Financial Management: Greater Manchester Fire and Rescue Authority - Case Study Example

Manchester Fire & Rescue Services ] Budget Proposal for 2011 and the impact cut on certain expenses will have on the planning process and delivery of fire fighting services. Content Introduction 3 Consideration for FRS 3 Characteristics of FRS 5 Risk Involved 6 Risk Considered 8 Impact of reduction of expenses 10 Opinion 13 Conclusion 13 References 14 Introduction Finance is the life blood of every organization. Businesses all around the world take special caution and have a special department which looks into the financial management aspect. This helps to ensure that the strategies crafted on the basis of the financial activities pay rich dividend as the department looks into all the aspect while taking decision. Greater Manchester Fire and Rescue Authority needs to look at financial management and ensure that strategies are drawn after looking at the inflows and outflows after careful planning. (Financial Management, 2011) Greater Manchester Fire and Rescue Authority which is looking towards cutting down certain expenses needs to weigh the benefits against the cost and based on it take steps so that the rescue operations don’t gets affected. Greater Manchester Fire and Rescue Authority needs to consider the different risk which might arise due to cut in the budget proposal and the long term effect it could have on their operations. They need to look at the manner cutting down cost will get absorbed in the management process and the manner it will help to improve efficiency so that they are able to save more lives and ensure a steady supply of equipments and technology with the stated cut. Consideration for Fire & Rescue Services Greater Manchester Fire and Rescue Authority needs to consider various factors while considering the cut in the budgeted figures. They need to ensure that it will help to improve the efficiency and ensure that they comply with the rules and regulations. This will develop Greater Manchester Fire and Rescue Authority and enable them to serve better. The factors looked after by Greater Manchester Fire and Rescue Authority is as follows Greater Manchester Fire and Rescue Authority looks forward to comply with the code and practices so that the rules are adhered to and cutting down expenses will not have an impact on the general outlay of rules. (Website, 2011) Greater Manchester Fire and Rescue Authority has ensured a operational boundary of over 5% so that if the planning goes haywire then steps could be taken to accommodate those without affecting the financial planning process. (Website, 2011) This should be ensured and reducing the expenses by 5% will help Greater Manchester Fire and Rescue Authority to ensure that the boundary limits are easily adhered to. Greater Manchester Fire and Rescue Authority have ensured that the operational boundary is set correctly so that changes in the planning process can be accommodated. (Website, 2011) Reducing the expenses by 5% will further give a boost to this as it will ensure that even after changes they are able to perform well within the set limits. Greater Manchester Fire and Rescue Authority have ensured that changes in the interest rate are accounted for. The fire and rescue service department has accounted for the fixed and fluctuating interest in their planning process so that changes can be accommodated. (Website, 2011) Greater Manchester Fire and Rescue Authority have taken all approvals from the concerned authority regarding investments of more than 365 days. This will ensure that they match the requirements of the regulations and deliver services which have maximum efficiency. Characteristics of Fire & Rescue Services Greater Manchester Fire and Rescue Authority demonstrate certain traits while providing services. A distinguishing part of their service is that they don’t differentiate among the urban and rural population. The traits demonstrated are as follows Greater Manchester Fire and Rescue Authority ensure that there is uniformity in service being imparted both to the rural and urban population. (Fire Service Resources, 2011) While reducing the expenses on certain areas Greater Manchester Fire and Rescue Authority should lay stress and see that uniformity in services between the rural and urban population doesn’t gets disturbed. Greater Manchester Fire and Rescue Authority look towards a model which ensures delivery, scrutiny and prioritizing the activities so that services rendered are better. (Fire Service Resources, 2011) Cutting down expense could have an impact in this direction which needs to be watched out and special care and precaution should be taken for the same. Greater Manchester Fire and Rescue Authority has both a retrospective and prospective assessment” (Fire Service Resources, 2011) while imparting service both to the urban and rural population. Greater Manchester Fire and Rescue Authority ensure standardization while providing services over the entire region. (Fire Service Resources, 2011) This could have an impact when expenses are reduced as it will increase the burden on the fire fighters and ensuring the same standardization will be thereby difficult. Risk Involved Greater Manchester Fire and Rescue Authority have various which are an inherent part of their services. The fire and rescue service department has to face those. The magnitude of these risks multiplies when there is a cut on expenditure as all the latest equipment, technologies and efficiency cannot be ensured. The risks involved are as follows Financial Risk: Fire and Rescue Services face the risk associated with wrong financing. This can affect their services to a large extent and result in the entire planning process going wrong. This risk needs to be looked after careful planning. (Shack, 2009) Reducing the cut in the budget proposal will have an impact and will increase the financial risk a equipments which are required for the operations will be difficult to be purchased. Physical Risk: The magnitude of this risk multiplies in case of fire and rescue operations as the fire fighters face the risk of their lives. It needs to be looked after by having proper gadgets and equipments which facilitate the process and also having different insurance program and benefits will help the fire fighters fight endlessly to save people thereby having an impact on their results. (Physical Risk, 2010) Reducing the expenses will increase the physical risk as fire fighters will find it difficult to purchase the latest technology. This will hamper their operations as reduction in the number of staff will further increase fatigue and concentration leading to a rise in physical risk. Economic Risk: This is a risk associated with changes in the economy. Fire and rescue services face the risk as downturn in the economy could affect investment. These needs to be watched out and creating provision and reserves will help to safeguard against it in the long run. (Erb, Harvey & Viskanta, 2009) Having a budget cut will be beneficial as it will reduce the impact of economic risk. Fire and Rescue Authority based on it will be able to generate provision and reserves which will take care of the economic risk in case of recession. This will help the fire and rescue operators in the long run as it is helping to diversify the risk from the boom period to the recessionary period. Environmental Risk: This is a risk associated with fire and rescue services as fire man has to protect the forest and environment. Fire and rescue services need to take operations quickly when such an incident occurs so that the magnitude can be reduced. The environmental risk multiplies with the reduction in budget. Reducing the budget and cutting down expenses will hamper the operations as fire fighters will find it difficult to gather all the technology and equipment to deal with forest fire. This could have a negative impact and will make the fire fighters take special efforts and direction which helps to reduce environmental risk. Risk Considered Greater Manchester Fire and Rescue Authority have considered various risk in their planning process to ensure that the effect of risk can be reduced. The risks considered are as follows Provision: Greater Manchester Fire and Rescue Authority have maintained a provision to save them against economic fluctuations. (Annual Report, 2009-10) This will help them meet the contingencies and ensure that there is a provision which could help the fire fighters procures the necessary equipments. Reserves: Greater Manchester Fire and Rescue Authority have maintained a reserve to save them against changes in technology and to finance the required technology. (Annual Report, 2009-10) This will help them meet the contingencies that they can be looked after in case they sustain injuries. This will help them to render better services. Disclosure: Greater Manchester Fire and Rescue Authority have disclosed their transaction so that the society and others associated with it get all the information. (Annual Report, 2009-10) This is making them set the operational boundary accordingly and ensure that they are able to prepare themselves for the changes in contingencies. Credit Risk: Greater Manchester Fire and Rescue Authority have ensured that their investments are well diversified into different fields. They have set a limit to ensure that the funds diverted into different directions are maintained up to a limit. (Annual Report, 2009-10) This has ensured a plan to purchase different equipments and technology. This has also ensured that Greater Manchester Fire and Rescue Authority is able to abide with the rules and ensure safety for the stakeholders. Liquidity Risk: Greater Manchester Fire and Rescue Authority have ensured that the risk associated with liquidity is taken care of. Greater Manchester Fire and Rescue Authority have ensured that not more than 40% of the loans mature within three years. (Annual Report, 2009-10) This has been done to ensure liquidity and to ensure that the receivable and payable are maintained as per the requirements. Interest Risk: Greater Manchester Fire and Rescue Authority have ensured that the risks associated with changes in interest rate are taken care of. They have set a limit of 50% to be invested both in fixed and floating interest rates. (Annual Report, 2009-10) This ensures that the investment and borrowings are well diversified to ensure that they are able to reduce the risk to a large extent. Some risk still remains but it is difficult to get the entire risk associated with the same. Price Risk: Greater Manchester Fire and Rescue Authority have not looked into this risk as no information regarding the same was provided from the financial statement. (Annual report, 2009-10) Thus the risk considered by Greater Manchester Fire and Rescue Authority have been immense and looks into different aspect of the business environment. It helps to ensure that the services are rendered in a proper way and helps to build a good reputation with the general public. Impact of reduction of expenses Greater Manchester Fire and Rescue Authority are looking towards reducing the investment in certain areas so that the extra finance can be used elsewhere. Doing so will help Greater Manchester Fire and Rescue Authority to improve the efficiency and help to facilitate their planning process? They are looking towards reducing expenses in staff, equipment and premises by 5%. Doing so will help the management to prepare better rules and management but will also have an effect on the manner the working is carried out. Reducing the expenses on staff, premises and equipment will affect the process in the following ways Reduction on staff expenses: Reducing the staff expenses by 5% will have a change in the management process. This will help the company as they will be able to save vital funds but it will have an effect on the staff. This will increase the burden on the remaining staff as they will have to handle all the pressure that could have been eased out. Reducing the staff expenses will render certain operations difficult and will increase the fatigue level which is a serious consideration and needs to be watched out. This will also make it difficult to carry out a number of operations at the same time in case of multiple casualties as reduction in staff will present it difficult for the fire fighters. This will also lead towards a negative feeling in the organization as the employees might fear that they might be fired from the organization. This will create a negative feeling throughout the organization thereby hampering the services. On the positive side it will help them increase their efficiency as they will be able to use the available resources to the optimum possible limit. This will also help the employees to prove their worth and help them carry out operations more effectively as reduction in employees will create less panic. Reduction in the number of employees will also shape the employees better and ensure that they are fit and ready for every operation thereby helping to improve the overall efficiency. Reduction in Equipment Expenses: Reducing equipment expenses by 5% will reduce the burden on the financial department as it constitutes a big portion of the entire financial planning process. This will hamper the process of acquiring new technology and equipments which needs to be watched out. Greater Manchester Fire and Rescue Authority needs to consider that reducing will help them to use the present equipment optimally. Cutting down the budget will make it difficult to purchase the different equipments required in different operations which might make certain operations difficult. This might also lead towards a delay in carrying out the rescue operations which might increase the number of casualties. On the positive front this will help them to increase efficiency and help the garner maximum results from the present equipments. It will ensure that equipments and technology which is required is only purchased so that there are no obsolete equipments. This will also ensure that with minimum equipments all the fire fighters develop themselves to be able to all the equipments. Reduction in premises expenses: Reducing premises expenses by 5% will reduce the burden on the financial department as it constitutes a big portion of the entire financial planning process. This will hamper the process of developing new facilitates for training and shelter for the fire fighters which needs to be looked after. Greater Manchester Fire and Rescue Authority needs to consider that reducing will help them to use the present premises optimally. Reducing the premises expense will help to save big amounts which can be used to provide training and support to the fire fighters. On the positive side this will help them to increase efficiency and help the garner maximum results from the present space. It will also ensure that all the equipments and necessary equipments are kept at a place which makes it easy to be transported thereby ensuring that the process is carried out at a good speed. This will also help to ensure that all needy changes take place in the premises to ensure that maximum efficiency is achieved. Opinion Greater Manchester Fire and Rescue Authority have performed well and their financial planning is sound. This has ensured that all their operations are looked after. Reducing the expenses will help Greater Manchester Fire and Rescue Authority to a certain extent but will also bring certain demerits along with it. The rescue operators needs to first weigh the benefits against the cost to be able to identify the manner the cut in budget proposal will affect the services. On the long run Greater Manchester Fire and Rescue Authority will benefit greatly from the cut in budget as it will help to ensure that all the future operations gets sorted out which helps to improve the overall planning. Conclusion Greater Manchester Fire and Rescue Authority have been able to manage their finances well. This has enabled them to meet their expenses with the budgets. They need to continue in the similar process and ensure that the risks are considered at every step. Greater Manchester Fire and Rescue Authority needs to look at the manner the cut in budget will benefit the operation services and design a mechanism which helps them to perform efficiently in the long run. References Annual Report, 2010, “Greater Manchester Fire and Rescue Authority: Annual Report 20091-“, retrieved on February 6, 2010 from http://www.manchesterfire.gov.uk/ Erb C, Harvey C & Viskanta T, 2009, “Political Risk, Economic Risk and Finacial Risk”, retrieved on February 6, 2011 from http://www.duke.edu/~charvey/Country_risk/pol/pol.htm Financial Management, 2011, “Financial Management”, Economy Watch, retrieved on February 6, 2011 from http://www.economywatch.com/finance/financial-management.html Fire Service Resources, 2011, “UK Fire Service Resources”, retrieved on February 6, 2011 from http://www.fireservice.co.uk/ Operational Boundary, 2011, “Operational Boundary”, retrieved on February 6, 2011 from http://www.verisae.com/page/1/operational-boundary.jsp Physical Risk, 2010, “Physical Risk”, retrieved on February 6, 2011 from http://ec.europa.eu/health-eu/my_environment/physical_risks/index_en.htm Rajeeb, 2010, “Risk Management in Business”, retrieved on February 6, 2011 from http://www.businessihub.com/risk-management-in-business/ Shack E, 2009, “Mathematica manages Financial Risk”, retrieved on February 6, 2011 from http://blog.wolfram.com/2009/11/03/mathematica-manages-financial-risk/ Website, 2011, “Greater Manchester Fire and Rescue Authority “, retrieved on February 6, 2011 from http://www.manchesterfire.gov.uk/ Read More