Answer to Question #176912 in Economics for Elorm

Question

Budgeting and Accounting tend to be risky in nature and often subject to significant statutory and other compliance requirement.

Design a checklist that ensures compliance on the statutory requirements.

Note: Your checklist should have three(3) sections;

A) Budgeting and performance

B) Record management and control

C) Auditing and Accountability

Each section should contain at least five (5) questions.

Answer 1

A) Budgeting is the process of planning the future activities of an enterprise, the results of which are documented by a budget system.

Usually, budgets are created as part of operational planning. Based on the strategic goals of the firm, budgets solve the problem of allocating economic resources at the disposal of the organization. The development of budgets provides quantitative certainty to the chosen prospects for the existence of the firm.

The main tasks of budgeting include the following:

providing ongoing planning;

ensuring coordination, cooperation, and communication of the enterprise divisions;

justification of the costs of the enterprise;

creation of a basis for assessing and monitoring enterprise plans;

compliance with the requirements of laws and contracts.

The benefits of high-quality budgeting and control over budgeting are well worth the cost of implementation and development. Of course, a lot depends on the specifics of the enterprise, but even small firms are encouraged to use budgeting (for example, in an abbreviated version).

The introduction of budgeting in an enterprise is faced with two groups of problems: methodological problems and organizational ones. The author's experience proves that, as a rule, the most difficult budgeting stage is the stage of its implementation in the enterprise. Privatized enterprises have inherited vast experience in drafting documents that are unnecessary for an enterprise in a market economy. Therefore, the decision of the top management to introduce budgeting in a new real scale of values ​​is fundamentally important. And from this moment, in essence, serious work begins, the main stages of which are as follows:

study of internal and external documentation of the enterprise, its structure and interaction of divisions, management accounting mechanisms, etc .;

Search for the least painful ways to involve the management team of the enterprise in the budgeting process;

development of a budgeting implementation plan (all further actions will be determined by the implementation plan);

revision of old or development of new internal standards;

creation of an information base for budgeting, providing for the development of new reports for departments close to the specifics of the enterprise;

creation of new or reorganization of old divisions for the implementation of the budgeting process;

development or purchase of software and its installation on the internal network of the enterprise;

training.

B) The main purpose of the internal control of accounting is to ensure that the employees of the financial service comply with the requirements of the current legislation and internal orders, as well as the correctness of reflection in the accounting of current business transactions.

With the correct organization of control, it is possible to avoid material damage in the form of penalties, additional charges, and penalties from the state regulatory authorities.

Principles of internal control of accounting

When organizing the internal control system, it is necessary to rely on several basic principles:

It is necessary to control the work of the accounting department at all management levels and in all divisions of the company without exception;

To carry out control, it is necessary to involve employees who, thanks to their powers and functions, can check the activities of the unit and identify possible errors;

The beneficial effect of internal control should be comparable to the costs of organizing and conducting it at the enterprise.

C) Functional accountability to the board of directors means that the following issues are attributed to the competence of the board of directors:

- approval of the regulation on internal audit (or another document, taking into account the peculiarities of the system of organizing the company's internal documentation), which defines the goals, objectives, powers, and limitations of internal audit;

- approval of the internal audit activity plan and approval of the budget of the internal audit unit;

- receiving information from the head of internal audit on the progress of the implementation of the internal audit activity plan and on the implementation of internal audit (including the results of individual audits (including the results of monitoring the implementation of action plans developed by the heads of audit facilities based on the results of audits), significant shortcomings of the RMS, ICS and CG, a report on internal audit activities for the period, the results of internal and external assessments of the internal audit function and approval of an action plan to improve internal audit); approval of the decision on the appointment and dismissal from office, as well as remuneration of the head of internal audit;

- consideration of significant restrictions on the powers of internal audit or other restrictions that could adversely affect the implementation of internal audit.