Actual versus budget reporting is a financial analysis process that compares an organisation's actual financial performance with the budgeted or planned performance for a specific period, such as a month, quarter, or year. This type of reporting provides valuable insights into how well a company is managing its finances and whether it is meeting its financial goals and targets.
Here's how BAS/IAS Submission works:
Budget Creation:
At the start of a fiscal period (e.g., a fiscal year or a quarter), a company typically creates a budget or financial plan. This budget outlines expected revenues, expenses, and other financial metrics based on past performance, market conditions, and strategic goals.
Actual Financial Performance:
As the period progresses, the company records its actual financial transactions and performance. This includes actual revenues, expenditures, sales, and other financial activities.
Data Collection:
Actual financial data is collected from various sources within the organization, such as accounting systems, financial statements, and transaction records. It should be accurate and up-to-date.
- Comparison: Actual versus budget reporting involves comparing the actual financial results to the budgeted figures for the same period. This comparison is typically done for key financial metrics, such as:
- Revenue: Did the company achieve its revenue targets, or did it fall short or exceed expectations?
- Expenses: Were actual expenses in line with the budgeted amounts, or were there significant variances?
- Profitability: What is the actual profit margin compared to the budgeted margin?
- Cash Flow: How did actual cash flows compare to the budgeted cash flow projections?
Key Performance Indicators (KPIs):
Other important metrics, such as customer acquisition costs, inventory turnover, or return on investment (ROI), may also be compared.
Analysis of Variances:
After the comparison is made, the next step is to analyze the variances between the actual and budgeted figures. Variances can be categorized into:
- Favorable Variances: Instances where actual performance exceeds budgeted performance in a positive way (e.g., higher revenues or lower expenses).
- Unfavorable Variances: Instances where actual performance falls short of budgeted performance in a negative way (e.g., lower revenues or higher expenses).
Root Cause Analysis:
For significant variances, organizations often conduct a root cause analysis to determine why the variances occurred. This may involve looking at changes in market conditions, operational inefficiencies, unexpected events, or other factors.
Reporting and Communication:
The results of the actual versus budget analysis are typically presented in financial reports or dashboards. These reports are shared with key stakeholders, including senior management, investors, and board members.
Course Correction:
If unfavorable variances are identified, organizations may take corrective actions to address the issues and bring financial performance back in line with the budget. This could involve cost-cutting measures, revenue-enhancing strategies, or adjustments to the budget itself.
Continuous Improvement:
Actual versus budget reporting is an ongoing process, and organizations use it to continuously improve financial management, planning, and decision-making.
Business Activity Statement (BAS):
- Purpose: The BAS is a statement used by businesses to report and pay a number of tax obligations, including Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and other taxes.
- Frequency: Businesses generally need to submit a BAS either quarterly or annually, depending on their annual GST turnover.
- Components: The BAS typically includes information on GST collected and paid, PAYG withholding for employees, and other tax-related transactions.
Instalment Activity Statement (IAS):
- Purpose: The IAS is used to report and pay the PAYG income tax instalments and other taxes, such as fringe benefits tax (FBT) instalments and the luxury car tax.
- Frequency: The frequency of IAS lodgements depends on the taxpayer's reporting obligations. It can be monthly or quarterly.
- Components: The IAS includes information on PAYG income tax instalments, FBT instalments, and other relevant tax obligations.
Submission Process:
- Frequency Determination: The frequency of BAS and IAS submissions is determined by the ATO based on the taxpayer's annual GST turnover and other factors.
- Online Lodgement: Businesses can usually lodge their BAS and IAS online through the Business Portal on the ATO website or using authorized accounting software.
- Due Dates: The due dates for submission and payment vary based on the reporting period and the taxpayer's lodgement frequency. It's crucial to adhere to these dates to avoid penalties.
Tips for Submission:
- Accuracy: Ensure that all information provided in the BAS and IAS is accurate. This includes figures related to sales, expenses, and taxes.
- Timeliness: Submit the statements on time to avoid late lodgement penalties.
- Record Keeping: Maintain accurate and up-to-date records to support the information provided in the statements
