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Fruitless and wasteful expenditure; means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

Irregular expenditure; means expenditure , other unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation.

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Q: What is the link between irregular fruitless and wasteful and unauthorised expenditure?
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What are the pros and cons of zero based budgeting?

Advantages of Zero-Based BudgetingEfficient allocation of resources, as it is based on needs and benefits.Drives managers to find cost effective ways to improve operations.Detects inflated budgets.Municipal planning departments are exempt from this budgeting practice.Useful for service departments where the output is difficult to identify.Increases staff motivation by providing greater initiative and responsibility in decision-making.Increases communication and coordination within the organization.Identifies and eliminates wasteful and obsolete operations.Identifies opportunities for outsourcing.Forces cost centers to identify their mission and their relationship to overall goals.Disadvantages of Zero-Based BudgetingDifficult to define decision units and decision packages, as it is time-consuming and exhaustive.Forced to justify every detail related to expenditure. The R&D department is threatened whereas the production department benefits.Necessary to train managers. Zero-based budgeting must be clearly understood by managers at various levels to be successfully implemented. Difficult to administer and communicate the budgeting because more managers are involved in the process.In a large organization, the volume of forms may be so large that no one person could read it all. Compressing the information down to a usable size might remove critically important details.Honesty of the managers must be reliable and uniform. Any manager that exaggerates skews the results.


What is the importance of file organization?

To execute a database efficiently, there are various design tradeoffs needed. One of the most vital ones is the file Organisation. For instance, if there were to be an application that need only sequential batch processing, then the use of indexing methods would be pointless and wasteful.There are various important consequences of an inappropriate file Organisation being used in a database. Therefore using replication would be wasteful of space besides posing the trouble of inconsistency in the data. The wrong file Organisation can also-Mean much larger processing time for modifying the required record or retrieving.Want undue disk access that could stress the hardwareNeedless to say, these could have a lot of undesirable consequences at the user level, such as making some applications impractical.


What are Advantage disadvantage of file system?

This question is not clear and i think the it was supposed to read like"what are the disadvantages of file processing sytem".If this is what the question was meant to be then the answer would be as follows: 1. Program-Data Dependence. File descriptions are stored within each application program that accesses a given file. 2. Duplication of Data. Applications are developed independently in file processing systems leading to unplanned duplicate files. Duplication is wasteful as it requires additional storage space and changes in one file must be made manually in all files. This also results in loss of data integrity. It is also possible that the same data item may have different names in different files, or the same name may be used for different data items in different files. 3. Limited data sharing. Each application has its own private files with little opportunity to share data outside their own applications. A requested report may require data from several incompatible files in separate systems. 4. Lengthy Development Times. There is little opportunity to leverage previous development efforts. Each new application requires the developer to start from scratch by designing new file formats and descriptions 5. Excessive Program Maintenance. The preceding factors create a heavy program maintenance load. 6. Integrity Problem. The problem of integrity is the problem of ensuring that the data in the database is accentuate


Features of budgetary control?

Budgetary control methodsa) Budget:· A formal statement of the financial resources set aside for carrying out specific activities in a given period of time.· It helps to co-ordinate the activities of the organisation.An example would be an advertising budget or sales force budget.b) Budgetary control:· A control technique whereby actual results are compared with budgets.· Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budgets.Budgetary control and responsibility centres;These enable managers to monitor organisational functions.A responsibility centre can be defined as any functional unit headed by a manager who is responsible for the activities of that unit.There are four types of responsibility centres:a) Revenue centresOrganisational units in which outputs are measured in monetary terms but are not directly compared to input costs.b) Expense centresUnits where inputs are measured in monetary terms but outputs are not.c) Profit centresWhere performance is measured by the difference between revenues (outputs) and expenditure (inputs). Inter-departmental sales are often made using "transfer prices".d) Investment centresWhere outputs are compared with the assets employed in producing them, i.e. ROI.Advantages of budgeting and budgetary controlThere are a number of advantages to budgeting and budgetary control:· Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces management to look ahead, to set out detailed plans for achieving the targets for each department, operation and (ideally) each manager, to anticipate and give the organisation purpose and direction.· Promotes coordination and communication.· Clearly defines areas of responsibility. Requires managers of budget centres to be made responsible for the achievement of budget targets for the operations under their personal control.· Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick against which actual performance is measured and assessed. Control is provided by comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors.· Enables remedial action to be taken as variances emerge.· Motivates employees by participating in the setting of budgets.· Improves the allocation of scarce resources.· Economises management time by using the management by exception principle.Problems in budgetingWhilst budgets may be an essential part of any marketing activity they do have a number of disadvantages, particularly in perception terms.· Budgets can be seen as pressure devices imposed by management, thus resulting in: a) bad labour relationsb) inaccurate record-keeping.· Departmental conflict arises due to:a) disputes over resource allocationb) departments blaming each other if targets are not attained.· It is difficult to reconcile personal/individual and corporate goals.· Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This is often coupled with "empire building" in order to enhance the prestige of a department.Responsibility versus controlling, i.e. some costs are under the influence of more than one person, e.g. power costs.· Managers may overestimate costs so that they will not be blamed in the future should they overspend.Characteristics of a budgetA good budget is characterised by the following:· Participation: involve as many people as possible in drawing up a budget.· Comprehensiveness: embrace the whole organisation.· Standards: base it on established standards of performance.· Flexibility: allow for changing circumstances.· Feedback: constantly monitor performance.· Analysis of costs and revenues: this can be done on the basis of product lines, departments or cost centres.Budget organisation and administration:In organising and administering a budget system the following characteristics may apply:a) Budget centres: Units responsible for the preparation of budgets. A budget centre may encompass several cost centres.b) Budget committee: This may consist of senior members of the organisation, e.g. departmental heads and executives (with the managing director as chairman). Every part of the organisation should be represented on the committee, so there should be a representative from sales, production, marketing and so on. Functions of the budget committee include:· Coordination of the preparation of budgets, including the issue of a manual· Issuing of timetables for preparation of budgets· Provision of information to assist budget preparations· Comparison of actual results with budget and investigation of variances.c) Budget Officer: Controls the budget administration The job involves:· liaising between the budget committee and managers responsible for budget preparation· dealing with budgetary control problems· ensuring that deadlines are met· educating people about budgetary control.d) Budget manual:This document:· charts the organisation· details the budget procedures· contains account codes for items of expenditure and revenue· timetables the process· clearly defines the responsibility of persons involved in the budgeting system.Budget preparationFirstly, determine the principal budget factor. This is also known as the key budget factor or limiting budget factor and is the factor which will limit the activities of an undertaking. This limits output, e.g. sales, material or labour.a) Sales budget: this involves a realistic sales forecast. This is prepared in units of each product and also in sales value. Methods of sales forecasting include:· sales force opinions· market research· statistical methods (correlation analysis and examination of trends)· mathematical models.In using these techniques consider:· company's pricing policy· general economic and political conditions· changes in the population· competition· consumers' income and tastes· advertising and other sales promotion techniques· after sales service· credit terms offered.b) Production budget: expressed in quantitative terms only and is geared to the sales budget. The production manager's duties include:· analysis of plant utilisation· work-in-progress budgets.If requirements exceed capacity he may:· subcontract· plan for overtime· introduce shift work· hire or buy additional machinery· The materials purchases budget's both quantitative and financial.c) Raw materials and purchasing budget:· The materials usage budget is in quantities.· The materials purchases budget is both quantitative and financial.Factors influencing a) and b) include:· production requirements· planning stock levels· storage space· trends of material prices.d) Labour budget: is both quantitative and financial. This is influenced by:· production requirements· man-hours available· grades of labour required· wage rates (union agreements)· the need for incentives.e) Cash budget: a cash plan for a defined period of time. It summarises monthly receipts and payments. Hence, it highlights monthly surpluses and deficits of actual cash. Its main uses are:· to maintain control over a firm's cash requirements, e.g. stock and debtors· to enable a firm to take precautionary measures and arrange in advance for investment and loan facilities whenever cash surpluses or deficits arises· to show the feasibility of management's plans in cash terms· to illustrate the financial impact of changes in management policy, e.g. change of credit terms offered to customers.Receipts of cash may come from one of the following:· cash sales· payments by debtors· the sale of fixed assets· the issue of new shares· the receipt of interest and dividends from investments.Payments of cash may be for one or more of the following:· purchase of stocks· payments of wages or other expenses· purchase of capital items· payment of interest, dividends or taxation.Steps in preparing a cash budgeti) Step 1: set out a pro forma cash budget month by month. Below is a suggested layout.Month 1Month 2Month 3$$$Cash receiptsReceipts from debtorsSales of capital itemsLoans receivedProceeds from share issuesAny other cash receiptsCash paymentsPayments to creditorsWages and salariesLoan repaymentsCapital expenditureTaxationDividendsAny other cash expenditureReceipts less paymentsOpening cash balance b/fWXYClosing cash balance c/fXYZii) Step 2: sort out cash receipts from debtorsiii) Step 3: other incomeiv) Step 4: sort out cash payments to suppliersv) Step 5: establish other cash payments in the monthFigure 4.1 shows the composition of a master budget analysis.Figure 4.1 Composition of a master budgetOPERATING BUDGETFINANCIAL BUDGETconsists of:-consists ofBudget P/L acc: get:Cash budgetProduction budgetBalance sheetMaterials budgetFunds statementLabour budgetAdmin. budgetStocks budgetf) Other budgets:These include budgets for:· administration· research and development· selling and distribution expenses· capital expenditures· working capital (debtors and creditors).The master budget (figure 4.1) illustrates this. Now attempt exercise 4.1.Exercise 4.1 Budgeting IDraw up a cash budget for D. Sithole showing the balance at the end of each month, from the following information provided by her for the six months ended 31 December 19X2.a) Opening Cash $ 1,200.19X219X3Sales at $20 per unitMARAPRMAYJUNJULAUGSEPOCTNOVDECJANFEB260200320290400300350400390400260250Cash is received for sales after 3 months following the sales.c) Production in units: 240270300320350370380340310260250d) Raw materials cost $5/unit. Of this 80% is paid in the month of production and 20% after production.e) Direct labour costs of $8/unit are payable in the month of production.f) Variable expenses are $2/unit. Of this 50% is paid in the same month as production and 50% in the month following production.g) Fixed expenses are $400/month payable each month.h) Machinery costing $2,000 to be paid for in October 19X2.i) Will receive a legacy of $ 2,500 in December 19X2.j) Drawings to be $300/month.An exampleA sugar cane farm in the Lowveld district may devise an operating budget as follows:· Cultivation· Irrigation· Field maintenance· Harvesting· Transportation.With each operation, there will be costs for labour, materials and machinery usage. Therefore, for e.g. harvesting, these may include four resources, namely:· Labour: -cutting-sundry· Tractors· Cane trailers· Implements and sundries.Having identified cost centres, the next step will be to make a quantitative calculation of the resources to be used, and to further break this down to shorter periods, say, one month or three months. The length of period chosen is important in that the shorter it is, the greater the control that can be exercised by the budget but the greater the expense in preparation of the budget and reporting of any variances.The quantitative budget for harvesting may be calculated as shown in figure 4.2.Figure 4.2 Quantitative harvesting budgetHarvesting1st quarter2nd quarter3rd quarter4th quarterLabourCuttingnil9,000 tonnes16,000 tonnes10,000 tonnesSundrynil300 man days450 man days450 man daysTractorsnil630 hours1,100 hours700 hoursCane trailersnil9,000 tonnes16,000 tonnes10,000 tonnesImp, & sundriesnil9,000 tonnes16,000 tonnes10,000 tonnesEach item is measured in different quantitative units - tonnes of cane, man days etc.-and depends on individual judgement of which is the best unit to use.Once the budget in quantitative terms has been prepared, unit costs can then be allocated to the individual items to arrive at a budget for harvesting in financial terms as shown in table 4.2.Charge out costsIn table 4.2 tractors have a unit cost of $7.50 per hour - machines like tractors have a whole range of costs like fuel and oil, repairs and maintenance, driver, licence, road tax and insurance and depreciation. Some of the costs are fixed, e.g. depreciation and insurance, whereas some vary directly with use of the tractor, e.g. fuel and oil. Other costs such as repairs are unpredictable and may be very high or low - an estimated figure based on past experience.Figure 4.3 Harvesting cost budgetItem harvestingUnit cost1st quarter2nd quarter3rd quarter4th quarterTotalLabourCutting$0.75 per tonne-6,75012,0007,50026,250Sundry$2.50 per day-7501,1251,1253,000Tractors$7.50 per hour-4,7258,2505,25018,225Cane Trailers$0.15 per tonne-1,3502,4001,5005,250Imp. & sundries$0.25 per tonne-2,2504,0002,5008,750-$15,825$27,775$17,875$61,475So, overall operating cost of the tractor for the year may be budgeted as shown in figure 4.4.If the tractor is used for more than 1,000 hours then there will be an over-recovery on its operational costs and if used for less than 1,000 hours there will be under-recovery, i.e. in the first instance making an internal 'profit' and in the second a 'loss'.Figure 4.4 Tractor costsUnit rateCost per annum (1,000 hours)($)($)Fixed costsDepreciation2,000.002,000.00Licence and insurance200.00200.00Driver100.00 per month1,200.00Repairs600.00 per annum600.00Variable costsFuel and oil2.00 per hour2,000.00Maintenance3.00 per 200 hours1,500.007,500.00No. of hours used1,000.00Cost per hour7.50Master budgetThe master budget for the sugar cane farm may be as shown in figure 4.5. The budget represents an overall objective for the farm for the whole year ahead, expressed in financial terms.Table 4.5 Operating budget for sugar cane farm 19X41st quarter2nd quarter3rd quarter4th quarterTotal $Revenue from cane130,000250,000120,000500,000Less: CostsCultivation37,26148,26842,36855,416183,313Irrigation7,27815,29718,47311,32952,377Field maintenance4,82612,92315,9917,26241,002Harvesting-15,82527,77517,87561,475Transportation-14,10024,75015,75054,60049,365106,413129,357107,632392,767Add: Opening valuation85,800135,165112,24094,26085,800135,165241,578241,597201,892478,567Less: Closing valuation135,165112,24094,26090,29090,290Net crop cost-129,338147,337111,602388,277Gross surplus-66,200102,6638,398111,723Less: Overheads5,8767,3617,4865,32126,044Net profitless)(5,876)(6,699)95,1773,07785,679Once the operating budget has been prepared, two further budgets can be done, namely:i. Balance sheet at the end of the year.ii. Cash flow budget which shows the amount of cash necessary to support the operating budget. It is of great importance that the business has sufficient funds to support the planned operational budget.Reporting backDuring the year the management accountant will prepare statements, as quickly as possible after each operating period, in our example, each quarter, setting out the actual operating costs against the budgeted costs. This statement will calculate the difference between the 'budgeted' and the 'actual' cost, which is called the 'variance'.There are many ways in which management accounts can be prepared. To continue with our example of harvesting on the sugar cane farm, management accounts at the end of the third quarter can be presented as shown in figure 4.6.Figure 4.6 Management accounts - actual costs against budget costs Management accounts for sugar cane farm 3rd quarter 19X4Item Harvesting3rd quarterYear to dateActualBudgetVarianceActualBudgetVarianceLabour- Cutting12,20012,000(200)19,06018,750(310)- Sundry7421,1253831,5841,875291Tractors9,3758,250(1,125)13,50012,975(525)Cane trailers1,6782,4007222,5053,7501,245Imp & sundries4,2704,000(270)6,5136,250(263)28,26527,775(490)43,16243,600438Here, actual harvesting costs for the 3rd quarter are $28,265 against a budget of $27,775 indicating an increase of $490 whilst the cumulative figure for the year to date shows an overall saving of $438. It appears that actual costs are less than budgeted costs, so the harvesting operations are proceeding within the budget set and satisfactory. However, a further look may reveal that this may not be the case. The budget was based on a cane tonnage cut of 16,000 tonnes in the 3rd quarter and a cumulative tonnage of 25,000. If these tonnages have been achieved then the statement will be satisfactory. If the actual production was much higher than budgeted then these costs represent a very considerable saving, even though only a marginal saving is shown by the variance. Similarly, if the actual tonnage was significantly less than budgeted, then what is indicated as a marginal saving in the variance may, in fact, be a considerable overspending.Price and quantity variancesJust to state that there is a variance on a particular item of expenditure does not really mean a lot. Most costs are composed of two elements - the quantity used and the price per unit. A variance between the actual cost of an item and its budgeted cost may be due to one or both of these factors. Apparent similarity between budgeted and actual costs may hide significant compensating variances between price and usage.For example, say it is budgeted to take 300 man days at $3.00 per man day - giving a total budgeted cost of $900.00. The actual cost on completion was $875.00, showing a saving of $25.00. Further investigations may reveal that the job took 250 man days at a daily rate of $3.50 - a favourable usage variance but a very unfavourable price variance. Management may therefore need to investigate some significant variances revealed by further analysis, which a comparison of the total costs would not have revealed. Price and usage variances for major items of expense are discussed below.LabourThe difference between actual labour costs and budgeted or standard labour costs is known as direct wages variance. This variance may arise due to a difference in the amount of labour used or the price per unit of labour, i.e. the wage rate. The direct wages variance can be split into:i) Wage rate variance: the wage rate was higher or lower than budgeted, e.g. using more unskilled labour, or working overtime at a higher rate.ii) Labour efficiency variance: arises when the actual time spent on a particular job is higher or lower than the standard labour hours specified, e.g. breakdown of a machine.MaterialsThe variance for materials cost could also be split into price and usage elements:i) Material price variance: arises when the actual unit price is greater or lower than budgeted. Could be due to inflation, discounts, alternative suppliers etc.ii) Material quantity variance: arises when the actual amount of material used is greater or lower than the amount specified in the budget, e.g. a budgeted fertiliser at 350 kg per hectare may be increased or decreased when the actual fertiliser is applied, giving rise to a usage variance.OverheadsAgain, overhead variance can be split into:i) Overhead volume variance: where overheads are taken into the cost centres, a production higher or lower than budgeted will cause an over-or under-absorption of overheads.ii) Overhead expenditure variance: where the actual overhead expenditure is higher or lower than that budgeted for the level of output actually produced.Calculation of price and usage variancesThe price and usage variance are calculated as follows:Price variance = (budgeted price - actual price) X actual quantityUsage variance = (budgeted quantity - actual quantity) X budgeted priceNow attempt exercise 4.2.Exercise 4.2 Computation of labour variancesIt was budgeted that it would take 200 man days at $10.00 per day to complete the task costing $2,000.00 when the actual cost was $1,875.00, being 150 man days at $12.50 per day. Calculate:i) Price varianceii) Usage varianceComment briefly on the results of your calculation.Management action and cost controlProducing information in management accounting form is expensive in terms of the time and effort involved. It will be very wasteful if the information once produced is not put into effective use. There are five parts to an effective cost control system. These are:a) preparation of budgetsb) communicating and agreeing budgets with all concernedc) having an accounting system that will record all actual costsd) preparing statements that will compare actual costs with budgets, showing any variances and disclosing the reasons for them, ande) taking any appropriate action based on the analysis of the variances in d) above.Action(s) that can be taken when a significant variance has been revealed will depend on the nature of the variance itself. Some variances can be identified to a specific department and it is within that department's control to take corrective action. Other variances might prove to be much more difficult, and sometimes impossible, to control.Variances revealed are historic. They show what happened last month or last quarter and no amount of analysis and discussion can alter that. However, they can be used to influence managerial action in future periods.Zero base budgeting (ZBB)After a budgeting system has been in operation for some time, there is a tendency for next year's budget to be justified by reference to the actual levels being achieved at present. In fact this is part of the financial analysis discussed so far, but the proper analysis process takes into account all the changes which should affect the future activities of the company. Even using such an analytical base, some businesses find that historical comparisons, and particularly the current level of constraints on resources, can inhibit really innovative changes in budgets. This can cause a severe handicap for the business because the budget should be the first year of the long range plan. Thus, if changes are not started in the budget period, it will be difficult for the business to make the progress necessary to achieve longer term objectives. One way of breaking out of this cyclical budgeting problem is to go back to basics and develop the budget from an assumption of no existing resources (that is, a zero base). This means all resources will have to be justified and the chosen way of achieving any specified objectives will have to be compared with the alternatives. For example, in the sales area, the current existing field sales force will be ignored, and the optimum way of achieving the sales objectives in that particular market for the particular goods or services should be developed. This might not include any field sales force, or a different-sized team, and the company then has to plan how to implement this new strategy.The obvious problem of this zero-base budgeting process is the massive amount of managerial time needed to carry out the exercise. Hence, some companies carry out the full process every five years, but in that year the business can almost grind to a halt. Thus, an alternative way is to look in depth at one area of the business each year on a rolling basis, so that each sector does a zero base budget every five years or so.Key termsBudgeting Budgetary controlBudget preparationManagement action and cost controlMaster budgetPrice and quantity varianceResponsibility centresZero based budgeting


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Is Advertising is wasteful expenditure?

Advertising on the whole is not wasteful, it brings in business. However, not all advertising campaigns are equally successful, so in some cases advertising is wasteful.


Is Advertising is wasteful expenditure for any business?

i think advertisement is not the wasteful expenditure because if u advertise ur product then ur product will be sold heavily in the market. if ur the new comer into the business and u dont know how to sell ur product then if u advertise ur product then it will reach to the coustmers very easily and ur product will be sold in a great extent.suppose the company like satyam introduced 108 ambulance but it is not known to the people at the later age of that but it reached to the all over andhra by the advertisement only. so, there is no wasteful of money in advertising


Use the word wasteful in a sentence?

Example sentence for the adjective 'wasteful':The company's review of wasteful practices is an effort to save money.


What are the function of a finance department?

The main functions of the finance department are to put in place an effective financial cost effective control system including trimming wasteful expenditure, centralized accounting system, and help in boosting production output of the company.


What is the adverb for wasteful?

The adjective wasteful has the adverb form wastefully. It means in a profligate, useless, or extravagant manner.


Is wind power wasteful?

No


What is a synonym for wasteful?

waste


Spread it on thick?

wasteful


What is the adjective for waste?

Wasteful.


What is wasteful competition?

h


How use wasteful word in sentences?

The word 'wasteful' is an adjective, a word used to describe a noun. An adjective can also function as a subject complement.Example uses:The company is working to reduce wasteful practices. (adjective)Using a leaf blower when a rake or a broom will do the job is so wasteful. (subject complement)