Vocational scenario

Organisation

A large accountancy firm that undertakes extensive business consultancy work for their client base. They have a central London head office and regional offices in the UK in Birmingham and Southampton. Last year, the group turnover was £200 m with 25 per cent deriving from non-UK markets, principally in Southeast Asia. They have a small regional office in Singapore. The firm also has a policy of taking on smaller niche clients, where they feel there is potential for fast growth.

Role

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.

 Assignment activity and guidance 

Your supervisor, one of the firm’s Key Account Managers, has asked you to prepare a blog that will be used to market and promote its accounting services to new and existing clients. The working title you have been given for the blog is ‘The role of accounting in an organisation’. The blog must be presented as an online blog in an engaging and practical way, covering relevant academic theory, making use of, for example, headings, images and illustrations. Your blog 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 areconstraints or threats to the organisation.

Having completed the first activity, 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.

You have been provided with raw budget data below which you can manipulate and model appropriately.

The cash/bank balance on 1 January is £150,000. Purchases of supplies are estimated to be £3000 paid per month. £25, 000 of equipment is to be paid for in January. Rental costs will be £2000 per month for 9 months and then this will rise to £3000 per month thereafter.

£1000 per month of interest is payable on the secured business loan.

Marketing costs are estimated to be £1000 per month, sales salaries will be £2000 per month and administrative salaries will be £3000 per month. 

Cash receipts from customers of £13000 will begin in March and will remain at this level for the rest of the year. 

A cash dividend of £4000 will be paid in December. 

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

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.