Finance Management of Greater Manchester Fire and Rescue Authority - Report Example

Content Introduction 3 Consideration for FRS 3 Characteristics of FRS 5 Impact of reduction in expenses 5 Risk Involved 7 Risk Considered 9 Opinion 11 Conclusion 11 References 12 Introduction Growth in technology and the orientation of businesses towards improving efficiency through different measures have increased the importance being laid to each department. This has made businesses concentrate on all the different functions and finance is one. Businesses consider it a specialized function and hire different talent to ensure that liquidity crunch doesn’t creep in. Having a sound financial policy ensures that the planning of the other department is sound and helps to achieve what different business plans for the future. Greater Manchester Fire and Rescue Authority needs to consider the financial aspect and draw their future plans based on it. This will help to improve the planning in all the departments and will ensure that they are able to perform within the provided budget. (Financial Management, 2011) Greater Manchester Fire and Rescue Authority by having a sound financial management policy can ensure a smoother future and direct their efforts towards improving services. Greater Manchester Fire and Rescue Authority thereby will be able to protect more lives by planning and purchasing the latest gadgets, technology and life saving equipments which helps both the local residents and the fire fighters. This will also help Greater Manchester Fire and Rescue Authority to improve their operational limit and will ensure prosperity and growth for the future. Consideration for Fire & Rescue Services Fire and rescue services need to look after various factors while planning as it helps them to abide by law. Greater Manchester Fire and Rescue Authority is no exception and has ensured that they lay important to these factors. This has helped Greater Manchester Fire and Rescue Authority to plan well and ensure that the different factors which could have a bearing on their activity are looked after. The factors which Greater Manchester Fire and Rescue Authority looks after are as Greater Manchester Fire and Rescue Authority have ensured that all steps taken by them are within the prescribed rules and conduct already being laid out. (Website, 2011) Greater Manchester Fire and Rescue Authority have ensured a contingency plan by having an operational limit by over 5% to meet the contingencies. (Website, 2011) This has helped them in the entire operation and ensures that all the factors are looked after. Greater Manchester Fire and Rescue Authority have laid special stress on deciding the operational boundary and the operational limit so that the function of the entire department doesn’t gets affected. (Website, 2011) This has helped to ensure proper services and reduction in casualties. Greater Manchester Fire and Rescue Authority have taken steps in relation to interest rate fluctuations by ensuring that the loans have a mix of fixed and variable interest rates so as to save themselves from the shock of interest rate fluctuations. (Website, 2011) Characteristics of Fire and Rescue Services Every fire and rescue services demonstrates certain traits which helps them in the future by facilitating the planning process. Greater Manchester Fire and Rescue Authority have also demonstrated certain traits which have helped them to ensure proper services for the residents. The characteristics demonstrated by Greater Manchester Fire and Rescue Authority are as follows Greater Manchester Fire and Rescue Authority have a plan which ensures uniformity with respect to services irrespective of the place of the work. (UK Fire, 2011) Greater Manchester Fire and Rescue Authority follow a business model which looks after every small aspect related to the business which helps to improve their services. (UK Fire, 2011) Greater Manchester Fire and Rescue Authority looks that the services to the rural and urban population is not differentiated by having a retrospective and prospective assessment (UK Fire, 2011) Greater Manchester Fire and Rescue Authority have used the concept of standardizing their work which has reflected in their planning process and helped to save more lives. (UK Fire, 2011) Impact of reduction in expenses Greater Manchester Fire and Rescue Authority are looking towards reducing expenses in staff, equipments and premises by the tune of 5%. This is being done with the intention that the money can be used elsewhere. The operators also have the intention that reducing the expenses will help to improve efficiency of the already possessed equipments, staff and premises. This will also have an impact on their performance. Greater Manchester Fire and Rescue Authority need to match the benefits against cost and based on it needs to take their decision as the final effect could be huge. The impact which these cut will have is as Reducing Staff Expenses: Greater Manchester Fire and Rescue Authority decision to reduce staff expenses by 5% will have both negative and positive effect. On the positive side reducing the expenses will reduce the burden on the financial department and help them plan well. This will help them use the finance elsewhere where it is required. This will also help to use the existing staff to the maximum possible extent thereby increasing the usage rate and improving efficiency. On the negative side it will put extra burden on the staff which might create a panic situation resulting in higher casualties. This might also raise fear in the hearts of the employees that they could be fired in the future thereby affecting their motivational level. Greater Manchester Fire and Rescue Authority thus need to evaluate all the factors as the list is not exhaustive before taking decision regarding the same. Reducing Equipment Expenses: Greater Manchester Fire and Rescue Authority decision to reduce equipment expenses by 5% will have both negative and positive effect. On the positive side reducing the expenses will reduce the burden on the financial department and help them plan well. This will help them use the finance elsewhere where it is required. This will help them use the present equipments in the manner which will yield maximum efficiency. This will help them to ensure that technology which is required is only purchased and doing so will prevent the unnecessary financial expenditure to be incurred. On the negative front this will render certain operations tough as it will require different equipments and not having might make the operations difficult. This increases the risk that in case of malfunctioning of the equipments the fire operators will find it difficult to manage with the remaining equipments. Greater Manchester Fire and Rescue Authority thus need to evaluate all the factors as the list is not exhaustive before taking a final verdict as it could lead towards mass scale casualties. Reducing Premises Expense: Greater Manchester Fire and Rescue Authority decision to reduce premise expenses by 5% will have both negative and positive effect. On the positive side reducing the expenses will reduce the burden on the financial department and help them plan well. This will help them use the finance elsewhere where it is required. This will also improve efficiency as the fire fighters will use the place efficiently. This will also result in huge saving and will help them use it in areas which will save more lives. On the negative front this will affect the services as having less space will make the fire fighters tired as the place of rest reduces. This will also affect their storage facility as preserving all the equipments at a smaller place might delay operations. Greater Manchester Fire and Rescue Authority thus need to evaluate all the factors as the list is not exhaustive before it decides on the future course of action. Risk Involved There are various risk which a business faces and Greater Manchester Fire and Rescue Authority has to face those. This makes it important that Greater Manchester Fire and Rescue Authority identifies those risks and takes steps which will help to mitigate those. Some of the risk identified and associated with fire and rescue services are as Financial Risk: Businesses irrespective of their size and period of operation faces financial risk. This risk arises due to inefficient financial planning and could make the organization suffer. Fire and rescue services lay special attention to it and ensure that it is minimized. Expenses on staff, equipment and prices make them face the extra risk and create a situation where they face a liquidity crunch. (Jorion, 2007) Business Risk: These risks are part of every business and special attention needs to be laid while calculating it. This risk highlights the importance of external and internal factors and fire and rescue services consider it strongly. Fire and rescue operators can reduce it by improving the cash flow. (BSI, 2011) Physical Risk: This risk multiplies in case of fire and service operations as the fire fighters face threat of personal life along with the lives of the residents who get engulfed into fire. Proper use of technology, equipments and fire fighting gadgets helps fire and rescue operators to reduce the magnitude of physical risk. (Song, 2010) Economic Risk: These risks arise due to economic factors and have a toll on the entire economy. Fire and rescue operators need to watch out for it and take steps which helps to safeguard against those. (Swedroe, 2010)By ensuring saving by cutting down cost will ensure that they are able to finance it themselves when the need arises and don’t have to rely on external sources. Environmental Risk: These risks have a serious consideration in case of fire and rescue operations and with growth in global temperatures the need to ensure that it remains within limits has grown. Fire operators need to take special care in case of forest fire, building fires and others so that environmental harm is reduced to the minimum possible extent. (Case, 2011) Risk Considered Greater Manchester Fire and Rescue Authority over the years has looked into different risk and has devised a mechanism which helps to ensure that the impact of these risk is minimized. The risk which Greater Manchester Fire and Rescue Authority looks after are Provision: Greater Manchester Fire and Rescue Authority have a provision in their financial statements which helps them to prepare themselves against contingencies and economic fluctuations. (Annual Report, 2010) This has been beneficial for Greater Manchester Fire and Rescue Authority as they are able to ensure that all the necessary technologies are possessed which prevents human lives. Reserves: Greater Manchester Fire and Rescue Authority have reserves in their financial statement which helps hem purchase technology, gadgets and other equipments for the future. (Annual Report, 2010) This has helped them to ensure that casualties are reduced and a better relation with the residents is developed. Disclosure: Greater Manchester Fire and Rescue Authority have been very sound with their disclosure principle. They have ensured that all their transactions are disclosed as evident from the financial statement. (Annual Report, 2010) This has built a good rapport and helped them avail easy loans at low rates thereby improving their services. Credit Risk: Greater Manchester Fire and Rescue Authority have taken special care to ensure that credit risk is minimized. They have achieved it by diversifying their investment into different avenues. (Annual Report, 2010) This has thereby improved their planning process as everything gets linked and doing so has ensured that they are able to purchase the fire fighting equipments which will facilitate them. Liquidity Risk: Greater Manchester Fire and Rescue Authority have reduced these to a large extent by devising a policy where they don’t invest in loans of over 40% which mature in three years. (Annual Report, 2010) This has helped them to consider the necessary steps which will help them in the long run. Interest Rate Risk: Greater Manchester Fire and Rescue Authority has a sound plan which ensures that investment in fixed and floating rates accounts for 50% each of their investment. (Annual Report, 2010) This helps to reduce the impact of the risk and doing so has facilitated the entire process as the risk remains within control. Greater Manchester Fire and Rescue Authority has thus taken care of the various risk which they encounter and special care and attention will benefit Greater Manchester Fire and Rescue Authority immensely as it will reduce risk further. Opinion Greater Manchester Fire and Rescue Authority have been able to plan well and deliver on all fronts. They need to continue similarly. Cutting down the expenses on staff, equipments, and premises by 5% will have an effect on the manner the services are rendered. This will also ensure that they are able to use the present resources effectively which will help to improve their operations. Greater Manchester Fire and Rescue Authority should weigh both the positives and negatives before deciding the course of action which will suit them. This will help them to deal with the additional uncertainties and will help to build a good reputation with the public. Conclusion Greater Manchester Fire and Rescue Authority have been able to plan and manage their finances will which has been the key to success. They need to continue similarly which will help them improve their relationship and deliver better services. This will help Greater Manchester Fire and Rescue Authority immensely and will help them protect more lives in the future. 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