Financial Accounting And Analysis: Relationship Between Australian Accounting Standards, Balance Sheet Limitations, FBT Payments, Budgeting, Audit Trail, And Financial Reporting

Answer (a)

Australian accounting standards includes standards equivalent to the international financial reporting standards. On the contrary, accounting principles are guidelines and rules those shall be followed by the entities while preparing financial statements (Stamford 2015).

Answer (b)

Financial probity is the strict adherence to the code of ethics on the basis of undeviating honesty, particularly in the commercial related matters and is beyond the legal requirement (Bosire 2016).

Answer (c)

Actual picture of profitability is not shown by balance sheet as the balance sheet represents assets, equity and liability items at a certain point of time whereas the income statements shows the profits covering particular period of time.

Answer (d)

Break-even analysis helps in determining the level at which the new service or product of the entity will be profitable. It is computed as –

Break-even point = fixed cost / contribution per unit

Answer (e)

FBT are required to be paid by the organization on account of the fringe benefits provided by it to the employees. It is shown under entertainment head in organisation’s chart of accounts.

Answer (f)

Operating cash flow ratio that is calculated through dividing cash flow from operation by sales can be used for analysing trends of cash flow

1. Planning and financial cycle of the Australian football League covers the period from 1^stNovember to 31^st October (com.au 2019).
2. Principle business of the company is promoting, controlling, managing and encouraging Australian football. Software that can be used by the organisation includes quickbooks, oho and Reckon.
3. Calculation of ratios –

1. Tax return due dates
2. Due dates for lodging as well as paying annual GST return is 31^stOctober
3. Company returns are due for lodging and paying income tax is on 28^th In case of lodging the BAS the due dates can be monthly or quarterly and can be different.
4. Due dates for lodging as well as paying relevant territory/state tax is 31^stOctober (gov.au 2019)

1. Under zero based budgeting all expenses for new period are computed based on the actual expenses required to be incurred. Resource allocation is procedure involving allocation and management of assets to meet the entity’s strategic goals. While new item is included in budget it is estimated on the basis of its consumption or usage in past periods (Glass, Stefanova and Prinzivalli 2014).
2. COGS is always reviewed for determine the margin of gross profit as without sales and COGS, gross profit cannot be computed.
3. Total income and total expenses are reviewed in the profit and loss budget setting procedure for determining the net profit margin

1. Audit trail is maintenance of record for system activity. Maintenance of audit trail assures that system resources have not been altered by the insiders, hackers or disgruntled employees (Duncan and Whittington 2016)
2. Variance analysis is critical and shall be reported o he senior decision makers as it assists in managing the budgets through controlling budgeted against actual figures. Further, it helps in highlighting any significant difference that can be investigated and proceeded with accordingly (Taieb and Atiya 2015).
3. Ageing summary for accounts receivable helps in analysing how long a receivable is due for. It is crucial as it helps in identifying the customers those are falling behind the payment date and dues those are likely to become bad debts.

1. Statutory requirements requires the entity to maintain the financial records, to prepare annual financial report and directors report, preparing half-years report, getting the reports audited. It further requires that financial statement shall include financial performance (profit and loss), financial position (balance sheet), cash flows, taxation returns, depreciation schedules, General ledger , General journal , Assets register , Computer backup , Cash records, Bank account statements, bank reconciliations and bank loan documents , Sales/debtor records, Work in progress records , Job/customer files , Stock listings , Creditors records, Correspondence, annual returns and ASIC forms , Wages and superannuation records , Registers, Minutes, Deeds and inter-company transactions(Kwok 2017)
2. Australian taxation office and Australian security and investment commission has developed SBR enabled reporting
3. Regression analysis, scenario analysis and value at risk analysis can be used as risk management tool
4. The ultimate recommendation shall be to reduce the error, mistake, fraud or misstatement of financial statement
5. Internal control is used by the organisation to achieve the organisational objectives.
6. Analysis including eligibility data sheet, eligibility documents, forms and the qualification information and bill of quantities shall be done for providing information for tender or estimate of bid proposal.

1. Monthly financial report includes cash management report, profit and loss report and bigger picture of the company’s financial activities over the month in addition to data geared for developing sustainable improvements and strategies that will increase profitability and foster growth (com.au 2019).
2. The company has audit and risk committee that provide assurance regarding integrity and preparation of reports, internal control and policies used for managing business risk.
3. Internal control checklists for audit generally include payables control, customer billing control, payroll control, cash disbursement, prepaid expenses, deferred charges, shareholder’s equity, intangibles, fixed assets, cash receipts and inventories.

References

afl.com.au. 2019. AFL – News, Fixtures, Scores & Results – AFL.com.au. [online] Available at: https://www.afl.com.au/ [Accessed 31 Oct. 2019].

Ato.gov.au. 2019. Home page. [online] Available at: https://www.ato.gov.au/ [Accessed 31 Oct. 2019].

Bosire, K., 2016. The impact of integrated financial management information system (IFMIS) on financial probity in the public sector in Kenya. University of Nairobi. 

Duncan, R.A.K. and Whittington, M., 2016. Enhancing cloud security and privacy: The power and the weakness of the audit trail. Cloud Computing 2016.

Glass, V., Stefanova, S. and Prinzivalli, J., 2014. Zero-based budgeting: Does it make sense for universal service reform?. Government Information Quarterly, 31(1), pp.84-89.

Kwok, B.K., 2017. Accounting irregularities in financial statements: A definitive guide for litigators, auditors and fraud investigators. Routledge.

Stamford, L., 2015. Accounting: New standard, new opportunities. Company Director, 31(4), p.48.

Taieb, S.B. and Atiya, A.F., 2015. A bias and variance analysis for multistep-ahead time series forecasting. IEEE transactions on neural networks and learning systems, 27(1), pp.62-76.

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