Answer to Question #176913 in Economics for Emefa

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 budget management, which includes preparing estimates, distributing them, making amendments based on recent changes.

The budget is called the totality of all income and expenses, it is on it that the functioning of the organization depends.

The ability to regulate cash flows is one of the most important for a business since the number of funds that a company can have today without fearing for its position in the future depends on the efficiency of this process.

The goals of organizing a budgeting system at an enterprise are:

assessment of the current state of the company - it is possible to determine the level of the company's efficiency and the need for adjustments;

regular planning of activities taking into account the indicators characterizing the current work of the organization;

approval of plans that allow you to spend more economically and wisely;

efficient use of available resources, that is, allowing you to get maximum profit at minimum costs;

detailed study of the basics of investment activities to generate additional income;

assessment of planned projects in terms of their necessity and profitability for the entire business - each manager of the organization must justify the purpose of implementing his direction;

developing and further strengthening the discipline of the enterprise in general and specifically in financial matters;

working with all levels of the enterprise to get the most out of your business;

providing a detailed analysis of the available costs - their budgeting allows you to spend the saved funds for other purposes;

availability of a proven system for monitoring the execution of tasks by lower levels;

motivation of personnel to obtain high results required by the entire organization;

compliance with established legislation and contractual obligations.

As you understand, the organization of the budgeting process in the enterprise makes it possible to cope with a number of tasks, which means that it plays an essential role for any company. It is advisable in large organizations, where employees of several departments are engaged in this, and their work is coordinated by the management. In the case of small organizations with a small staff of specialists, brief reports from the head himself are sufficient. Such work does not take a lot of time, making the processes faster and more efficient.

B) Internal control in the organization's activities should:

to permeate the entire management system, from the development of strategic plans and the formulation of tactical tasks to control over a specific operation of acquiring, using, and ensuring the safety of any resource and asset;

facilitate the implementation of management decisions, assess their legality and effectiveness, show the real state of affairs in the organization, identify and minimize risks.

Internal controls should not only assess the reliability of the facts of economic life but also prevent illegal events, processes, operations and prevent negative results of the financial and economic activities of an economic entity. Internal control evaluates the reliability of indicators and the timeliness of reporting. It prevents distortion of accounting data and accounting (financial) statements.

C) The chief audit executive should report periodically to senior management and the board on the objectives, authority, and responsibilities of internal audit, and on progress in the implementation of the work plan. The report should also contain information on significant risks and control issues, including risks of fraud, corporate governance issues, and other information required by senior management and the Board.

Ideally, the internal audit function is considered to have dual accountability: functional - to the board of directors, more precisely, its audit committee, and administrative - to the head of the organization or another leader (CFO, controller ...) with the appropriate level of authority in order to ensure day-to-day activities of the internal audit service. It is generally accepted that accountability to the audit committee of the board of directors ensures the independence of the internal audit function.