Question:
Task 1
A.C. 1.1 – Assess the relationship(s) between a financial system/function and other systems/function in
an organisation
A.C. 1.2 – Describe the systems of accounts and financial statements used to control a financial system
A.C. 1.3 – Analyse financial information contained in a set of accounts or financial statements
Task 2
A.C. 2.1 – Construct a budget for an area of management responsibility
A.C. 2.2 – Develop budgetary control systems comparing actuals with planned expenditure
A.C. 2.3 – Discuss corrective actions to be taken in response to budgetary variations
A.C. 2.4 – Identify conflicts that can occur with management control systems and how these could be
resolved or minimised
Task 3
A.C. 3.1 – Define the current and potential sources of finance that support organisational activities
A.C. 3.2 – Evaluate the distribution of finance in support of organisational activities
A.C. 3.3 – Evaluate the monitoring and control of finance employed in support of organisational activities
Solution:
Task 1
A.C. 1.1
Assess the relationship between a financial system/function and other systems/functions in an organization:
Finance constitutes an important part in the functioning of any organization because in order for the organization to make profits, it requires a steady flow of funds to make planned expenditure for delivering products and services which will generate the profit after sale. Therefore, any activities conducted by the other departments in the organization without suitable financial considerations can have a drastic effect. For example, if purchase decides to place bulk orders to avail discounts, but there aren’t sufficient funds, it could affect the relationship with the suppliers, or if the sales team decides to extend credits or discounts in order to increase sales, it will have an effect on cash flow and finance which will not be able to collect when it is needed for the business. The activities of other departments are in turn dictated by the financial system of the organization. For instance, if the finance department has shortage of funds, the sales team might not be able to offer attractive discounts and extended credit for customers, as a result the competitors will have the edge because their offers are more attractive. A shortage of funds can also have an effect on marketing and lead to reduced overall income. In addition, prioritizing projects is very crucial and it could affect the overall strategy of the organization. Hence we observe the two-way dependence where it is important to maintain effective communication between the finance and other departments in order to avoid any issues that might arise.
A.C. 1.2 Describe the systems of accounts and financial statements used to control a financial system:
The following are one of the most important systems of accounts and statements used to control a financial system:
- Profit and Loss Account
Profit and loss account is similar to an income statement. Profit (or loss) can be considered in two ways and both ways give us the same result. It shows the change in wealth of the business over a period. The wealth of the business is the amount it is worth to the owners, the shareholders. The balance sheet includes the total change in wealth accumulated since the………………………………………………………………………………………………………………………………………….Please contact our team to receive guidance, support and tutorial services on this assessment in full customised to your organisation background and expectations levels
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