Essays on Major Assignment Finance And Accounting For Hospitality Businesses Assignment

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Executive SummaryThis study was to identify the importance of formal accounting procedures and auditing, and the reasons to implement them within the organization, by the general manager and the Chairman of the Board. This report involved the discussion and key benefits of developing proper cash handling procedures, cash control procedures, operational & cash flow budgeting and capital budgeting. IntroductionBackgroundThis report has been written because of the several concerns raised by the general manager of the organization concerning, use of his personal credit to fund wage payment of employees due to insufficient funds within the organization’s bank account.

The concerns also include spending large amount of money and resources on new equipment and refurbishing of public areas that goes uncounted and improper expenses management. Objectives The objective of this report is to convince the Board of Management members of the importance of formal accounting processes and procedures within the organization, and why formal accounting procedures should be implemented. The scope This report examines the relevance and importance of formal accounting system in the organization to bring about efficiency and effectiveness of resources allocation and use to ensure proper running of the organization and maximization of profits.

Main body of the report   Due to lack of the proper accounting methods and procedures in the business to account for the day to day operation of the organization, the need to implement and understand these accounting tools within the organization takes centre stage in its financial prosperity and growth. Therefore, this report examined the importance and the reasons why such methods need to be used; these techniques included, cash handling procedures, cash control methods, operational & cash flows budgeting, and capital budgeting.

(Horngren 2002a). Cash handling proceduresDeveloping a proper cash handling within the organization provides a documentation evidence of the money received and transacted; this would help to ensure easy tracking of the income and expenditure of the organization. (Horngren 2002a). The cash handling procedures requires that all the money received be banked, payments not to be made using cash, cash be held in safe places, separation of duties to be effected, preparation and reconciliation of petty cash book with independent records and at regular intervals ensured.

(Horngren 2002b). All the cash received should be properly audited and listed to prevent any case of theft and misconduct. This would be important to ensuring that individuals handling cash have no direct contact to the reconciliation of tills, cash counting to be done in separate protected areas, tills that would not be properly balanced to be reported the responsible offices, and audit should be carried out on a regular mode. This will enhance and ensure that there are no errors encountered during the auditing process, since there would be a clear and effective crosschecking of financial documents.

(Horngren 2002b). Cash control techniquesCash becomes a very critical component of any profit generating business. A business’s assets help to generate income; this further generates cash flows to the businesses, which are used in many ways. The cash flows would then enable the organization to pay its creditors, reward the shareholders, pay the employees’ salaries, and provide capital replacement for growth. The cash control procedures applied in the business include regular bank reconciliation, separation of duties in cash handling, liability of cash shortages, approval of cash payment, and both internal and external audit.

(Hawawini et al 2001). The regular bank reconciliation would ensure that cash generated within the organization is unfailing with the bank records, and an autonomous evaluation of the reconciliation by the board will offer safeguard. In addition, it will check the cash generated to prevent fraud. The separation of roles over cash handling will ensure sufficient handling of cash disbursement and stop cases of cash embezzlement. (Hawawini et al 2001).

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