Resource Management and Budgeting Processes - Essay Example

Apart from dealing with food products and Tesco mobile among other brands, Tesco PLC deals with selling and distribution of safety equipment such as gumboots, oil-resistant boots, helmets, earplugs, overalls, and dust coats among others. The majority of our customers are entities dealing with the manufacturing of all kinds of products as well as flower farms. Based on the need to maintain safety in all workplaces and be in line with Occupational Safety and Health Administration  (OSHA)  safety requirements, the majority of firms offering products as well as services have continued to order from us thus increasing our sales. Tesco PLC has outsourced the process of manufacturing most of our products to a neighboring firm. Outsourcing refers to the contracting of a firm’s business activity to a third party. Being a company that deals with the selling of safety equipment, we are focused on providing quality products that meet safety protection regulations as specified by OSHA.

Advantages of outsourcing our services

One of the key advantages of Tesco PLC outsourcing the manufacturing of its products is that we are partnering with experts who are excellent in the production of safety equipment. Thus our quality products are completed faster and effectively. The second advantage is that the company is able to share the risks arising. Another advantage of outsourcing is that the company does not incur the costs of hiring production machines or purchasing them. Likewise, we are able to concentrate on our core business of selling and marketing our products making the relationship with our clients stronger.

Disadvantages of outsourcing our services

Although Tesco PLC emulates outsourcing, the company is faced with some disadvantages. First is the lack of customer focus by the company we have outsourced to.  Based on the fact that the company manufacturers products for various companies dealing with safety gadgets, it may lack complete focus on the quality of our brands. Additionally, sometimes there is a delay in the delivery of the final products to Tesco PLC premises an issue that has caused us to lose some loyal customers. Despite the disadvantages, our organization's objective is to outsource its production process for the next 3 years after which it will establish its own production department.

Budgeting processes

Tesco PLC.has an established accounting department that undertakes the budgeting process under the leadership of a senior accountant.  The company maintains a cash budget. The cash budget entails an expansive plan of future cash flows. In order to ensure that the company liquidity is maintained at a recommendable state, four items are covered by the cash budgets. These include cash receipts, cash disbursements, the net change in cash for a particular period of time as well as new financing needs. The accounting department undertakes six processes in its annual budget preparation.

Automating: This department uses excel spreadsheets with formulas that are used to compute forecasts. Additionally, the accounting uses the QuickBooks accounting package that makes their work easier.

Focusing on the budget items: Instead of counting the items one by one, the accounting has emulated driver-based metrics that are advantageous in that they are faster and easier.

Communication with the directors: This entails holding discussions with the directors to come up with attainable forecasts. This ensures that the directors do not reject the budget once it is presented at the start of our financial year.

Focusing on future directions: Each department is supposed to provide its forecast and estimates to the accounts department in order for them to be included in the final budget.

Iterative group discussion: Before the release of the final budget, the senior accountant holds a discussion with other accountants on key aspects of the budgets.

Reviewing and approving the budget: The directors review the budget after which it is approved by the shareholders

Financial reporting requirements

The key objective of the accounting department is to provide financial reports that indicate a true and fair view of Tesco PLC affairs. Based on the various users of our company’s financial reports, the company hires the services of the external auditor to verify the report to avoid any misleading information. The accounting department applies the International Financial Reporting Standards (IFRS) in its reporting of the financial reports. These standards ensure that Tesco PLC's books of accounts are understandable, comparable, and relevant for the users such as banks and investors.  As per the requirements of the IFRS, our senior accountant complies with the regulations that indicate that financial statements consist of five aspects. These include a balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement, and a summary indicating the accounting policies used by the accountant.

Conclusion

Based on the above discussion, it is clear that firms should take adequate measures to avoid wastage of resources. One of the strategies that new companies can use to save their financial resources is outsourcing. Outsourcing does not only save on operational costs but also enables the production of quality brands. Tesco PLC's principle is to consider all the stakeholders during the budget preparation process an aspect that has contributed to a more stable budget. The company's financial stability has also been supported by the adoption of International Financial Reporting Standards by the accounting department.