Manage FinancesBSBFIM601 UNIT SUMMARYPhoto by Micheile Henderson on Unsplash • This unit describes the skills and knowledge required to undertakebudgeting, financial forecasting and reporting and to allocate andmanage resources to achieve the required outputs for the businessunit. It includes contributing to financial bids and estimates, allocatingfunds, managing budgets and reporting on financial activity.• It applies to individuals who have managerial responsibilities whichinclude overseeing the management of financial and other resourcesacross a business unit, a series of business units or teams, or anorganisation. It covers all areas of broad financial management. In alarger organisation this work would be supported by specialists infinancial management. ELEMENTSTO COVERPhoto by Micheile Henderson on Unsplash Establish budgets and allocate fundsImplement budgetsPlan for financial management KEY TERMS AND DEFINITIONSFinance: Finance is the study of money and how it is used. Specifically, it deals with the questions of how an individual,company or government acquires the money needed – called capital in the company context.Financial Accounting: Financial accounting is the field of accounting concerned with the summary, analysis and reporting offinancial transactions related to a business. This involves the preparation of financial statements available for public use.Financial Management: Financial management focuses on ratios, equities and debts. It is useful for portfolio management,distribution of dividend, capital raising, hedging and looking after fluctuations in foreign currency and product cycles.Financial Managers: Financial managers are the people who will do research and based on the research, decide what sort ofcapital to obtain in order to fund the company’s assets as well as maximizing the value of the firm for all the stockholders.Financial Data: For a corporation or other large entity, the term “financial data” refers to information on performance in termsof income, expenses, and profits, usually over the course of a full fiscal year.Financial Statements: Financial statements (or financial reports) are formal records of the financial activities and position of abusiness, person, or other entity.KEY TERMS AND DEFINITIONSFinancial Year: is a period of twelve months, used by government, business, and other organizations in order to calculate theirbudgets, profits, and losses.Tax Liabilities: Tax liabilities are current liabilities. Current liabilities are short-term debts you must pay within a year. Generally,you incur short-term liabilities from normal business operations.Financial transactions: A financial transaction is an agreement, or communication, carried out between a buyer and a seller toexchange an asset for payment.Financial viability: is the ability of an entity to continue to achieve its operating objectives and fulfill its mission over the long term.Profit and Loss Statement: The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, andexpenses incurred during a specified period, usually a fiscal quarter or year.Balance Sheet: A balance sheet is a financial statement that reports a company’s assets, liabilities and shareholders’ equity at aspecific point in time and provides a basis for computing rates of return and evaluating its capital structure.KEY TERMS AND DEFINITIONSCash Flow Statement: The cash flow statement, is a financial statement that summarizes the amount of cash and cash equivalententering and leaving a company.Budgeting: A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled andre-evaluated on a periodic basis.Forecasting: is a technique that uses historical data as inputs to make informed estimates that are predictive in determining thedirection of future trends.Statutory requirement: Something, such as official approval, a license, or a permit that is required by law for engaging in a certainactivity (such as land development, mineral or oil exploration, sale of securities).Critical Dates: Important dates to make tax payment, salaries, end of the year reporting etc.BUDGETING AND FORECASTING CONCEPTSBudgetingA company’s budget document is a detailed financial statement that projects expenditures on a monthly,quarterly, or annual basis.By factoring in historical results, management insight, and upcoming internal and external events, budgets letcompanies compare how actual spending stacks up against predictions, thus allowing for more accurateplanning moving forward.ForecastingForecasting is a technique that uses historical data as inputs to make informed estimates that are predictive indetermining the direction of future trends.Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for anupcoming period of time. This is typically based on the projected demand for the goods and services offered.BUDGETING AND FORECASTING CONCEPTSBUDGETING OBJECTIVESProvidestructurePredictCashflowsAllocateresourcesModelscenariosMeasureperformancePROCESS IN BUDGETINGSTAKEHOLDER IN BUDGETING PROCESS• Shareholder• Senior Management• Finance Department• Audit Department• Government Bodies• Financial InstitutesPhoto by Floriane Vita on UnsplashPRINCIPLES OF DOUBLE ENTRY BOOKKEEPINGDouble Entry AccountingThe basic principle of double entry bookkeeping is that there are alwaystwo entries for every transaction.One entry is known as a credit entry and the other a debit entry.The entries are often displayed in ‘T’ accounts:UNDERSTANDING ORGANIZATIONALAND POLICY REQUIREMENTOrganisation Policies and ProceduresA set of policies are principles, rules, and guidelines formulated or adopted by an organization toreach its long-term goals and typically published in a booklet or other form that is widely accessible.Policies and procedures are designed to influence and determine all major decisions and actions, andall activities take place within the boundaries set by them.Procedures are the specific methods employed to express policies in action in day-to-day operationsof the organization.Together, policies and procedures ensure that a point of view held by the governing body of anorganization is translated into steps that result in an outcome compatible with that view.SAMPLE OF BUDGETS AND FORECASTBUDGETING AND FORECASTINGBudgetingBudgeting is a company financial expectation they want to achieve in a time period. Some of the main features of budgeting include:• Estimating income and expenses• Expected Cashflow• Expected Receivable• A budgeted is compared to Actual result to calculate the variancesForecastingForecasting estimates company financial data by examining historical costs. Some of the main features of forecasting include:• Estimating financial requirements• Control cashflow• Measuring plan• Informed and correct management decisionsBUDGETING AND FORECASTINGIN BUSINESS PLANBudgeting in Business PlanSuccessful businesses put their effort to create accurate and attainable budgets as part oftheir business plan and regularly monitor financial performances. When planning businessfuture, we will need to fund our plans. Budgeting is the most effective way to controlcashflow, allowing to invest in new ventures. Budgeting in business planning can give you:• A greater ability to make continuous improvements and anticipate problems• Sound financial information on which to base decisions• Improved clarity and focus• A greater confidence in your decision-makingPhoto by Micheile Henderson on UnsplashBUDGETING AND FORECASTINGIN BUSINESS PLANHow to create budget for business planStep 1: Tally Your Income SourcesStep 2: Determine Fixed CostsStep 3: Include Variable ExpensesStep 4: Predict Fixed CostsPhoto by Helloquence on Unsplash Step 5: Pull It All TogetherBUDGETING AND FORECASTINGIN BUSINESS PLANForecasting in Business PlanBusiness planning or forecasting is a forward-looking view, starting today and going intothe future. The way you come up a credible financial section for your business plan is todemonstrate that it’s realistic. Financial forecasting in Business plan can give you:• It is needed when looking for investment from any financial institutes.• Financial forecast includes your best guesses about the future of your business based on a set ofassumptions about what you expect to happen down the road• It can also help you know how much money you need on hand, called your cash reserve.• A carefully thought-out financial forecast can help guide many of the decisions you make, from hiringnew employees to managing your inventory.BUDGETING AND FORECASTINGIN BUSINESS PLANComponents of Financial Section of a Business Plan• A Sales Forecast• Expense Budget• Projected Cash Flow Statement• Pro forma Income Statement• Estimated Balance Sheet• Breakeven analysisPhoto by Adeolu Eletu on UnsplashOBJECTIVES OF BUDGETS AND FORECASTINGBudgeting Objectives• Provide Structure• Predict Cash Flow• Allocate Resources• Model Scenarios• Measure PerformancesPhoto by Kelly Sikkema on UnsplashOBJECTIVES OF BUDGETS AND FORECASTINGForecasting Objectives• It seeks to provide the means for the expression of its goals and priorities to ensure they are internally consistent.• Forecasts can also help a company identify the assets or debt needed to achieve its goals and priorities.• Forecasting helps a company’s executive management determine where the company is headed.• Calculating the financial impact of those forecasts is where financial modeling comes into play.MASTER BUDGET AND FUTURE PLANNING• The master budget is the aggregation of all lower-level budgets produced by a company’s variousfunctional areas.• It includes budgeted financial statements, a cash forecast, and a financing plan.• The master budget is typically presented in either a monthly or quarterly format, and usually covers acompany’s entire fiscal year.• It explains the company’s strategic direction, how the master budget will assist in accomplishing specificgoals, and the management actions needed to achieve the budget.• A master budget is the central planning tool that a management team uses to direct the activities of acorporation, as well as to judge the performance of its various responsibility centers.MASTER BUDGET AND FUTURE PLANNING Master Budgetincludes:Sales budgetMerchandisepurchases budgetProduction budgetManufacturing budgetSelling budgetAdministrative General andexpense budgetCapital budgetsCash budgetsBudgetedFinancialStatements PURPOSE OF MASTER BUDGETImportantPlanning ToolMeasuresPerformanceInterdivisionCoordinationSTATIC AND FLEXIBLE BUDGETINGStatic Budget• A static budget is generally used as a projection tool for estimating businessexpenses within a given period of time.• Discrepancies resulting from the fluctuating cost of raw materials or initialbudgeting errors appear on a static budget as static budget variance.• When accounting for the end of a production cycle’s actual expenses, the staticbudget variance needs to be combined with the actual initial static budget in orderto achieve accurate financial reporting.STATIC AND FLEXIBLE BUDGETINGFlexible Budgeting• Flexible budgets work well as a performance evaluation tool in conjunction with a static budget andare basically a comprehensive accounting of the static budget’s cost variance.• Flexible budget expenditures can be stymied by offering employee performance incentives directlyrelating to staying on the static budget.• A basic rule of thumb about flexible budgets is that they are a business cycle analysis tool and cannotbe compiled before the end of the business cycle itself.• Analyzing the flexible budget at the end of the business cycle allows management to adjust the nextbusiness cycle’s static budget forecasts to match the changing circumstances of operating costs.ZERO BUDGETZero Based BudgetZero-based budgeting is the method of developing a budget from scratch, or “zerobase”, by examining every cost and expense to see if they are essential to thecompany’s operations without regard to prior years’ activities.ZERO BASED BUDGETINGTYPES OF BUDGETSCapitalBudgetsOperatingBudgetsCashBudgetsSalesBudgetsTYPES OF BUDGETSWholesale andRetail Business BudgetTYPES OF BUDGETSService Industry BudgetTYPES OF BUDGETSManufacturingIndustry BudgetFACTORS AFFECTING BUDGETSRevenuesExpensesMarketConditionsLegislativeChangesBUDGET VARIANCE:CAUSES, ANALYSIS AND TECHNIQUESBudget variance is a periodic measure to calculate the difference betweenbudgeted and actual figures for a particular accounting category.A favorable budget variance refers to positive variances or gains; an unfavorablebudget variance describes negative variance, meaning losses and shortfalls.ExampleAs an example of a budget variance, ABC Company had budgeted $400,000 of selling and administrativeexpenses, and actual expenses are $420,000. Thus, there is an unfavorable budget variance of $20,000.However, the budget used as the baseline for this calculation did not include a scheduled rent increaseof $25,000, so a flaw in the budget caused the variance, rather than any improper management actions.VARIANCE ANALYSISVariance analysis is the quantitative investigation of the differencebetween actual and planned behavior. This analysis is used tomaintain control over a business.For example, if you budget for sales to be $10,000 and actual salesare $8,000, variance analysis yields a difference of $2,000.BUDGET VARIANCE:CAUSES, ANALYSIS AND TECHNIQUESCauses of Budget VarianceThere are three primary causes of budget variance:• Changes in productivity can alter the cost levels.• Change in product design will alter the cost levels.• Investment in new capital and replacement of old equipment can haveimmediate effects on both operating costs and overhead costs.• Changes in hours of working time will have its influence on costs.BUDGET VARIANCE:CAUSES, ANALYSIS AND TECHNIQUESTypes of Variances• Sales Price Variance• Sales Volume Variance• Sales Mix Variance• Sales Quantity Variance• Direct Material Price Variance• Direct Material Usage Variance• Direct Material Mix Variance• Direct Material Yield Variance• Direct Labor Rate Variance• Direct Labor Efficiency Variance• Direct Labor Idle Time Variance• Variable Overhead Spending Variance• Variable Overhead Efficiency Variance• Fixed Overhead Total Variance• Fixed Overhead Spending Variance• Fixed Overhead Volume Capacity & Efficiency VarianceVARIANCE ANALYSISSteps to do Variance AnalysisThe variance reportIdentify Componentsof Cost Items andTheir Variances.Finding VarianceCauses for FixedCostsFinding VarianceCauses for VariableCostsDrawing Conclusions Prescribing SolutionsFINANCIAL FORECASTSFinancial forecast is a process of estimating future financial outcomes fora company. Financial forecasts estimate future income and expenses fora company over a specific period of time such as one year.Furthermore, financial forecasts can use historical accounting and salesdata, external market and economic indicators to predict future financialstatements over a specific period of time.Video – https://www.youtube.com/watch?v=R9CY0GSaZ_AFINANCIAL FORECASTS ESTIMATESThere are four main types of forecasting methods,• Perform financial forecasting• Reporting, and operational metrics tracking• Analyze financial data• Create financial models use to predict future revenues.Photo by Campaign Creators on UnsplashFINANCIAL FORECASTS ESTIMATES• Profit and loss statements• Balance sheets• Burn rate• Other cash• Flow forecastsPhoto by Campaign Creators on UnsplashFEW TIPS TO MAKE FINANCIAL FORECASTSAS ACCURATE AS POSSIBLE• Use multiple scenarios.• Start with expenses• Outline each step in your sales process• Find comparisons• Constantly reassessPhoto by Johan Godínez on UnsplashFINANCIAL RATIOS AND ANALYSIS OFFINANCIAL HEALTHFinancial ratios are relationships determined from a company’s financial informationand used in accounting for comparison purposes and decision making process.Financial Ratio analysis is critical for helping to understand financial statements foridentifying trends over time and for measuring the overall financial state of thebusiness.There are many financial ratios can use to assess the health of the business.Financial ratios offer to companies a way to evaluate their company’s performanceand compare it with other similar businesses in the industry. Ratios measure therelationship between two or more components of financial statements. Theyare used most effectively when results over several periods are compared. At theend, this will effect to the company’s decision-making process.FINANCIAL RATIOS AND ANALYSISOF FINANCIAL HEALTHRATIO ANALYSISRatio AnalysisFinancial ratio analysis is used to help uncover the underlined trends andrelationships contained in information presenting financial statement.These includes are :• Profitability ratio• Liquidity ratio• Operational ratioPhoto by Adeolu Eletu on UnsplashProfitability ratioIt measures the ability of the business to make a profit andincrease in the ratio result is normally viewed as a positive trend.The profitability ratio for analysing the statement of financialperformance are :• Gross profit margin• Net profit margin• Operating profit marginRATIO ANALYSISPhoto by Adeolu Eletu on UnsplashRATIO ANALYSISLiquidity ratioLiquidity ratio are used to assess the capacity of the business to meet its shortterm liability and financial obligation using liquid cash, assets, give a picture ofcompany short term financial position over specific time period.Operational ratioOperational ratio use turnover measures to measure the company’s efficiency in theuse management assets.MANAGING CASH FLOWManaging cash flow will ensure how much money is coming into andgoing out of your business. Further, this will be help to identify howmuch money will be available in future.How to Improve Cash Flow• Collecting receivables• Tightening credit requirements• Increasing sales• Pricing discounts• Securing loansHow to manage cash flow –https://www.youtube.com/watch?v=8F6X6GYKssYCASH FLOW FORECASTSA cash flow forecast is a plan that shows how much money a businessexpects to receive in, and pay out, over a given period of time.• Positive cash flowPositive cash flow will be occur, When the business expects to receive morethan it spends.• Negative cash flowNegative cash flow will be occur, When the business expects to spend morethan it earns.What is cash flow forecasting?https://www.youtube.com/watch?v=MIuAh6iH9ewPROFIT AND LOSS FORECASTSProfit and loss forecast estimates how much moneywill bringing by selling products or services and theprofit you can make from the sales.BALANCE SHEETS FORECASTSThe balance sheet forecast shows a financial snapshot ofthe business at a specific point in time, usually at the endof each accounting year.A balance sheet forecast is important for businesses asit predicts what a business expects to own and what itexpects to owe at a specific future date.ASSUMPTIONS AND PARAMETERSFOR THE FINANCIAL FORECASTINGThere are several assumptions about forecasting:• There is no way to state what the future will be with complete certainty. Regardless ofthe methods that we use there will always be an element of uncertainty until theforecast horizon has come to pass.• There will always be blind spots in forecasts. We cannot, for example, forecastcompletely new technologies for which there are no existing paradigms.• Providing forecasts to policy-makers will help them formulate social policy. The newsocial policy, in turn, will affect the future, thus changing the accuracy of the forecast.ASSUMPTIONS AND PARAMETERSFOR THE FINANCIAL FORECASTINGParameters of Forecasting will be depending on the following:• The context of the forecast• The relevance and availability of historical data• The degree of accuracy desirable• The time period to be forecast• The cost/ benefit (or value) of the forecast to the companyThe time available for making the analysis.Photo by Micheile Henderson on UnsplashFIXED COSTSA fixed cost is a cost that does not change with anincrease or decrease in the amount of goods or servicesproduced or sold.Fixed costs are expenses that have to be paid by acompany, independent of any specific business activities.VARIABLE BUSINESS COSTSA variable cost is a corporate expense that changes inproportion to production output.Variable costs increase or decrease depending on acompany’s production volume; they rise as productionincreases and fall as production decreases.SALES RECORDS AND PROJECTIONS• Sales records means all the books of records and electronic records that can beused as evidence of sale of products. When predicting financial forecast, salesrecords are essential to predict it.• A sales projection is the amount of revenue a company expects to earn at somepoint in the future.***Accurately forecasting sales and building a sales plan can help to avoidunforeseen cash flow problems and manage production, staff and financing needsmore effectively.ANALYSIS OF REAL-LIFE FORECASTS• https://darbyfinance.com/case-study-fpa-services/• https://elantax.com/resources/case-studies/financial-forecasting/• https://blauco.com/2018/03/case-study-using-financial-forecasts-drive-growthprofitability/FINANCIAL RISKS AND CONTINGENCIESDefinition of Financial Risk:Financial risk is a condition when the firms has insufficientfinancial resources and strength to sustain its activities inthe trading market to undertake the commitment for theorganisation or the customers.Photo by Michael Longmire on UnsplashFINANCIAL RISKS AND CONTINGENCIESFinancial Risk TypesFINANCIAL RISKS AND CONTINGENCIESDefinition of ContingencyContingency is a potentially negative future event or circumstances which ispossible but cannot be predicted with certainty.Contingencies example: economic recession, natural disaster, fraudulent activity,or a terrorist attackRisk Contingency: It is a plan to handle a risk if occurs, it does not reduce itsprobability of occurrence but reduce its impacts.FINANCIAL RISKS AND CONTINGENCIESFinancial risk contingencies : It is a course of action undertake in times of financialcrisis which focus on proper allocation of the available financial resources.Steps to plan and execute financial contingency plan:• Consider the potential risks• Create a list of priority resources• Delegate responsibility• Identify the alternative sources of credit• Back up the data• Review and update process regularlySTRATEGIES TO MINIMISE RISKS• Outsourcing of operations to transfer the risk to another organisation• Hedge the investment• Lower each asset type’s risk through diversification• Change asset allocation or rebalancing when necessary• Seeking fund through loans, issues of shares or grants• Reduce the cost of retention by providing proper training anddevelopment to ensure the continuity of the management and theemployeesPhoto by Headway on UnsplashMONITOR FINANCIAL PERFORMANCEFinancial Performance is the process of measuring the resultsof an organisation’s policies and operations in monitory terms.It is medium to measure the organisation’s financial condition inparticular timeframe.Comparison between the similar types of organisation across thesame industryPhoto by Gabrielle Henderson on UnsplashMONITOR FINANCIAL PERFORMANCEMonitoring financial performance creates certainty and confidencein making short and long term decision and leads to a heathierbusiness and faster growth rate.It helps to monitor profitability, cash flow and non-financial factors.Capturing data and evaluating performance can provide thecompetitive edge.There are numbers of ways to monitor financial performance:• Using financial ratios, to assess where the business isunderperforming and judge the effect changes.• Using monitoring figures, to maximise efficiency and minimisewaste which helps the business in long run.Photo by Gabrielle Henderson on UnsplashMONITOR FINANCIAL PERFORMANCESome of KPIs to monitor financial performance are:• Stock turnover- days• Debtors turnover- days• Current ratio• Debt/equity• Interest coverage• Return on investment• Gross profit margin• Breakeven salesPhoto by Gabrielle Henderson on UnsplashMILESTONES AND PERFORMANCE INDICATORSMilestones are tools used to convert businessstrategies and tactics into action.Examples: high priority tasks, checkpoints anddeliveries, hiring staff and signing contracts, etc.It is important parts of business planning whichprovides the opportunity to visualise the company’sfuture and measure the progress.MILESTONES AND PERFORMANCE INDICATORSMilestone that signal positive growth of business:• Having a viable business model• Gaining a positive market response• Achieving and maintaining a positive cash flow• Implementing a scalable marketing strategy• Sustaining business growthMILESTONES AND PERFORMANCE INDICATORSPerformance Indicator is also known as Key performance indicator (KPI).It is an indicator of to measure the progress and obtain the intended result.It create an analytical basis for decision making and help focus attentionon what matters most.KPIs includes setting the targeted goals and tracking the progress againstthe target.MILESTONES AND PERFORMANCE INDICATORSTypes of KPIs:• Process KPIs• Input KPIs• Output KPIs• Leading KPI• Lagging KPI• Outcome KPI• Qualitative KPI• Quantitative KPIMILESTONES AND PERFORMANCE INDICATORSHow to design KPI:• It should be clearly linked to the strategy.• It should provide answer to the most important question.• It should primarily designed to empower employees and provide them with relevantinformation to learn.Some of example of financial KPIs are:• Growth in Revenue• Net Profit Margin• Gross Profit Margin• Operational Cash Flow• Current Accounts Receivables• Inventory TurnoverPRINCIPLES OF BUDGETARY CONTROLBudget is a formal statement of estimated income andexpenditures based on future plans and objectives.Budgetary Control refers to a control technique wherebyactual results are compared with budgets.If any differences (variances) are made the responsibility of keyindividuals who can either exercise control action or revise theoriginal budgets.PRINCIPLES OF BUDGETARY CONTROLPrinciples of Budgetary control:• Manage budgets within clear, credible and predictable limits for fiscal policy• Design the capital budgeting framework in order to meet national developmentneeds in a cost-effective and coherent manner• Ensure that budget documents and data are open, transparent and accessible• Present a comprehensive, accurate and reliable account of the public finances• Actively plan, manage and monitor budget executionPRINCIPLES OF STATISTICAL ANALYSISAND MEASURES OF VARIANCEStatistical analysis means to evaluate models and formulas in an effort to findmathematical relationships between to variables..The purpose of these methods is to take quantitative, or mathematical, data to determinethe correlation between one or more variables or predict the possibility of a future eventoccurring again in similar situations.Variance is the difference between an actual amount and a pre-determined standardamount or the amount budgeted.Variance is means to visualize and understand the data being consider.PRINCIPLES OF STATISTICAL ANALYSISAND MEASURES OF VARIANCEPrinciples:• Helping phase witch is reasonable data collection and amend tostatistical analysis• Design the experiment, survey, or other way to approach theproblem,• Gather the data,• Summarize and analyze the data, and thenPhoto by Campaign Creators on Unsplash • Draw the conclusions and communicate the results.ORGANISATIONAL PROCEDURES AND POLICIESOrganisational procedures and policies is guidelines on how the organisation’swork to be carried out and also how to carryout the decision making processes.It is essential component because it addresses the pertinent issues and ensures thatemployers are consistent in their decision.Some of the policies used in organisation are:• Employee conduct policies• Equal opportunity policies• Attendance and time off policies• Substances abuse policies• Workplace security policiesORGANISATIONAL PROCEDURES AND POLICIESEmployers often provides employees with the handbooks of policies and procedureof organisation which regulates matters such as:• Work health and safety.• Anti-discrimination and equal employment opportunity.• Occupational Health and Safety.• Use of company property.• Use of social media.• Drug and alcohol use.• Employee performance management and disciplinePRINCIPLES AND PRACTICES OFACCRUAL ACCOUNTINGAccrual Accounting recognizes revenues, expenses, gains and losses and therelated increase or decrease in assets and liabilities in the period when theaccounting event occurs.It is a system of accounting in which revenues are recognized when earned andexpenses are recognized when incurred enen in the absence of cash flow.The method follows the matching principle, which says that revenues and expensesshould be recognized in the same period.PRINCIPLES AND PRACTICES OFACCRUAL ACCOUNTINGPrinciple of Accrual Principle:• Real time analysis of expenses and revenues.• Show what work has been completed and not what is to be done in the future• Record and report revenue at the time it is earned or realised by business notwhen the cash transaction is done.Photo by Austin Distel on UnsplashETHICAL CONSIDERATIONS FOR BUDGETARYFORECASTING AND PROJECTIONS:STRENGTH OF ASSUMPTIONS, FORECAST RELIABILITIESEthical consideration :• To combat faking the numbers• Find misappropriation of assets• Beat wrongful disclosure and executive focusing• Creating a chain of commandPhoto by Austin Distel on UnsplashETHICAL CONSIDERATIONS FOR BUDGETARYFORECASTING AND PROJECTIONS:STRENGTH OF ASSUMPTIONS, FORECAST RELIABILITIESStrength of assumption:• Provides control over money• Track the financial goal• Helps in organise the spending• Help Create a Cushion for Unexpected Expenses• Budgeting Makes Talking About Finances Much EasierPhoto by Micheile Henderson on UnsplashPRINCIPLES OF CORPORATE GOVERNANCE• Lay solid foundations for management and oversight• Structure the board to be effective and add value• Instill a culture of acting lawfully, ethically and responsibly• Safeguard the integrity of corporate reports• Make timely and balanced disclosure• Respect the rights of security holders• Recognise and manage risk• Remunerate fairly and responsiblywww.altec.edu.au
