You were recently hired as Management Director of the new I Can Business Incorporated (ICBI). You...

Question

You were recently hired as Management Director of the new I Can Business Incorporated (ICBI). You
have been asked to establish policies and systems for the business. The first one you choose to work on
is a financial reporting system.
For this assignment, you must develop a 4–5-page memo that you will deliver to the ICBI Board of
Directors. You will describe what a financial reporting system is and explain how the management team
at ICBI should use an activity-based budget instead of an operating budget. Be sure to explain the
similarities and the differences of the two. Finally, give examples of budget guidelines for ICBI. You must
answer the following:
• Describe the meaning and the components of a financial reporting system.
• Explain the budget process.
• Describe a budget contingency plan.
• Give an example of financial guidelines that ICBI should follow to successfully plan for finance
management.
o Identify and describe at least 5 basic financial guidelines.

budgeting-week-3-cl143lix-ja4tj1qc.pdf

Sumit · Accepted Answer

Memorandum
TO: Board of Directors
FROM: Managing Director
CC:
DATE:
SUBJECT: Financial Reporting System
A company is established with the objective of earning profits for its shareholders. The profits are earned by the company by entering into transactions. Hence it is important to record the transactions accurately and fairly in the books of accounts of the company. The Financial Reporting System is the system by which the company prepares its financial reports. The Financial Reporting System helps to standardize the accounting procedure in the company so that the financial reports are prepared accurately and Fairly. The Financial reporting system helps to communicate the result of the company to its various stakeholders so that their confidence on the reporting practices is enhanced. Establishing proper Financial Reporting Systems enhances the credibility of the company and the reduce the probability of fraud and non-compliance of the laws of the land. Thus, it helps to reduce the uncertainty surrounding the company.
The Various components of the financial reporting system are:
(a). Financial Statements: The financial statements consist of a Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of Changes in Stock Holders Equity and notes to the financial statement.
(b). Annual Reports: The Annual reports are issued by the company to convey the annual performance and operational performance to the stakeholders of the company. The Annual report when issued for a quarter is known as Quarterly report and when issued for the entire year is known as Annual Report.
(c). Prospectus: Prospectus can be defined as the legal document through which the company sells its securities (Shares, debentures or bonds) in the market to the potential investors of the company.

You were recently hired as Management Director of the new I Can Business Incorporated (ICBI). You have been asked to establish policies and systems for the business. The first one you choose to work...

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