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Eyeglasses for the Poor’s Internal Controls

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Week 3 Discussion 2

Internal Controls

Joy Becket is the director of Eyeglasses for the Poor (EP).  EP receives donations of eyeglasses and recycles them for use by the nearsighted needy around the world.  Sometimes the eyeglass frames are expensive designer frames that can be sold to raise operating funds for the organization.  Joy is concerned that EP’s resources are not adequately safeguarded.  This problem is compounded by the fact that there are relatively few employees so separation of duties is difficult.  She does know that if anything goes wrong (i.e. waste of resources, embezzlement), she will be held responsible.  Therefore, she has called you in as an expert consultant in the area of accountability and control.  She has asked you to recommend specific procedures and policies for enhancing the internal controls for the organization.  Write a one-page memo identifying policies and procedures she should consider adopting.

Reference

Finkler, S. A., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013). Financial management for public, health, and not-for-profit organizations (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Sample paper

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Eyeglasses for the Poor’s Internal Controls

Name

Institution

Course

Date

It is mandatory for every serious organization to have internal control policies and procedures written down to safeguard the organizations interest. Internal controls are well-stated financial management practices which organizations use to prevent misuse and misappropriation of its assets which may occur through theft or embezzlement. Eyeglasses for the poor should put in place a policy that requires more than one person to sign for the receivables from the donors; this will make it very difficult to steal from the organization because if a loss occurs then the signatories will be held accountable. It is also essential to conduct fixed asset inventory annually so as to reconcile the assets on the ground and those in the books which is a good way to keep track of the inventory moving in and those moving out (Finkler et al., 2013).

Management should encourage reporting of any suspected wrongdoing by ensuring that they protect whistleblowers by bringing in legal counsel from outside the organization. There are other employees who will not feel comfortable doing so if they feel that their job will be at risk so it’s the duty of the management to put an anonymous report system to encourage that. A compliance program is another way to prevent theft and embezzlement, having a code of ethics governing the organization and communicate the same to the employees. Having an idea of what is allowed and what is not allowed is a good start for employee’s discipline. Detecting fraud is not an easy task and often entails bringing in experts to do a forensic audit on a regular basis to identify loop holes that might be used to embezzle the organization’s funds (Finkler et al., 2013).  The auditors will also educate both the employees and the management on the best internal control methods. However there are still instances when theft and embezzlement might occur but the above methods will greatly reduce the chances of them happening.

 

References

Finkler, S. A., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013). Financial management for             public, health, and not-for-profit organizations (4th ed.). Upper Saddle River, NJ: Pearson             Prentice Hall.

 

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Investment Decision

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Investment Decision Sample paperInvestment Decision Sample paper

 

Name

Instructor

Course name and number

Date

 

Table 1.1 Excel table showing the NPV and IRR

 

The net present value expected from the investment amounts to $161,816.27. The net present value gives the projected difference in present value of cash inflows, and the expected present value of cash outflows (Maher, Stickney, & Weil, 2012). If the figure of the net present value obtained is positive, then this is an indication that projected earnings associated with a project exceed the projected costs of the same. The net present value concept dictates that firms should only invest in those projects that give positive net present values. From the analysis, Duncombe Village Course should purchase the new equipment since there will be positive returns from the investment. From the analysis, it is possible to determine the profitability index. The profitability index of the investment can be obtained by dividing the obtained figure of the present value of inflows by the initial cost of the investment. From the analysis, the profitability index is 0.13. This means that for every dollar invested in the project yields an additional $0.13 in present value inflows.

It is also important to consider the internal rate of return expected from the project. The internal rate of return (IRR) is defined as the return rate that when applied to a particular project makes the net present value of the cash flows equal to zero (Maher, Stickney, & Weil, 2012). The IRR is also a good measure of profitability. From the excel analysis, the IRR is 14%, using a value of 0.10. The IRR obtained is more than the cost of capital. This means that investment in the project will be profitable. Duncombe Village Course will thus derive benefits from investing the purchase of new equipment.

 

References

Maher, M. W., Stickney, C. P., Weil, R. M. (2012). Managerial accounting: An introduction to    concepts, methods and uses. Boston: Cengage Learning.

 

Week 2  Discussion 2 Investment Decision

Analyze the following scenario:

Duncombe Village Golf Course is considering the purchase of new equipment that will cost $1,200,000 if purchased today and will generate the following cash disbursements and receipts.  Should Duncombe pursue the investment if the cost of capital is 8 percent?  Why?  Clearly label your calculations in your analysis.

Year Cash Receipts Cash Disbursements Net Cash Flow
1 1,000,000 500,000 500,000
2 925,000 475,000 450,000
3 800,000 450,000 350,000
4 750,000 430,000 320,000

 

 

 

 

The calculations must be completed in Excel, and accompanied by a separate 250 word narrative explanation.

 

Text reference:

 

Finkler, S. A., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013) Financial management for public, health, and not-for-profit organizations (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

 

 

This tasking requires the computation be completed in Excel, and accompanied by a 250 word narrative explanation. Clearly label the calculation. Accordingly, I am paying for two sheets. This must be received not later than May 24, 2016

Public administration-Allocation of Costs

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Week 2

Discussion 1

Allocation of Costs

Analyze the following scenario:

Jump Hospital currently allocates all maintenance  department costs based on departmental square feet.  However, the manager of the pharmacy department has suggested that an ABC approach be used for the portion of the maintenance department costs that relate to repairing equipment.  Her contention is that the pharmacy has relatively little equipment that breaks.  However, it must subsidize many high-tech departments that require expensive equipment repairs.  Using the tables below, calculate the maintenance cost assigned to the pharmacy using the existing method and using an ABC approach.  Clearly label your calculations in your analysis.

Maintenance Costs
Routine Maintenance Repairs Total
Volume (Square Feet) 100,000 800
Labor Hours 10,000 4000 14,000
Labor Cost/Hour $12.00 $18.00 $13.71
Supplies $20,000 $80,000 $100,000
Administration $15,000

 

 

Department Information
Pharmacy All Other Departments Total
Square Feet 2,000 98,000 100,000
Volume of Repairs 3 797 800
Hours of Repairs 6 3,994 4,000
Supplies Used for Repairs $200 $79,800 $80,000

 

 

 

The calculations must be completed in Excel, and accompanied by a separate 250 word narrative explanation.

 

Text reference:

 

Finkler, S. A., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013) Financial management for public, health, and not-for-profit organizations (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Sample paper

PUBLIC ADMINISTRATION

Students Name

Institution Affiliation

 

According to Isai, V. et al. (2014), cost allocation refers to the assignment of a shared cost to numerous cost objects. The cost allocation or spreading the cost can range from departmental rates to plant-wide rates, from machine hours to direct labor hours. Lastly, the allocation of costs can use activity based costing as a method of spreading the costs. According to Finkler, S. A. et al. (2013), The Activity Based Approach (ABC) allocates manufacturing overheads in a more logical manner compared to the traditional approach. The main objective of the cost allocation is to assign the costs based on the root causes of the mutual costs instead of simply disseminating the costs.

Jump Hospital presently apportions all maintenance department costs on the basis of departmental square feet.  However, there is a suggestion by the manager of the pharmacy department to use the ABC approach for the apportionment of the maintenance department costs relating to the repairing of the equipment (Hughes, M. 2016).  Her argument is that the pharmacy has comparatively diminutive paraphernalia that breaks.  Nevertheless, it must endow many advanced departments that necessitate exclusive equipment repairs.  This paper calculates the maintenance cost allocated to the pharmacy using the existing or traditional method and using an ABC approach.

In the traditional approach, Jump Hospital allocates costs on departmental square feet. The total overheads amounts to $ 115, 000 and its total allocation to the pharmacy department is $2,300. However, the proposal to change to an ABC approach that allocates costs on repairing of equipment will raise the allocation to $ 2,875. The excel sheet shows the calculations using both the methods.

 

References

Finkler, S. A., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013) Financial management for public, health, and not-for-profit organizations (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Hughes, M. (2016). The Simple Analytics of Matrix Accounting, Activity‐Based Costing, and Linear Programming. Journal of Corporate Accounting & Finance, 27(3), 31-37.

Isai, V., Radu, R. I., & Ionescu, C. (2014). A Study on the ABC Approach in Cost Management Practice. Risk in Contemporary Economy, 346-351.

 

Traditional Methods
Maintenance Overheads
Supplies 100,000
Administration 15,000
Total Overheads 115,000
Supplies Allocation 2,000/100,000*100,000 2,000
Administration Cost Allocation 2,000/100,000*15,000 300
Total Allocation 2,300
ABC Approach
Maintenance Overheads
Supplies 100,000
Administration 15,000
Total Overheads 115,000
Supplies Allocation 2,000/80,000*100000 2,500
Administration Cost Allocation 2,000/80,000*15,000 375
Total Allocation 2,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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