The Financial Statements and Greater Manchester Fire Authority - Essay Example

Financial management Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name /02/ 2011 Introduction I am going to review the financial statements for and Greater Manchester Fire authority and prepare a report for you, my senior manager. I have done this by critically assessing the operational boundary and the authorised limit proposals for the Fire and Rescue Services, calculating the safety margin of the Operational Boundary to the Authorised Limit and identifying six categories of risk facing the FRS. For each category I have commented on whether the risk has a financial impact on the FRS and if so, whether it has been recognised in the financial statements. At the conclusion I give my opinion as to whether it has been recognised, explaining why I believe that is the correct view. The impact on the proposals to cut the overall spend by 5% Managing executive expectations The managers for Greater Manchester Fire Rescue operation should realise cutting cost a management decision. Because it is unlikely that Greater Manchester Fire Rescue operation will be immune to budget cuts its objective is to reduce the impact on the organization. The managers for Greater Manchester Fire Rescue operation must be able to distinct the long-term plan of the organization from the short-term. They should also be able to position organization in a profitable and successful in the economy despite the recession. The primary plan for cost cutting should be clear to managers. They should determine where the organization should place cost-cutting timeline. Cost-cutting should be made in round i.e. there should be first round, second round and many cases it goes to tenth round. The round of cutting cost should be well administered such that the impact cannot be heavy on the organization. With the believe from the manager that Greater Manchester Fire Rescue operation is a key player in the economy, the government propose budget cut should not be interpreted negatively (Wildavsky, 1993). Once the manager have completed discovery phase arrangement should be made to convey the strategies to entire organization. This should not delegate the sole role to manage executive expectation once the cut are made. Managers should avoid making long presentation and get to the point. For them to stay on top of looming budget cuts they should figure out they can effectively educate senior management on the importance of Greater Manchester Fire Rescue operation role in the economy. The manager should create a discrete priority list of the IT functions that are truly business-essential and those functions that can be eliminated. Manager should have a clear list of services and areas that would be negatively affected if cuts were made. The managers should presents the report on opportunity costs such a cost-cutting decision and identify all its subsequent consequences, such as lower productivity. (An opportunity cost is what your organization would lose if a cost-cutting decision were made. For example, if they lay off a developer, the opportunity cost would be the ability to quickly change your e-commerce site.) The opportunity-cost document is usually a real eye-opener to most managers when they see how they dependent on services for the business success and competitiveness of the company. The eventual question that manager must answer is how at services can be cut with a minimal impact to productivity. Here is where the prioritized list comes in handy because they aught to have already determined what can be “sacrificed (McLaney, 2009). Return to core competencies In such moment of economy difficulty organization are made to go back organization basics. During the flourish of the economy the welfare of the organization is guarantee and no one seem to border a lot technology market. Managers then to consider being organization personnel’s all things to all people at such times of good economy. They are tempted go beyond the early support services model and began looking at revenue-generating applications or cost-cutting services to further their organization’s goals. With this shift in focus return on investment became the big “in” acronym. Managers needed to present returns for organization spending, either in faster productivity or revenue generation. With tough economic times head, begin slowly pulling in the scope of the various departments’ reach. It is a conservative move, but it may save the organization dollars in the long term (Miles &Preston, 2003). The Greater Manchester Fire Rescue operation should start by determining the core competencies of all members of the organization. The organization may have department that may be different in focus, but organization should pinpoint that focus. Managers should determine that core competency and then build on it. Various projects should be determine by lining them up with the company’s core business and determining if the projects are also in line with organization core skill. If not, Greater Manchester Fire Rescue operation managers should terminate the project, spreading out the development/implementation cycle, or outsourcing it. When budget cuts are made, Greater Manchester Fire Rescue operation may be called upon to maintain its current service offerings. Managers must ensure that Greater Manchester Fire Rescue operation will be able to handle the volume of services by holding back new services until funds are available. If circumstances demand that organization support the new application with limited resources, the opportunity-cost perspective that negotiates for any new, in-house cut on services that come in handy at such that of economy down fall (Merna, & Thani, 2008). Areas for possible cut Investigate outsourcing options At such time of economy outsourcing should avoided all as the control issues that revolve around the application. It is the time to seriously consider outsourcing services to save on costs, especially in labour. Though many organizations have struggled or failed, there are still strong markets leaders who have manage to come out of such times. Great challenge to management of the organization at such time is investigation on the operation that can be adjusted without necessarily ruining the fundamental aspect of the organization. Greater Manchester Fire Rescue operation should make sure to negotiate solid service level agreements and make certain that your in-house staff can support the management move to cut on the expenditure. The advantage of this strategy is that it keeps open the option of bringing the services back in-house if funds become available. The current contracts should be reviewed and renegotiate aggressively when those contracts expire. Greater Manchester Fire Rescue operation should build more services within their ability. Manager should remember that cost shouldn’t be the only factor in these decisions. The organization’s senior management should not favours cheapest remedies, but you are looking for overall value (Merna &Thani, 2008). Maintain staff morale As Greater Manchester Fire Rescue operation is pulling back on falling economy it should cut on the spending on employee’s development and training. Managers need to balance on such spending because it equally important to train employees exposes employees to the impact of economy melt down. If management found that projects have been cancelled and there’s a lull in activity, this might be the perfect opportunity to increase training offerings on those areas which more affected. An initial reaction may be to cut the training budget first, but I believe this really should be among the last areas to be axed. Begin the cross training that organization always planned, and send staff to formal training classes. Cutting training is devastating to morale because it cuts off growth opportunities, and people may begin to look elsewhere for employment. The cost of replacing staff is always higher than retaining current staff. Training your crew is essential for your group’s future success. Finally, as the organization are preparing for the worst, managers must prepare its staff mentally for the changes to come. Employees should know managers are taking precautions today to reduce drastic changes tomorrow. By doing so, they raise the level of awareness so others can pinpoint ways to reduce costs that they may have overlooked (McNutt, 2002). Training cost which Greater Manchester Fire Rescue is incurring can easily be cut by engaging in alternative mode of training. It is also equally important to appreciate the fact that morel and productivity to company is essential in the time of slowdown in the economy. Competitive edge can alternatively be sharpened by developing cost effective strategies. However, budget cuts mean that essential training gets put on the back burner, just when people are crying out for additional skills to cope more effectively with difficult conditions. It may very well be that the company is facing training budget cuts just at the time when employees most need a boost to keep up momentum. Whatever the situation cut on training can help. Impact on Greater Manchester Fire Rescue is not cheap, but there is a variety of ways to make a limited budget very effective (Corby &White, 1999) Areas of risk caused by implementation of budget cut and their control measures Labour relation risk There are a number of risks associated with fire rescue services. Greater Manchester Fire Rescue Operation Company is exposed to a wide range of internal risk and external risks following the budget cut by the government. The most critical risk that the Greater Manchester Fire Rescue operation company can face is associated with labour relationship between the company and its employees. In any economy downfall employees are the most affected since employers considers streamlining the labour cost as a first priority when the economy is not performing well. Employees always never welcome the moves by the management to cut spending since there is they are first victim to the circumstances. More often employees may decide to protest against the move by the management to cut the spending. They may decide to provoke labour relation laws that protect them rendering the process of cutting spending Greater Manchester Fire Rescue Operation impossible (Williams, 1998). Of course, there must be costs related to this project which must be identified to come up with a cost-benefits analysis of the organization. This will include costs such as materials and skilled labour for the weather forecasting lab, which will be supplied by a business partner of the Project Assistant Manger at very low prices plus costs arising from hosting training programmes with training being offered free of charge by an NGO, Precise Training Institute and refreshments and food catered to by the Fire Department cooking staff. Another cost that can’t be quite quantified ii the time spent by all staff in the project but this can’t be compared to the benefit that will be received in the near future to the community of Sun View. A planned process to modify attitude, knowledge or skill behaviour through learning experience to achieve effective performance in an activity or range of activities. Its purpose in the work situation is to develop the abilities of the individual and to satisfy the current and future needs of the organisation. Training Needs Analysis involves the planning and management of people’s learning with the aim of making the learning process more effective, increasingly efficient, properly directed and therefore useful. Such exposure will motivates the employees and stop them from participating in strikes. Service delivery risk Following harsh economic conditions the capacity to carry out the work, quantity of on hand effectively and efficiently will be impaired. Limited resources following the budget cut will have undesired impact on the service delivery of the company. Managers may incline to reducing cost to reflect the budget cut on the expense of service delivery. Areas which may be requiring a lot of attention from management are likely to suffer simply because much of their efforts will be directed to streamlining the spending. There is also the possibility of lack of interest by some parties of the guests invited and the staff included. Since this can happen there is need for the management to highlight the need for this project through drastic advertising plans to the staff and the general public reflecting on the long term benefits that will be achieved. There will also be need to monitor events that occur on a daily basis so that motivation measures can be made with the use of play games in the process of training. There will also hence be the need to have regular meetings between the Project Manager and the Assistant Project Manager Subcontracting risk During such time of economic downfall most of the companies are force to subcontract their services to subcontractor who can alternatively offer the best services cheaply. Greater Manchester Fire Rescue Operation Company has also been employing subcontracting strategies during such time of economy. Subcontracting condition is viewed as a source of the greatest risk, particularly those prepared by general intent to apply it. But the risk of possible liability under liquidated damage is too high to be ignored by subcontracting company. While subcontracting certainly makes the use of resources more efficient, it also increases the complexity of co-ordination and contract administration processes. Speedy resolution of such problem is vital if the cost of budget and time schedule are to be met. The quality of work would suffer, completion of the project would delay, and final cost would increase. Clearly, the existence of many subcontract agreement increase the principals’ financial risk (Wildavsky, 1993). General Reliability risk Managers are likely to be forced to abandon important aspect of the company i.e. repair and maintenance of the plant and machines. General reliability of the machine refers to how specific machine can be relied on to perform the required task. Without well maintenance the reliability of a machine may not be guarantee. It is risky to neglect the maintenance as part of strategies to streamline the spending. Without proper maintainace of machines and equipments the company cannot fully ascertain their reliability and chances and frequency of the machine to fail are very high (Miles &Preston, 2003). Mitigation risk The standards of product and services are likely to be compromised following the reduction on spending. Reduction on spending can amount neglecting legal obligation that result in litigation. The cost resulting from litigation and compensation are referred to as mitigation risk. Negligence due improper maintenance of machine can expose personnel to injury or death if fails. Any machine that can readily cause serious injuries is considered a high risk critical machine even though all other factors are low risk (Bender & Ward, 2002). References: Bender, R. and Ward, K., 2002. Corporate Financial Strategy. 2nd ed. Preston: Butterworth- Heinemann. Corby, S. and White, G., 1999. Employee relations in the public services: themes and issues. Bristol: Routledge. Gilbody, J., 1998. The UK monetary and financial system. Bristol: Routledge. IMF, 2009. Crisis and recovery. Birmingham: International Monetary Fund. McLaney, E., 2009. Business finance: theory and practice. 8th ed. Winchester: Prentice Hall. McNutt, P., 2002. The economics of public choice. 2nd Ed. London: Edward Elgar Publishing. Merna, T. and Thani, F., 2008. Corporate risk management. 2nd ed. London: John Wiley and Sons. Miles, D. and Preston, I., 2003. The economics of public spending. London: Oxford University Press. Williams, A., 1998. UK government & politics. 2rd ed. Preston: Heinemann. Wildavsky, A. B., 1993. National budgeting for economic and monetary union. Edinburgh: Martinus Nijhoff Publishers. Read More