUNTING AND GOVERNANCE 6 (2015): 1-12.

Salim, Emil, et al. "The Influence of Myob Accounting Softwareonthe Performance of Company Financial Report." UPI YPTK Journal of Business and Economics 1.1 (2016): 75-84.