Budgeting and Management Reporting 2022
Below please find information about the final assignment for the course. The assignment is to be
handed in as one Excel spreadsheet and one pdf document through itslearning, by the deadline
You have been employed as financial controller from 1.12.2021 of a small family-owned company. In the past there has really been no financial management but now that the founder’s daughter took over as CEO she wants proper procedures and reports. The company has a board of directors with three external board members plus two representatives of the owning family.
The company imports electronic equipment from South Korea and Japan and sells that to distributors.
There are no retail sales of the products directly to customers, but there is a service department selling spare parts online to consumers and repair shops. The company is organized into three divisions:
Audio (2 salespersons), Video (1 salesperson) and Spares (1 salesperson). The purchasing is done by one person and you are in administration. The CEO is also a full-time employee.
Business is going acceptably but there is a slight concern that the brands represented may not be at the spearhead of technology. The CEO is actively looking for new brands to sell, but that is likely to have an effect in 2024, earliest. Liquidity has been poor during the last year.
2. Numerical data
The income statement and balance sheet for 2021 and 2022 (forecast) can be found below. The
company has prepared no operating budget nor any cash flow budgets in the past.
3. The budget
Your first task is to prepare a master budget (operating budget, balance sheet and cash flow budget) for 2022. The budget may of course be partly based on the figures from previous years but all budget numbers and underlying assumptions must be briefly discussed and documented.
Where you lack data for the budget, carry out research and try to come up with sensible numbers that you can explain. Be sure to include recommendations and action points in the documentation, if you come up with any.
4. The proposed financial report
Secondly, prepare a proposal for a financial report for the company, in particular the Board. Prepare a template (a model) of the January 2022 monthly financial report, using January 2022 budget data,
leaving the actual outcomes blank. Remember to include all relevant financial and non-financial
information, but without drowning the reader in details. The report must give the Board all necessary information for evaluating the performance of the company.
5. Grading notes
The assignment gives a maximum of 40 points as follows:
- documented budget assumptions with discussion and explanations 8p
- a sensible and realistic operating budget 8p
- a balance sheet that balances and ties in with the other parts 8p
- a realistic monthly cash flow budget that ties in with the others 8p
- reporting structure and template 8p
Please note that Excels that are incomprehensible (impossible for me to understand) will get no points! Late submissions will get o points.