Financial Pressure, Opportunity, And Rationalization: 2.Esta ✓ Solved

Financial Pressure, Opportunity, and Rationalization. 2.Establishm

Financial Pressure, Opportunity, and Rationalization. Establishment of responsibility indicates assigned and authorized responsibility to specific employees to handle cash receipts. For example, Cashier. Segregation of duties indicates separate having custody of assets, authorization of assets, and recordkeeping of assets conducted by different individuals. For example, Accounting Employee A maintains cash balance per books and Assistant Cashier B maintains custody of cash on hand.

Documentation procedures indicate all prenumbered documents should be accounted for. Then, forward source documents for accounting entries to the accounting department. For example, Deposit slips. Physical controls are related to safeguarding of assets, and enhance the accuracy and reliability of the accounting records. For example, Safes.

Independent internal verification indicates the review of data is verified by an employee who is independent, and any discrepancies should be reported to the treasurer. For example, Assistant treasurer. Human resource controls are bond employees who handle cash, rotate employees’ duties and require vacations, also conduct background checks. Limitations of internal control are human element, collusion, and size of the business.

Preparing a bank reconciliation: Step 1: Deposits in transit (+) Step 2: Outstanding checks (-) Step 3: Bank errors (+/-) Apr.30 Cash(Debit) 1035 Accounts receivable(Credit) 1035 Apr.30 Cash(Debit) 36 Account payable—Andrea company(Credit) 36 Apr.30 Accounts receivable—J.R. Baron(Debit) 425.60 Cash(Credit) 425.60 Apr.30 Bank charge expense(Debit) 150 Cash(Credit) . Cash reported in balance sheet and statement of cash flow. Restricted cash is for a specific purpose, such as bank loan requirement or paying off debt, so it’s not available to spend or for general business use. This will appear on the balance sheet as other restricted cash or other assets. If it’s short-term, it will be classified as current assets. If it’s long-term, it will be classified as non-current assets. Negative cash balance is when the cash account in a company’s general ledger has a credit balance. In this case, a negative cash balance will be reported as a current liability in the balance sheet.

First, increase the speed of receivables collection. Second, keep inventory levels low. Third, monitor payment of liabilities. Fourth, plan the timing of major expenditures. Lastly, invest idle cash. CASE ANALYSES (3 pages maximum): Students are to use the Case Analysis Outline – suggested format - in the syllabus (see below) to review each assigned case.

Case Analysis Outline - Suggested Format: (a) Overview of major issues - describe the challenges/problems/issues outlined in the case. This section should be clear and succinct. You can make use of bullet points to describe the issues. (b) Applications of key themes - elaborate what you have learned from the assigned case by directly relating/connecting the case to concepts and themes described in the different chapters. (c) Analysis Situational Analysis External Environmental Analysis (Outside of the organization) Economic, Social, Political, Technological opportunities and challenges Internal Environmental Analysis (Specific to the organization) Organization’s internal strengths, weaknesses, opportunities, and external threats Describe the firm’s product, pricing, distribution/place, and promotion strategy (if applicable) Market Analysis Description of the target market including primary customers/target market In analysis, you can also put down your own thoughts and opinions about the issues/challenges described in the case. You can bring in outside information (such as the latest news, articles, references to any calculations, charts, diagrams or graphs*). If applicable, you can also answer any questions at the end of each case. These questions can also be used as a guide to develop the other sections of your case summary/write-up. (d) Recommendations Development and Evaluation of Strategic Alternatives, Recommendation of the better Alternative, Implementation Techniques for Recommended Alternative (How, when, where, why). Please note: If any of the above outline points are not applicable to your case, you can skip those points in your case write-up.

Paper For Above Instructions

In the financial world, organizations often face various pressures that can lead to opportunities as well as rationalizations of financial behavior. Understanding how these three elements interact is crucial for the establishment of sound financial practices.

Overview of Major Issues

Organizations encounter several financial challenges, such as:

• Pressure to meet revenue targets.
• Opportunities for cost-cutting in tough economic climates.
• Rationalization of poor financial practices due to intense competition.

Applications of Key Themes

The case outlines the significance of responsible management in handling cash transactions through the establishment of clear responsibilities. Financial pressures can significantly affect a company’s employees' ethical decisions. For instance, if a cashier faces heightened pressure to meet sales goals, they may be tempted to ignore or falsify records to show improved performance. This highlights the importance of a system of checks and balances, including segregation of duties which helps mitigate such risks (Arens, et al., 2019).

Situational Analysis

External Environmental Analysis

The economic context in which an organization operates can significantly influence its financial health. For example, during economic downturns, companies may face reduced revenues while still having fixed costs. These financial pressures might lead management to resort to unethical practices to maintain liquidity (Baker et al., 2017).

Internal Environment Analysis

Internally, a company’s strengths may include a strong brand reputation, while weaknesses may consist of inefficient cash flow management. Opportunities arise from technological advancements that can streamline financial processes, while threats can stem from regulatory changes that might impact compliance (Raghunandan & Rama, 2018).

Market Analysis

Understanding the target market is crucial as it helps in tailoring financial strategies. For instance, a company that sells luxury goods may have more leeway in pricing strategies, where consumers are less sensitive to minor price fluctuations. Knowing these dynamics enables better planning and execution of financial activities (Kotler & Keller, 2016).

Recommendations

To improve financial management and mitigate risks associated with financial pressures, several actionable recommendations include:

• Implementing comprehensive training programs on ethical standards to help employees resist financial pressures.
• Regular audits and independent internal verification to ensure compliance with financial regulations.
• Improving cash flow management practices, such as closely monitoring receivables and payables to maintain a healthy balance (Higgins, 2018).

Conclusion

In conclusion, understanding the interplay of financial pressure, opportunities, and rationalization is essential for organizations to manage their resources effectively and ethically. By establishing strong internal controls and promoting a culture of integrity, organizations can better navigate the challenges of the financial landscape.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2019). Auditing and Assurance Services: An Integrated Approach. Pearson.
• Baker, H. K., & Powell, G. E. (2017). Understanding Financial Management: A Practical Guide. Routledge.
• Higgins, R. C. (2018). Analysis for Financial Management. McGraw-Hill Education.
• Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson.
• Raghunandan, K., & Rama, D. V. (2018). Auditing: A Business Risk Approach. Cengage Learning.
• Libby, T., & Libby, P. A. (2018). Financial Accounting. McGraw-Hill Education.
• Messier, W. F., & Ragas, S. (2017). Auditing and Assurance Services. Cengage Learning.
• White, G. I., Sondhi, A. J., & Fried, D. (2014). The Analysis and Use of Financial Statements. Wiley.
• Revsine, L., Collins, D., & Johnston, S. (2016). Financial Reporting and Analysis. Pearson.
• Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.