Activity 3: Monitor and manage financial resourcesover a full planning cycle, including setting targets, managing risks and improving compliance mechanisms

This activity is a continuation of Activity 2.

This activity requires the student to monitor and manage financial resources over a full planning cycle, including setting targets, managing risks and improving compliance mechanisms.

Instructions for this activity:

• This activity will take place during the implementation of the financial plan/strategy.
• The student will monitor and manage financial resources over a full planning cycle, i.e. three months.
• The student will need to assess the outcomes of the financial plan each month for a period of three (3) months. For each month, the student will:
  • Assess the performance for the current month.
  • Revise targets for the next month using the financial plan prepared in Part B of Activity 1.
  • Identify and manage potential risks based on the outcomes of the analysis of the financial plan for each month.
  • Provide recommendations for improving compliance mechanism.
  • Record the outcomes using the template provided. Each template is labelled with a month in its heading.

To monitor and manage financial resources, you are required to follow the steps below each month:

Step 1: Monitor actual income and expenditure against the following budgets prepared in the financial plan (Part B - Activity 1).

• Record the actual income and expenditure.
• Prepare the following statements for each month:
  • Profit and loss statement
  • Balance sheet
  • Cash flow statement
• Assess the actual income and expenditure against forecasted income and expenditure (Based on profit and loss statement given in the financial plan (Activity 1 - Part B).
• Calculate the deviations from budgets and record using Forecasted versus actual profit and loss statement templatefor each month.
• Identify the unfavourable deviations, i.e. deviations that generate an adverse effect on budget objectives.

Step 2:Develop action plans to remedy significant deviations from budget objectives and projections

To develop the action plans, you must follow the steps given below:

• Identify three (3) unfavourable deviations based on the outcomes of Step 1.
• Develop an action plan for each identified unfavourable deviation. Include the following information in each action plan:
  • Three (3) risks based on the unfavourable deviation.
  • Remedial action
  • Key performance indicators
  • Person responsible

Step 3:Set and revise budget priorities to meet operational contingencies and risk management.

• Revise financial plan prepared in Activity 1: Part B - Template 16.
• Submit the revised financial plan each month to the trainer/assessor.

Evidence to be submitted each month:

• Record of deviations
• Action plan
• Revised financial plan for each month.

Template (Month 1): Forecasted versus actual profit and loss statement: Include and delete rows as required

Profit and loss statement	Forecasted figures (Month 1)	Actual figures (Month 1)	Deviations (Favourable or unfavourable) (Month 1)

Template (Month 1): Forecasted versus actual balance sheet: Include and delete rows as required

Balance sheet	Forecasted figures (Month 1)	Actual figures (Month 1)	Deviations (Favourable or unfavourable) (Month 1)

Template (Month 1): Forecasted versus actual cash flow statement: Include and delete rows as required

Cash flow statement	Forecasted figures (Month 1)	Actual figures (Month 1)	Deviations (Favourable or unfavourable) (Month 1)

Template: Action plan (Month 1)

Action plan
Negative deviation 1:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 2:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 3:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.

Template (Month 2): Forecasted versus actual profit and loss statement: Include and delete rows as required

Profit and loss statement	Forecasted figures (Month 2)	Actual figures (Month 2)	Deviations (Favourable or unfavourable) (Month 2)

Template (Month 2): Forecasted versus actual balance sheet: Include and delete rows as required

Balance sheet	Forecasted figures (Month 2)	Actual figures (Month 2)	Deviations (Favourable or unfavourable) (Month 2)

Template (Month 2): Forecasted versus actual cash flow statement: Include and delete rows as required

Cash flow statement	Forecasted figures (Month 2)	Actual figures (Month 2)	Deviations (Favourable or unfavourable) (Month 2)

Template: Action plan (Month 2)

Action plan
Negative deviation 1:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 2:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 3:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.

Template (Month 3): Forecasted versus actual profit and loss statement: Include and delete rows as required

Profit and loss statement	Forecasted figures (Month 3)	Actual figures (Month 3)	Deviations (Favourable or unfavourable) (Month 3)

Template (Month 3): Forecasted versus actual balance sheet: Include and delete rows as required

Balance sheet	Forecasted figures (Month 3)	Actual figures (Month 3)	Deviations (Favourable or unfavourable) (Month 3)

Template (Month 3): Forecasted versus actual cash flow statement: Include and delete rows as required

Cash flow statement	Forecasted figures (Month 3)	Actual figures (Month 3)	Deviations (Favourable or unfavourable) (Month 3)

Template: Action plan (Month 3)

Action plan
Negative deviation 1:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 2:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 3:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.