Assessment Investigate and discuss the importance of review and evaluation of financial performance planning monitoring. Assessment description This assessment requires candidates to answer the questions to demonstrate their knowledge and skills in regards to the effectiveness of financial management processes. Procedure 1. Read the budgeted figures and complete the table. 2. Look for any outstanding variances and list possible reasons and preventive measures you would take. 3. Look at different scenarios and at the processes involved. 4. Complete an evaluation grid looking at improvements to processes. 5. Complete the short answer questions. Specifications ? relevant skills are identified ? a demonstrated understanding of specific and transferable skills ? specific development opportunities are suggested. Case study Below are the 2008 budgeted cash flow figures from the Jolimont accountancy firm, as was the example in the workbook. Can you use the figures from the income statement below, to complete the actual figures for Jolimont accountancy firm for 2008? Look at where the cash for the company has come from and explain if this is a sustainable cash resource for the business. List any outstanding variances for the business and possibilities for the variances. What corrective measures would you put in place to help control these costs in the future? The below table requires full completion. In the first part new actuals need to be calculated based on your recommendations of decreasing expenses. The first 2008 column is the actuals and the second column is the predicted budget, the third is the variance that you calculate act-bud = variance Account Debit Credit Cash flows from operating activity Collections form debtors 180,000 Collections from cash sales 170,000 Interest received 2,300 Payments to creditors 139,000 Wages and salaries 21,000 Interest expense 10,900 Other operating expenses paid 48,120 Income tax paid 39,984 Total cash flow from operating activity 93,296 Cash flow from investing 18,000 Purchase of shares in Singh?s Ltd Total cash flow from investing activity Cash flows from financing 21,000 Proceeds from call on shares 180,000 Loan from Abbotsford Mortgage Co. 23,000 Loan repayments 41,000 Dividends paid 16,000 GST collected 14,000 GST paid 2,000 ATO GST settlement (refund) 137,000 Total cash flow from financing activities 212,296 Net change in cash flows 559,220 Opening bank balance 771,516 Closing bank balance 1. Explain if the source of cash sustainable, and list any outstanding variances you have noticed below: 3-4 variances required. 2. Now in the space provided, list the corrective measures you would implement and why: Corrective measure 1: Total GST collected is 14000 and total pais is 2000 but the totalrefund it shows as 137000 This is general variance Corrective measure 2: Corrective measure 3: Factors affecting variance needs to be stated specifically . Corrective measure 4: Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be less likely to occur in the future. Using these improvements, complete the evaluation grid below. 1. An employee who has been paid too much annual leave: 2. A large tax liability owed to the ATO: 3. An inflated budgeted expense account: 4. A sales representative?s overpaid bonus: 5. A large bank overdraft: 6. A trial balance that does not balance: 7. Overstated bad debts allowance: 8. Understated accounts payable: Using the above improvements complete the evaluation grid all sections (reformat table if required to fill in)

Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Analysis of financial plans Performance objective Report and monitor expenditure and compare with financial plans so that recommendations are developed for key stakeholders. Assessment description Complete the financial reporting for each period and develop recommendations using the templates provided. Specifications financial data tabled is accurately basic accounting terminology is used in recommendations sound reasoning is used in calculating the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. 2010 Innovation and Business Industry Skills Council Ltd Page 1 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Part 1 Case study Proactive Management Consultants Pty Ltd (PMC) is a small service organisation that provides consultative services to a wide variety of clients and has been in existence for just over five years. Typically they advise their clients on professional development opportunities, organisational structure and simple training initiatives. Although the past 12 months have been profitable for PMC, they face a very uncertain future. Reducing government support, the global financial crisis, an increasingly competitive market and a client base that believe they are already paying too much. PMC prides itself on the advice they give their clients, however, finance has never been their strength. The PMC board has approached your company to provide monthly financial reports and recommendations on how they should proceed with their financial plans. PMC has provided each month's sales and expenditure data from which they require your company to complete the reporting in the provided templates, interpret the data and provide recommendations. Accounts payable are entirely paid month-to-month whereas Accounts receivable is calculated 60% current month, 30% last month, 10% second to last month: Actual May sales = $42,100, actual June sales = $47,300. These figures will be required to determine actual sales receipts for July, August and September. On the following pages is the standard 1st financial quarter budget template from Proactive Management Consultants Pty Ltd (PMC). It is based on average percentages. However PMC has also provided you with a list of initiatives they plan to undertake over the next three months, and which they need you to update and consider in the budget. They are: anticipate large invoicing month in July due to number of leads all company motor vehicle registrations and insurance are due in July $18,000 15th of August moving to new premises whereby rent increases to $3,500 per month To increase productivity PMC will upgrade all computers under expensed equipment in August at $12,000. 2010 Innovation and Business Industry Skills Council Ltd Page 2 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts have sought an aggressive advertising campaign in August to invigorate lost clientele, $16,000 Due to advertising campaign, PMC are recruiting two new consultants in August. o This will add 30% to September's payroll o $10,000 in recruitment and training during August. and o result in increased business of 40% in September . A summary of actual 3rd quarter figures is also provided. Procedure 1. Read the case study 2. Create budgets for July, August, September and the total budget for the 1st Financial quarter using the given percentages and incorporating information from the list of initiatives from PMC outlined above. 3. Input the actual figures from the table provided and then calculate whether the figures are over or under budget 4. Analyse the data and complete your recommendations in the space provided. 5. Complete a new budget based on your recommendations. 2010 Innovation and Business Industry Skills Council Ltd Page 3 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 4 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 5 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 6 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Write your recommendations to PMC In light of July 0X actual sales and expenditure: Recommendation 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ In light of August 0X actual sales and expenditure: Recommendation 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ In light of September 0X actual sales and expenditure: Recommendation 1:_______________________________________________ Page 7 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ On the following page adjust the budgeted sales and expenditure based on your recommendations. Please note that this budget will be used as a basis for one of the tasks in Assessment 2- 'Contingency and Review'. Page 8 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 9 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Part 2 You now meet with David Grey the Financial Controller of PMC and inform him of the proposed budget changes. In the table below, circle the key stakeholders within PMC that David would need to inform about the new budgetary changes and which part of the budget would specifically affect their department or sector. Name Position Kelly Walsh Team leader HR department Brianna White Operations manager Belinda Toohey OHS representative Amanda Maccarone Union representative Angie Brown Senior accountant Shankar Singh Marketing manager Marta Fernandes Administration assistant Jordyn Gee Sales manager Karyn Ingilo Sales rep Kylie Bentley Office temp How would David Grey (the Financial Controller of PMC) negotiate with the stakeholders identified above regarding new budget measures that would affect them? Page 10 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Now list below where the financial controller can find relevant information to create reports to ensure that PMC departments are sticking to the new budget measures Hint: Types of business documents, accounts and processes. Page 11 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Forecast Estimates Performance objective To manage finance estimates for future cash flows, costs, assumptions and risks in accordance with organisational policies and procedures. Assessment description Complete the financial reporting for each period and develop recommendations using the templates provided. Specifications Qualitative answers that show an understanding of financial risk management basic accounting terminology is used in recommendations sound reasoning is used in developing the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. Page 12 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Part A Case Study Sarah Beckingsale runs a film production company. Sara's business plan could be more thorough, especially in the budgeting and financial plans. Sara does not get income on a regular basis but her operational costs are constant. Sarah has a business loan and a company credit card that she uses to cover expenses. When Sarah does make a film there are many variable costs, legal issues, employees to manage, and environmental concerns when making the film on location. While Sarah can estimate the income she will need to receive from the making of a film to cover costs, she cannot estimate all income that may result from sales of the film - her profit. Sarah's financial records are just kept in Excel and are a little disorganised. This makes business planning and financial management difficult. As Sarah's accountant you realise a Financial Risk Management Strategy needs to be produced to keep the business viable 1. Using the standard Risk Management process you are to develop a Financial Risk Management Strategy for Sarah Page 13 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Page 14 of 35 Assessment task 2 budgets and forecasts 2. FNS ACCT 503B: Manage Sarah would like to know when she will break-even this financial year. What is the formula you would use to advise Sarah when she would breakeven? 3. What key analysis tool would you use to help Sarah better manage her budget and her actual figures? Briefly explain what this is. 4. Which Financial Performance Ratios would you be looking at to monitor the financial performance of Sarah's business? Explain why. The first Financial Ratio is:__________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ The second Financial Ratio is:_______________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Page 15 of 35 Assessment task 2 FNS ACCT 503B: Manage budgets and forecasts The third Financial Ratio is:_________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 5. What tool would you use to see if the ratios for Sarah's business were realistic and attainable for film companies? Explain why _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 6. What is the \"Time Value of Money\"? Why is it an important tool in Sarah's company to manage her future finances? _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 7. Sarah needs to know the percentage difference in financial numbers from one quarter to the next to help create her financial budget. That is she wants to know by what percentage the numbers increase or decrease. What is the formula that you will use to provide Sarah with this information? Page 16 of 35 Assessment task 2 budgets and forecasts 8. FNS ACCT 503B: Manage Producing internally versus \"Buying In\" Sarah has thought that one way of managing her company's finances might be to outsource. That is hiring external companies to make the films for her. What are the financial issues that a company needs to consider when thinking about outsourcing rather than producing \"In-House\"? Page 17 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Page 18 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Document Budget Performance objective Understand Budgets, Reporting, Budget Communication, Forecasts and Trends, and Budget Variance Assessment description The assessment is CLOSED BOOK Correctly complete the multiple choice and short answer questions below Specifications Multiple choice questions are correctly answered Short form answers are accurate and use basic accounting terminology Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. Page 19 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Procedure Complete the following short answer and multiple choice questions Question 1: Identify and briefly explain three (3) types of Financial Budgets Financial Budget 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Financial Budget 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Financial Budget 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Question 2: Identify and briefly explain two (2) types of NonFinancial Budgets Non-Financial Budget 1:___________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Non-Financial Budget 2:___________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Page 20 of 35 Assessment task 3 budgets and forecasts Question 3: FNS ACCT 503B: Manage Which of the following are examples of alternative approaches to developing budgets? 1:2:3:4:- Zero-Based Budgeting Program Budgeting Activity Budgeting All of the above Question 4: Which of the following are examples of adaptive budgets? 1:2:3:4:- Rolling Budget Flexible Budget Operating Expenses Budget All of the above Question 5: Which of the following are examples of Financial Statement budgets? 1:2:3:4:- Budgeted Income Statement Budgeted Balance Sheet Cash Budget All of the above Question 6: When budget reports are published they are controlled by? 1:- The requirements of legislation 2:- Accounting Standards 3:- Both of the above Page 21 of 35 Assessment task 3 budgets and forecasts Question 7: FNS ACCT 503B: Manage For internal company purposes can a company follow their own format for a budget report? 1:- Yes 2:- No Question 8: Which of the following are examples of Financial Performance Indicators? 1:2:3:4:- Sales to Investment Labour Turnover Net Profit to Gross Sales All of the above Question 9: Which of the following are examples of Non-Financial Performance Indicators? 1:2:3:4:- Inventory Turnover Customer Complaints Warranty Repairs All of the above Question 10: 1:2:3:4:5:- What are the key causes of Trends? Economic Conditions Population Growth Fashion/Taste Changes Technological Changes All of the above Question 11: The effectiveness of the financial management process can be assessed by? 1:- Forecasting Page 22 of 35 Assessment task 3 budgets and forecasts 2:- Benchmarking 3:- Contribution Margin Question 12: this process FNS ACCT 503B: Manage Using your answer from question 11 briefly explain _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Question 13: Briefly explain the following Trend Analysis tools? 1: Horizontal Analysis 2: Vertical Analysis 3: Ratio Analysis Question 14: What is the standard formula for the accounting rate of return? Page 23 of 35 Assessment task 3 budgets and forecasts Question 15: FNS ACCT 503B: Manage If average annual profit was $20,000 and the original outlay was $75,000, what would be the accounting rate of return? Please show all calculations Question 16: What are the disadvantages of the accounting rate of return? Page 24 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Question 17: What is the Payback Method? Question 18: If my initial investment was $100,000 and my net-cash flow was $15,000 how long would the Payback Period be? Please show all calculations Question 19: Question 19: What are the disadvantages of the Payback Method? What is the Opportunity Cost? Page 25 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Page 26 of 35 Assessment task 3 budgets and forecasts Question 20: FNS ACCT 503B: Manage What is the time value of money? Page 27 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Monitor Budget Outcomes Performance objective Preparing variance reports, analysing and reporting on variance. Making recommendations and reviewing budget processess Assessment description Complete financial reports and make recommendations on variances. Complete general answer questions. Specifications financial data tabled is accurately basic accounting terminology is used in recommendations sound reasoning is used in calculating the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. 2010 Innovation and Business Industry Skills Council Ltd Page 28 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Part 1 Below are the 2008 budgeted cash flow figures from the Jolimont accountancy firm. Can you use the figures from the income statement below, to complete the actual figures for Jolimont accountancy firm for 2008? Look at where the cash for the company has come from and explain if this is a sustainable cash resource for the business. List any outstanding variances for the business and possibilities for the variances. What corrective measures would you put in place to help control these costs in the future? Jolimont accountancy firm BUDGET 2008 $ Cash flows from operating activities Collections from debtors Collections from cash sales Interest received Payments to creditors Wages and salaries Interest Payments Other operating expenses paid Income tax paid Total cash flows from operating expenses 210,000 160,000 2,300 -121,000 -16,000 -3,500 -17,000 -21,000 193,800 Cash flows from investing activities Proceeds from sale of property Payment for motor vehicle Purchase of shares in Singh's Ltd Total cash flows from investing activities -12,000 -12000 Cash from financing activities Proceeds from call on shares Loan from Abbotsford Mortgage Co. Loan repayments Dividends Paid GST Collections GST Paid ATO-GST Settlement Total cash flows from financing activities Net change in cash Opening bank balance Closing bank balance ACTUAL 2008 $ VARIANCE 2008 $ 7,000 -14,000 -28,000 12,400 -13,800 -1,400 -36,400 145,400 559,220 704,620 Income Statement for 2008 Account 2010 Innovation and Business Industry Skills Council Ltd Debit Credit Page 29 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Cash flows from operating activity Collections form debtors 180,000 Collections from cash sales 170,000 Interest received 2,300 Payments to creditors 139,000 Wages and salaries 21,000 Interest expense 10,900 Other operating expenses paid 48,120 Income tax paid 39,984 Total cash flow from operating activity 93,296 Cash flow from investing 18,000 Purchase of shares in Singh's Ltd Total cash flow from investing activity Cash flows from financing Proceeds from call on shares 21,000 180,000 23,000 Loan from Abbotsford Mortgage Co. Loan repayments Dividends paid 41,000 16,000 14,000 GST collected GST paid ATO GST settlement (refund) Total cash flow from financing activities Net change in cash flows 2,000 137,000 212,296 559,220 771,516 Opening bank balance Closing bank balance 1. Explain if the source of cash sustainable, and list any outstanding variances you have noticed below: 2010 Innovation and Business Industry Skills Council Ltd Page 30 of 35 Assessment task 4 BSBFIM501A Manage budgets and financial plans 2. Now in the space provided, list the corrective measures you would implement: Corrective measure 1: Corrective measure 2: Corrective measure 3: Corrective measure 4: 3. The financial controller has decided to increase debt repayment time for debtors from 60 days to 120. This had led to an increase in sales but what are the consequences? Where do we look for this information in our business records? 2010 Innovation and Business Industry Skills Council Ltd Page 31 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Part 2 Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be less likely to occur in the future. Using these improvements, complete the evaluation grid below. An employee who has been paid too much annual leave: A large tax liability owed to the ATO: An inflated budgeted expense account: A sales representative's overpaid bonus: A large bank overdraft: A trial balance that does not balance: Overstated bad debts allowance: Understated accounts payable: 2010 Innovation and Business Industry Skills Council Ltd Page 32 of 35 Assessment task 4 BSBFIM501A Manage budgets and financial plans Evaluation grid Idea Suitability for target audience Technical feasibility 2010 Innovation and Business Industry Skills Council Ltd Commercial potential Possible impacts Resources required Time constraints Explore further? Yes/No Page 33 of 35 Assessment task 4 BSBFIM501A Manage budgets a Short answer questions 1. What are the roles and responsibilities of an auditor? 2. What is an ageing summary? 3. List the process you would follow if you identified a cost variation. 4. What is the difference between a favourable and unfavourable variance? 5. List the advantages of ensuring effective monitoring of financial processes. 6. List the steps you would follow to implement and monitor improvements or changes made to the financial management process. 2010 Innovation and Business Industry Skills Council Ltd Assessment task 4 BSBFIM501A Manage budgets a 7. List the communication strategies you would use to disseminate information about budgets/financial plans to team members. 8. List the advantages and disadvantages of the communication strategies identified in question 7. 2010 Innovation and Business Industry Skills Council Ltd Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Analysis of financial plans Performance objective Report and monitor expenditure and compare with financial plans so that recommendations are developed for key stakeholders. Assessment description Complete the financial reporting for each period and develop recommendations using the templates provided. Specifications financial data tabled is accurately basic accounting terminology is used in recommendations sound reasoning is used in calculating the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. 2010 Innovation and Business Industry Skills Council Ltd Page 1 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Part 1 Case study Proactive Management Consultants Pty Ltd (PMC) is a small service organisation that provides consultative services to a wide variety of clients and has been in existence for just over five years. Typically they advise their clients on professional development opportunities, organisational structure and simple training initiatives. Although the past 12 months have been profitable for PMC, they face a very uncertain future. Reducing government support, the global financial crisis, an increasingly competitive market and a client base that believe they are already paying too much. PMC prides itself on the advice they give their clients, however, finance has never been their strength. The PMC board has approached your company to provide monthly financial reports and recommendations on how they should proceed with their financial plans. PMC has provided each month's sales and expenditure data from which they require your company to complete the reporting in the provided templates, interpret the data and provide recommendations. Accounts payable are entirely paid month-to-month whereas Accounts receivable is calculated 60% current month, 30% last month, 10% second to last month: Actual May sales = $42,100, actual June sales = $47,300. These figures will be required to determine actual sales receipts for July, August and September. On the following pages is the standard 1st financial quarter budget template from Proactive Management Consultants Pty Ltd (PMC). It is based on average percentages. However PMC has also provided you with a list of initiatives they plan to undertake over the next three months, and which they need you to update and consider in the budget. They are: anticipate large invoicing month in July due to number of leads all company motor vehicle registrations and insurance are due in July $18,000 15th of August moving to new premises whereby rent increases to $3,500 per month To increase productivity PMC will upgrade all computers under expensed equipment in August at $12,000. 2010 Innovation and Business Industry Skills Council Ltd Page 2 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts have sought an aggressive advertising campaign in August to invigorate lost clientele, $16,000 Due to advertising campaign, PMC are recruiting two new consultants in August. o This will add 30% to September's payroll o $10,000 in recruitment and training during August. and o result in increased business of 40% in September . A summary of actual 3rd quarter figures is also provided. Procedure 1. Read the case study 2. Create budgets for July, August, September and the total budget for the 1st Financial quarter using the given percentages and incorporating information from the list of initiatives from PMC outlined above. 3. Input the actual figures from the table provided and then calculate whether the figures are over or under budget 4. Analyse the data and complete your recommendations in the space provided. 5. Complete a new budget based on your recommendations. 2010 Innovation and Business Industry Skills Council Ltd Page 3 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 4 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 5 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 6 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Write your recommendations to PMC In light of July 0X actual sales and expenditure: Recommendation 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ In light of August 0X actual sales and expenditure: Recommendation 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ In light of September 0X actual sales and expenditure: Recommendation 1:_______________________________________________ Page 7 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Recommendation 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ On the following page adjust the budgeted sales and expenditure based on your recommendations. Please note that this budget will be used as a basis for one of the tasks in Assessment 2- 'Contingency and Review'. Page 8 of 35 Assessment task 1 FNS ACCT 503B: Manage budgets and forecasts Page 9 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Part 2 You now meet with David Grey the Financial Controller of PMC and inform him of the proposed budget changes. In the table below, circle the key stakeholders within PMC that David would need to inform about the new budgetary changes and which part of the budget would specifically affect their department or sector. Name Position Kelly Walsh Team leader HR department Brianna White Operations manager Belinda Toohey OHS representative Amanda Maccarone Union representative Angie Brown Senior accountant Shankar Singh Marketing manager Marta Fernandes Administration assistant Jordyn Gee Sales manager Karyn Ingilo Sales rep Kylie Bentley Office temp How would David Grey (the Financial Controller of PMC) negotiate with the stakeholders identified above regarding new budget measures that would affect them? Page 10 of 35 Assessment task 1 budgets and forecasts FNS ACCT 503B: Manage Now list below where the financial controller can find relevant information to create reports to ensure that PMC departments are sticking to the new budget measures Hint: Types of business documents, accounts and processes. Page 11 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Forecast Estimates Performance objective To manage finance estimates for future cash flows, costs, assumptions and risks in accordance with organisational policies and procedures. Assessment description Complete the financial reporting for each period and develop recommendations using the templates provided. Specifications Qualitative answers that show an understanding of financial risk management basic accounting terminology is used in recommendations sound reasoning is used in developing the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. Page 12 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Part A Case Study Sarah Beckingsale runs a film production company. Sara's business plan could be more thorough, especially in the budgeting and financial plans. Sara does not get income on a regular basis but her operational costs are constant. Sarah has a business loan and a company credit card that she uses to cover expenses. When Sarah does make a film there are many variable costs, legal issues, employees to manage, and environmental concerns when making the film on location. While Sarah can estimate the income she will need to receive from the making of a film to cover costs, she cannot estimate all income that may result from sales of the film - her profit. Sarah's financial records are just kept in Excel and are a little disorganised. This makes business planning and financial management difficult. As Sarah's accountant you realise a Financial Risk Management Strategy needs to be produced to keep the business viable 1. Using the standard Risk Management process you are to develop a Financial Risk Management Strategy for Sarah Page 13 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Page 14 of 35 Assessment task 2 budgets and forecasts 2. FNS ACCT 503B: Manage Sarah would like to know when she will break-even this financial year. What is the formula you would use to advise Sarah when she would breakeven? 3. What key analysis tool would you use to help Sarah better manage her budget and her actual figures? Briefly explain what this is. 4. Which Financial Performance Ratios would you be looking at to monitor the financial performance of Sarah's business? Explain why. The first Financial Ratio is:__________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ The second Financial Ratio is:_______________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Page 15 of 35 Assessment task 2 FNS ACCT 503B: Manage budgets and forecasts The third Financial Ratio is:_________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 5. What tool would you use to see if the ratios for Sarah's business were realistic and attainable for film companies? Explain why _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 6. What is the \"Time Value of Money\"? Why is it an important tool in Sarah's company to manage her future finances? _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ 7. Sarah needs to know the percentage difference in financial numbers from one quarter to the next to help create her financial budget. That is she wants to know by what percentage the numbers increase or decrease. What is the formula that you will use to provide Sarah with this information? Page 16 of 35 Assessment task 2 budgets and forecasts 8. FNS ACCT 503B: Manage Producing internally versus \"Buying In\" Sarah has thought that one way of managing her company's finances might be to outsource. That is hiring external companies to make the films for her. What are the financial issues that a company needs to consider when thinking about outsourcing rather than producing \"In-House\"? Page 17 of 35 Assessment task 2 budgets and forecasts FNS ACCT 503B: Manage Page 18 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Document Budget Performance objective Understand Budgets, Reporting, Budget Communication, Forecasts and Trends, and Budget Variance Assessment description The assessment is CLOSED BOOK Correctly complete the multiple choice and short answer questions below Specifications Multiple choice questions are correctly answered Short form answers are accurate and use basic accounting terminology Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. Page 19 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Procedure Complete the following short answer and multiple choice questions Question 1: Identify and briefly explain three (3) types of Financial Budgets Financial Budget 1:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Financial Budget 2:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Financial Budget 3:_______________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Question 2: Identify and briefly explain two (2) types of NonFinancial Budgets Non-Financial Budget 1:___________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Non-Financial Budget 2:___________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Page 20 of 35 Assessment task 3 budgets and forecasts Question 3: FNS ACCT 503B: Manage Which of the following are examples of alternative approaches to developing budgets? 1:2:3:4:- Zero-Based Budgeting Program Budgeting Activity Budgeting All of the above Question 4: Which of the following are examples of adaptive budgets? 1:2:3:4:- Rolling Budget Flexible Budget Operating Expenses Budget All of the above Question 5: Which of the following are examples of Financial Statement budgets? 1:2:3:4:- Budgeted Income Statement Budgeted Balance Sheet Cash Budget All of the above Question 6: When budget reports are published they are controlled by? 1:- The requirements of legislation 2:- Accounting Standards 3:- Both of the above Page 21 of 35 Assessment task 3 budgets and forecasts Question 7: FNS ACCT 503B: Manage For internal company purposes can a company follow their own format for a budget report? 1:- Yes 2:- No Question 8: Which of the following are examples of Financial Performance Indicators? 1:2:3:4:- Sales to Investment Labour Turnover Net Profit to Gross Sales All of the above Question 9: Which of the following are examples of Non-Financial Performance Indicators? 1:2:3:4:- Inventory Turnover Customer Complaints Warranty Repairs All of the above Question 10: 1:2:3:4:5:- What are the key causes of Trends? Economic Conditions Population Growth Fashion/Taste Changes Technological Changes All of the above Question 11: The effectiveness of the financial management process can be assessed by? 1:- Forecasting Page 22 of 35 Assessment task 3 budgets and forecasts 2:- Benchmarking 3:- Contribution Margin Question 12: this process FNS ACCT 503B: Manage Using your answer from question 11 briefly explain _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Question 13: Briefly explain the following Trend Analysis tools? 1: Horizontal Analysis 2: Vertical Analysis 3: Ratio Analysis Question 14: What is the standard formula for the accounting rate of return? Page 23 of 35 Assessment task 3 budgets and forecasts Question 15: FNS ACCT 503B: Manage If average annual profit was $20,000 and the original outlay was $75,000, what would be the accounting rate of return? Please show all calculations Question 16: What are the disadvantages of the accounting rate of return? Page 24 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Question 17: What is the Payback Method? Question 18: If my initial investment was $100,000 and my net-cash flow was $15,000 how long would the Payback Period be? Please show all calculations Question 19: Question 19: What are the disadvantages of the Payback Method? What is the Opportunity Cost? Page 25 of 35 Assessment task 3 budgets and forecasts FNS ACCT 503B: Manage Page 26 of 35 Assessment task 3 budgets and forecasts Question 20: FNS ACCT 503B: Manage What is the time value of money? Page 27 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Monitor Budget Outcomes Performance objective Preparing variance reports, analysing and reporting on variance. Making recommendations and reviewing budget processess Assessment description Complete financial reports and make recommendations on variances. Complete general answer questions. Specifications financial data tabled is accurately basic accounting terminology is used in recommendations sound reasoning is used in calculating the strategies that are recommended. Submission guidelines The assessment task is due on the date specified by your facilitator. Any variations to this arrangement must be approved by your facilitator in writing. The method of submitting the assessment (electronic or hardcopy) will be specified by your facilitator prior to the due date. Adjustment for distance-based learners No adjustment necessary. 2010 Innovation and Business Industry Skills Council Ltd Page 28 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Part 1 Below are the 2008 budgeted cash flow figures from the Jolimont accountancy firm. Can you use the figures from the income statement below, to complete the actual figures for Jolimont accountancy firm for 2008? Look at where the cash for the company has come from and explain if this is a sustainable cash resource for the business. List any outstanding variances for the business and possibilities for the variances. What corrective measures would you put in place to help control these costs in the future? Jolimont accountancy firm BUDGET 2008 $ Cash flows from operating activities Collections from debtors Collections from cash sales Interest received Payments to creditors Wages and salaries Interest Payments Other operating expenses paid Income tax paid Total cash flows from operating expenses 210,000 160,000 2,300 -121,000 -16,000 -3,500 -17,000 -21,000 193,800 Cash flows from investing activities Proceeds from sale of property Payment for motor vehicle Purchase of shares in Singh's Ltd Total cash flows from investing activities -12,000 -12000 Cash from financing activities Proceeds from call on shares Loan from Abbotsford Mortgage Co. Loan repayments Dividends Paid GST Collections GST Paid ATO-GST Settlement Total cash flows from financing activities Net change in cash Opening bank balance Closing bank balance ACTUAL 2008 $ VARIANCE 2008 $ 7,000 -14,000 -28,000 12,400 -13,800 -1,400 -36,400 145,400 559,220 704,620 Income Statement for 2008 Account 2010 Innovation and Business Industry Skills Council Ltd Debit Credit Page 29 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Cash flows from operating activity Collections form debtors 180,000 Collections from cash sales 170,000 Interest received 2,300 Payments to creditors 139,000 Wages and salaries 21,000 Interest expense 10,900 Other operating expenses paid 48,120 Income tax paid 39,984 Total cash flow from operating activity 93,296 Cash flow from investing 18,000 Purchase of shares in Singh's Ltd Total cash flow from investing activity Cash flows from financing Proceeds from call on shares 21,000 180,000 23,000 Loan from Abbotsford Mortgage Co. Loan repayments Dividends paid 41,000 16,000 14,000 GST collected GST paid ATO GST settlement (refund) Total cash flow from financing activities Net change in cash flows 2,000 137,000 212,296 559,220 771,516 Opening bank balance Closing bank balance 1. Explain if the source of cash sustainable, and list any outstanding variances you have noticed below: 2010 Innovation and Business Industry Skills Council Ltd Page 30 of 35 Assessment task 4 BSBFIM501A Manage budgets and financial plans 2. Now in the space provided, list the corrective measures you would implement: Corrective measure 1: Corrective measure 2: Corrective measure 3: Corrective measure 4: 3. The financial controller has decided to increase debt repayment time for debtors from 60 days to 120. This had led to an increase in sales but what are the consequences? Where do we look for this information in our business records? 2010 Innovation and Business Industry Skills Council Ltd Page 31 of 35 Assessment task 4 financial plans BSBFIM501A Manage budgets and Part 2 Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be less likely to occur in the future. Using these improvements, complete the evaluation grid below. An employee who has been paid too much annual leave: A large tax liability owed to the ATO: An inflated budgeted expense account: A sales representative's overpaid bonus: A large bank overdraft: A trial balance that does not balance: Overstated bad debts allowance: Understated accounts payable: 2010 Innovation and Business Industry Skills Council Ltd Page 32 of 35 Assessment task 4 BSBFIM501A Manage budgets and financial plans Evaluation grid Idea Suitability for target audience Technical feasibility 2010 Innovation and Business Industry Skills Council Ltd Commercial potential Possible impacts Resources required Time constraints Explore further? Yes/No Page 33 of 35 Assessment task 4 BSBFIM501A Manage budgets a Short answer questions 1. What are the roles and responsibilities of an auditor? 2. What is an ageing summary? 3. List the process you would follow if you identified a cost variation. 4. What is the difference between a favourable and unfavourable variance? 5. List the advantages of ensuring effective monitoring of financial processes. 6. List the steps you would follow to implement and monitor improvements or changes made to the financial management process. 2010 Innovation and Business Industry Skills Council Ltd Assessment task 4 BSBFIM501A Manage budgets a 7. List the communication strategies you would use to disseminate information about budgets/financial plans to team members. 8. List the advantages and disadvantages of the communication strategies identified in question 7. 2010 Innovation and Business Industry Skills Council Ltd