Prepare budgets for planning, control and decision-making using spreadsheets.

LO1 Examine the context and purpose of accounting.

LO4 Prepare budgets for planning, control and decision-making using spreadsheets.

Assignment Brief and Guidance

Scenario and activity:

You have recently joined the firm as a Graduate Trainee attached to their UK SME (Small and Medium Enterprises) Unit, offering accountancy and financial services to businesses that typically have a turnover ranging from £0.5 m to £15 m. As part of your ongoing training, you have been asked to undertake some activities.

Your supervisor, one of the firm’s Key Account Managers, has asked you to prepare a report and memorandum with an accompanying Excel spreadsheet explaining ‘The role of accounting in an organisation’. The report must be written using an academic style covering relevant academic theory, making use of, for example, headings, images and illustrations. Your report should include the following, but is not limited to:

·      the purpose and scope of accounting in complex operating environments

·      a critical evaluation of the accounting function in informing decision making and meeting stakeholder and societal needs and expectations

·      the main branches of accounting and job skillsets and competencies

·      accounting systems and the role of technology in modern-day accounting

·      issues of ethics, regulation and compliance and the extent to which they are constraints or threats to the organisation.

Having completed the report, you have now been asked to work with a hospitality and catering start-up business that your firm has just taken on as a client. The business is particularly in need of support and guidance with budgeting and how it can be used to inform efficient resource allocation and support effective control and decision making.

The founder of the business is investing £100,000 of their own capital and has also secured a business loan of £50,000.

(Note: students are to be provided with raw budget data in spreadsheet format, which

they will then manipulate and model)

You have been asked to prepare a memorandum that includes the following.

·      Production of a 12-month cash budget that makes use of variance analysis to show the impact of the different individual scenarios below:

1. discounting prices by 20 per cent, which in turn increases sales volume per month by 10 per cent

2. increasing the marketing budget by 10 per cent per month, which in turn generates an additional 20 per cent in sales revenue

3. offering suppliers one-month’s trade credit

4. reducing rental/property related costs by 15 per cent per month.

·      An evaluation of the role that budgets play in the effective planning and control of

resources in an organisation such as your client’s. This will include both benefits and any limitations of using budgets and the extent to which they can help identify problems and corrective actions.

·      An outline of a range of budgetary control solutions, with justification, to support

organisation decision making and ensure efficient and effective deployment of resources.