Board of directors
Fly Me High Travels International
Subject: To assist them in taking the decision regarding the expansion of the business
The budget will comprise of the total income that has been earned through the sales and expense that will comprise of the advertising and other related expenses that have been incurred in relation thereto. The budget outcomes will depict that the opening cash balance at the beginning of the month is $ 15000. The sales have been recorded at the increases of 10 percent in the end of the month. The online sales have been faced with the increase of 15 percent in the end of the month. The expenses related to the advertising will remain the same. The ending cash balance has been recorded negative during the month of February to June. The company will not able to achieve its key performance indicators as shown in the budget. During the month of February, the company will not have enough cash to pay out its expenses that depict the poor performance of the company. The total cash flow generated at the half month year end will amount to $ 251, 479 which is in negative and shows the poor financial condition of the Fly Me High Travels International. The company needs to adopt the strategies that will result in increasing its income by way of sales and try to reduce the expenses (Trapeznikov and Saligrama, 2013). In the given case, the company has been paying accounting and legal fees which depict that certain penalty has been paid by the company which depicts that it does not follow the ATO requirements. In order to meet out with the requirements of the ATO, it needs to file certain documents with ATO within the stipulated time period. In order to improve the financial position, the company needs to lower down the expense and generate another source of income which will help in the generation of the revenue. The records that need to keep for the five years will include accurate and accessible accounting standards which will explain the transactions that will affect the financial position of the company. The operating financial statement needs to file and the copies that may relate with the annual budget.
a.) The budgeted performance of the Fly Me High Travels International depicts that there has been the major difference in the actual and budgeted profit. The comparison of the actual and budgeted results must be made for controlling the performance. In the given figure, it has been depicting that budgeted results and the actual results are the difference that depicts that operations are conducted in the required manner. Reasons for improving the performance must be analyzed and then it needs to be followed in the future planning. The budget will depict that the performance of the company has been deteriorated. The total cash balance at the month end is $ 8,765 in the month of Jan which has been decreased to $-5,523 in the month of Feb, -$30,283 in the month of March, $ -58,550 in the April, $-71,756 in the month of May and then $-94,132 in the month of June that clearly depicts the poor performance of the company due to increasing expenses.
b.) Corporate governance has been considered as the global concept and has been considered as the interesting perspective to taken into consideration the characteristics of the human. It will include the parameters and the extent to which the corporations will minimize the obligations related to tax. It will also include how the government reconciles their needs with the global needs and how the industries will report with respect to the environmental responsibility. It covers the aspects related with the legal accounting standards that the organization needs to follow upon (Agrawal and Cooper, 2017).
c.) The business can improve the internal control procedures through creating a controlled environment that needs to be managed through the assistance of the communication. Risk assessment areas need to be identified and then control procedures need to opt for creating the more reliable budgets. Preventive control activities majorly aim to detect the chances for the fraud. Communication must be done on the regular basis for the purpose of ensuring the compliance requirements.
The board of directors
Fly Me High Travels International
The results from the budget depict that financial performance of the company which has been deteriorated. The expenses are higher than the total income that depicts that there is need to perform some management action. Corporate scandals have occurred when the necessary operations will not be performed. Companies need to improve the corporate governance and in the absence of the proper corporate governance, they need to suffer from the financial, legal and the reputation harm. If the risky accounting policies have been followed that it will result in affecting the interest of the stakeholders involved. The members must be provided with the accurate responsibility for asking the questions that may relate to the subject matter and if any query possessed by them. In order to remove the cultural differences, there is need to think in relation to the attitudes, ideas, and beliefs for understanding the other cultures. The following techniques must be used for considering the cultural differences and making under stable to the International office. The different ways of writing must be used, defining the roles and responsibilities in relation to the male and female that has been defined by various cultural boundaries (Claessens and Yurtoglu, 2013).
What are the five statutory and other regulatory requirements relating to corporate governance in accounting?
If the business operates in the environment, it needs to comply out with the various practices that will result in establishing the base for the growth.
• Accounting has been considered as the major tool in the corporate governance. Better decisions can be made with the help of the honest accounting. Corporate decisions will be made after proper planning.
• Proper accounting will help the corporations to meet out their statutory obligations that would comprise the ability to pay taxes.
• Corporation is most accountable in respect to the shareholders which depict those shareholders to assist in taking the decisions.
• It helps in the long term planning and helps the leaders and the managers to take financial action (Mu, et. al., 2015).
• Proper records related with the employee need to be kept so that it will help in planning the future.
a) How do you ensure you are up to date on professional and legal accounting standards for any organization?
If you are paying tax on the regular basis and comply with all the relevant standards applicable to the organization in a timely manner without any having any fault then it has been concluded that you are up to date on professional and legal accounting standards. If you are holding any of the professional qualification, then you have to conduct the work in the required manner.
b) Why is it important to apply accounting standards in the context of corporate governance in Australia?
The ASX corporate governance considers that most of the listed company will get the benefit through removing the duplications and then overlap the in between the principals and the corporation acts in the accounting standard. In accordance with the ASX Council, principles need to be amended which would signify that the listed company (Mu, et. al., 2015).
Determine three statutory reporting requirements for companies in Australia.
• The companies need to keep their financial records for the purpose of ensuring that their operations are conducted in an ethical manner.
• The second reporting requirements state that companies are required to lodge the report that contains the substantial amount of the money. The exemption will include that the company needs to lodge the financial reports if they had already filed the financial reports with the ASX, NSX.
• The financial report that has been prepared as per the requirements of the corporation act 2001 and they need to comply out with the accounting standards section 296 (Agrawal and Cooper, 2017).
The board of directors of an organization has a concern about the internal control procedures. Why should these procedures be analyzed and monitored in order to ensure compliance with corporate governance requirements?
Corporate governance comprises of the relationship in among the management of the company, it shares holders and other stakeholders that are involved in any organization. If the organization would suffer from the consequences related to the problem of the internal control failure, then the chances for the attainment of its objectives would be reduced. The internet control procedure majorly focuses on promoting the efficiency and ensures the financial statements are prepared in accordance with the laws and regulatory requirements. The board of the directors of the public companies needs to disclose about the assessment related to the effectiveness of the internal control system. The unmonitored controls tend to reduce the time. The organization will be benefitted by identifying the internal control procedures that need to be followed on the timely basis (Brown, et. al., 2014).
Explain why an internal audit is useful in an organization and how audit reports, assessments and recommendations can help improve Corporate Governance processes and objectives.
Internal audit is considered as the independent approach that has been designed for the purpose of achieving the operations of the organizations. It assists in achieving the aims through the systematic and disciplined approach which will help in enhancing the efficiency of the risk management and improve the governance process. The role of the internal audit majorly focuses on the creating value for the organization and then assists in providing the suggestion and improvements related with the corporate governance system of the organization concerned. The expectations of the shareholder that is related to the function of the internal audit would be required for assessing and then making the recommendations for the purpose of enhancing the Corporate Governance processes and objectives. The audit report has been prepared after conducting the audit that will prevent the business from the unauthorized actions that have been reported from being swept (Tricker and Tricker, 2015).
Evaluate the role of Australian Securities Exchange (ASX) in assisting corporate governance in Australia?
Australian Securities Exchange (AXN) will engage in framing a number of policies and the procedures for the purpose of carrying out the operations of the business in an ethical manner. The AXN corporate governance council has been established and their major purpose is to develop the principles and recommendations of the practices related to corporate governance (Cheng, et. al., 2013).
How would you explain the Ethical Corporate Governance concept and how can the board members of an organization demonstrate that they are committed to ethical standards?
The ethical behavior that has been existing in the corporate governance demands the two level analysis that signifies the concerns that may relate with the corporate governance and the effects it would create the society. Ethical corporate governance would consist of the rules and practices through which an organization is controlled. The board of directors demonstrate with the assistance of the directives, actions and analyze the importance of the ethical behavior for supporting the functions related to the internal control. They will adhere to the ethical standards for the purpose of evaluating the performance of the persons (Basu and Forbes, 2014).
Briefly, explain the importance of keeping employee records by organizations with few practical examples.
Keeping an exact record of the employees will help the organization in the process of the recruitment, assist in the identification of the required skills and safeguard the time that has been involved in performing the administrative duties. Keeping better records will help in the physical as well as financial transactions associated with it. For example The record keeping of the employee will help in the preparation of the tax returns that need to be filed. The information can be further used in planning the requirements in the future (Jex and Britt, 2014).
a) Research on the Australian Accounting Standards Board website (http://www.aasb.gov.au/), according to AASB 116, for the disclosure requirements on depreciating assets.
b) Determine the two common methods of Depreciation of depreciating assets, the useful lives or the depreciation rates used for Office Computer, Motor Vehicle, and Office Furniture.
a.) The depreciation that has been charged in relation to any period need to be recognized in the profit and loss account until it has to be included as the carrying amount of the another asset. The depreciating amount related to the asset needs to be relocated over the basis till the useful life of the asset (Lain, et. al., 2014).
b.) The two common methods that have been used for the purpose of calculating the depreciation on the assets are straight line depreciation method and diminishing value method. The office computer useful life has been 4 years at the straight line method at the rate of 25%. Motor vehicle having the mass more than 3.5 has a useful life of 15 years and the rate is 6.67%. Office furniture that will include chairs having life around 10 years and the rate is 10.00%.
An organization has just received a Qualified Auditor report. Auditors have reported the contravention about the director’s superannuation not being paid for the past 2 years. Prepare a list of suggestions to management to rectify this contravention; your answer should focus on the rectification to the internal control system to prevent this contravention in future.
It needs to be rectified by appointing a person that will undertake the action for the rectifying the contravention within the specified time involved and need to provide evidence in relation to the compliances (Mihaylov, et. al., 2015). If the individual fails to comply out with the required direction, then strict liability will be imposed on him. It will also result in attracting tax penalty over the fund that has not been paid. Audits and related verification in respect of the superannuation will have to be performed in a timely manner under the control conditions for prevention this type of contravention in the future through establishing efficient and effective internal control systems (Klettner, et. al., 2016).
a) Explain three major Performance indicators that can be used as a benchmark for Corporate Governance Compliance requirements.
The three major performance indicators will comprise of the following:
• Monitoring the investment
• Monitoring the adoption
• Monitoring health
b) Review and assess performance indicators in terms of investments in Research & Development areas of an organization.
Monitoring investment: The investment must be done if it is making multiple sources of the incomes and there is the need for monitoring the investments are done in the right direction.
Monitoring adoption: The activity must be checked that whether it is going as per the planned level and trends need to be examined on the regular basis.
Monitoring the health: The trend will not give much importance when an activity has been established. The focus can be majorly shifted as per the benchmarking activity that will result in strengthening the activity level (Crane and Matten, 2016).
Make a plan for submitting the following reports according to the Australian Taxation Office requirements:-
Analyse the following situation and comment if they need to pay GST or not. Tom is a plumber who is registered for GST. He installs a new spa for Jerry, an electrician. Jerry is also registered for GST and wires Tom’s new shed as payment for installing the spa. They are providing some services and are registered under the GST. Therefore they need to pay for the GST (May 2016).
• Agrawal, A., & Cooper, T. (2017). Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance, 7(01), 1650014.
• Basu, A. K., & Forbes, B. (2014). Does fundamental indexation lead to better risk‐adjusted returns? New evidence from Australian Securities Exchange. Accounting & Finance, 54(3), 699-728.
• Brown, P., Preiato, J., & Tarca, A. (2014). Measuring country differences in enforcement of accounting standards: An audit and enforcement proxy. Journal of Business Finance & Accounting, 41(1-2), 1-52.
• Cheng, M., Dhaliwal, D., & Zhang, Y. (2013). Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting?. Journal of Accounting and Economics, 56(1), 1-18.
• Claessens, S., & Yurtoglu, B. B. (2013). Corporate governance in emerging markets: A survey. Emerging markets review, 15, 1-33.
• Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
• Jex, S. M., & Britt, T. W. (2014). Organizational psychology: A scientist-practitioner approach. John Wiley & Sons.
• Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), 145-165.
• Laing, G. K., & Perrin, R. W. (2014). Deconstructing an accounting paradigm shift: AASB 116 non-current asset measurement models. International Journal of Critical Accounting, 6(5-6), 509-519.
• May, S. (2016). Applying the GST to imported digital products and services: Problems and solutions. Tax Specialist, 19(3), 110.
• Mihaylov, G., Tretola, J., Yawson, A., & Zurbruegg, R. (2015). Tax compliance behaviour in Australian self-managed superannuation funds.
• Mu, Y., Kitayama, S., Han, S., & Gelfand, M. J. (2015). How culture gets embrained: Cultural differences in event-related potentials of social norm violations. Proceedings of the National Academy of Sciences, 112(50), 15348-15353.
• Trapeznikov, K., & Saligrama, V. (2013, April). Supervised sequential classification under budget constraints. In Artificial Intelligence and Statistics(pp. 581-589).
• Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and practices. Oxford University Press, USA.
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