BSBFIM501 Manage budgets and financial plans

BSBFIM501

Manage budgets and financial plans

Assessment 1

SCeNArio

Assessment due date:        5.00pm, <insert date>

Assessment type:   Individual assessment

Assessment format:          Report

Submission details

• This assessment task is due to be submitted at reception by 5.00 pm on the <insert date>.

Ø  Any variations to this arrangement must be approved in writing by your assessor. Students may request alternative arrangements subject to individual circumstances in consultation with the course coordinator and trainer of the unit.

Ø  A printed version of your assessment must be submitted with any required evidence attached.

• A completed cover sheet must be submitted with all assessments.
• Failure to submit your complete assessment by the date specified will be deemed as non-submission.
• You are required to fill in, sign the academic honesty statement, and attach the assessment cover sheetto the front of your submitted assessment. Ensure you sign the receipt form when submitting.
• Plagiarism: Failure to adhere to the plagiarism policy, as outlined on the assessment cover sheet, will lead to the non-acceptance of the submitted assessment, as well as a written warning for breach of the policy.

Performance objective and Assessment description

Students are required to demonstrateskills in planning and implementation of financial management approaches.

Instructions for the student

Assessment 1 is compulsory. You are required to achieve competency in all questions to be deemed Competent for this unit.

The following tasks maybe completed (i) as a workplace project based on your organisation and job role, (ii) as a simulated workplace project based on an organisation you are familiar withand are able to access sufficient information through research, or (iii) a fictional organisation where you are required to provide inputs..

If you choose to use your own organisation, you will need to obtain permission from management as you might need to present sensitive and confidential information.

Where possible, attach examples of the financial documents you make reference to in order to support your answers.

Task requirements:

1. Using your current workplace or a simulated workplace where you are the manager, describe the following:

(a)        The name of your organisation and the types of business activities it conducts.

Our organization is known as Beta Botanical Cosmetics. The firm majors in the production of cosmetic products that are purely natural. The firm is also involved in the manufacturing of these products, supplying these products as well as marketing. The firm is working towards the establishment of a strong brand in the community, and it looks forwards to becoming the best natural product producing firm in the cosmetic industry.

(b)        Your work team and your primary responsibilities in the work team.

I am the head of our work team; whose primary responsibilities are to oversee the manufacturing process. As a firm, we believe that the manufacturing step is the essential step to ensuring a long-standing brand in the market. My team and I ensure that the manufacturing of these products goes through all the processes required. The initial step, which is the selection is the most hectic and also the most important. Ideally, the distinction of the different products is vital at this stage. Once the plants are mixed, the resulting mixture will be unfit for the production of a pure product. As such, when making this suspension, we must be keen on the first stage. We are a team of five, each person assigned to a specific scene. The primary purpose in these stages is to ensure that all the ingredients are put at a particular processing stage, and by doing this, we ensure that we maintain our competitive advantage over the other competitors.

(c)        The types of budgets and financial plans that you are responsible for orcan access.

As the team’s manager in the manufacturing sector, I have access to finances in the manufacturing department. The firm thought it wise to have every department compile its investments before they are collected in the overall platform since it is the best way of getting the finances in check. In this department, I am responsible for purchasing the supplies that are required in the manufacturing process. We keep the balanced budget that is mainly used to keep our incoming money and the money going out in check (Balseiro). Unlike other available budgets, this one is intended at showing the actual financial status. Through this budget, we have established a financial system that accounts for all the money we pump into the business, the profits that come with it as well as the amount of money invested in the company. With the developed technologies, the firm has established a new ERP system that takes into account all the products that have been purchased and this makes it easy for the finance department to keep the finances in check.

2. Select one of the budgets or financial plans described in Question 1c. T The budgets and financial plans must include budgets, ageing summaries, cash flow, petty cash, GST, and profit and loss statements. Attach a copy/example of the document/s.

• Identify the relevant personnel you will consult with in order to seek clarification or to propose changes to the budgets or financial plans, or to disseminate financial information.

The financial sector is a very sensitive department that determines the performance of the firm. Since the company recognizes this, the firm has the finance department set aside some of the consultation sectors that aid in checking the operations of the company as well as giving financial advice on matters concerning the financial operations of the company (Dudin, Mihail, et al.). For instance, the firm has a total of five financial analysts who are involved in offering advice to the company and foreseeing its investment decisions. Additionally, the firm has introduced a market analyst department that is mainly engaged in researching the market. Since the firm thrives through selling its product on these markets, the firm incorporates the actions of the marketing analysts as a part of the financial department since the projects given by this department are used for the investment purpose. Similarly, the marketing department determines the overall performance of the firm since the sales and the profits are achieved from the directives that the market gives.

• Explain how you will consult with the relevant personnel as per point 2(a).

The best way of consulting with the financial analyst at this point is by giving them access to the operations of the firm so that they can compute all the financial transactions that take place. Most importantly, the financial analysts need to be involved in all the plans of the company so that they can determine if they are a good idea in promoting the operations of the firm. The financial analysts can either advice for or against the operations and plans of a firm depending on the data they have at hand (Dudin, Mihail, et al.). As such, it is essential that they are given access to the details of the company. This is the same case when it comes to the marketing analysts. In this case, the marketing analysts should be consulted before any decision about investing in a market or pulling out is concerned. Ideally, these people have all the analysed data and facts that the firm might need to make an investment decision. As such, these people are the best when it comes to making these decisions. They should, therefore, be given a chance to have access to the operations of the firm, including the market surveys and data collected during the market study.

• Explain how you will ensure that documented outcomes in the budgets or financial plans are achievable, accurate and comprehensive.

Budgets are usually created to not only account for the money invested but also guide the expenditure. After setting an objective of meeting the documented figures in terms of investing, the firm should ensure that it keeps its spending strictly to the numbers that have been listed on the budgets. The best way to avoid miscellaneous is by authorizing only the amount that is indicated on the budget, and ensuring that it serves the purpose that is set for (Balseiro). For instance, if the money is set out for advertisement, then the finance department should ensure that it monitors the use of the money to meet the purpose. Furthermore, the project in which the money is injected should document every expenditure it incurs for accountability.

3. Part of financial management involves contingency planning. Based on the budget and financial plans from Questions 1 and 2:

(a)        Describe a situation where you have encountered issues that have or might affect your work team’s operation. How would these affect the original work plan?

The firm has managed to work to meet its deadlines and acquire the right resources for keeping the operations in check. However, when we were starting the company, we encountered a problem with our leading supplier, who could not deliver in time due to unavoidable circumstances. On this day, we had not learned of the art of outsourcing as fast as possible, and as such, we almost stopped our operations since we did not have the right ingredients to continue our steady supply of products and this affected the sales of the firm for a week. It also impacted on the number of transactions that we had at that time, and this meant that we lost our loyal customers to our competitors.

(b)        Prepare a contingency plan to overcome the issue identified in (a). Your contingency plan might include but not be limited to:

• Any adjustments in your budget or financial plan that you or your work team would or have taken to resolve the issues.

On the financial budget, we will cut on the cost of expenses such as the allowances that the group members are given with respect to making their lives comfortable. Transportation allowances can be cut and instead, the firm provides transport so that these people can get to where they want to go without spending so much.

• How you would make adjustments to ensure you achieve the same outcomes as per the original plan.

Contingency planning is an essential aspect of the operations of any firm. In the business world, events happen, and as such, it is essential that the firm incorporates this as part of their services (Mundy, Julia, et al.). In this case, for instance, the contingency plan that proved to be more effective in this case was outsourcing suppliers. Since our loyal supplier was not delivering a week later, it was vital that we involved the operations of another supplier fast. In outsourcing and getting a client within the shortest time possible, we had to increase the amount invested in our budgets. After solving the problem of supplies, we came to learn that our budgets should be accommodative of contingency plans just in case we land into another problem.

(c)        Review the implementation of the contingency plan and describe the actionsyou would takefurther to improve the financial management process in the future.

The Implementation of the contingency plan must be supported by a document that effectively points out the specific actions that might disrupt the normal functioning of the firm’s operations. In this case, for instance, the unreliability of suppliers should be indicated. Additionally, there is a possibility of failure in the operational machines that are responsible for the effective operations of the firm. Secondly, the document must show the likelihood of natural disasters such as fire and earthquakes (Mundy, Julia, et al.). Each obstacle should be mentioned and forwarded to the budgeting sectors so that some funds can be set aside to salvage the situation. Another aspect that should be noted is threatening employees, and this includes issues such as strikes and boycotts that might hinder the timely delivery of goods. After taking note of the factors as well as the financial budgets given on each, the company can release funds to be reserved for these purposes. The best way of improving financial management is by creating budgets and working within the given budgets to avoid making losses.

4. To ensure an effective and smooth process of planning and implementing budgets and financial plans, it is essential to involve all members of the work team. Using the budget or financial plans outlined in the previous section or a similar plan, explain:

(a)        The steps you would take or have taken to disseminate the relevant information to your work team.

There are three ways of disseminating information, the dissemination for awareness, understanding and action. Understanding the role of distribution is essential in conveying information. Information delivery is the most essential aspect of any project. As such, it consumes more time than is expected by most people. The primary step of information dissemination is to match the message to the needs of the audience (Inan, Gurkan, and UmitBititci). This can be done in various ways, including slogans on t-shirts, or even a video on YouTube. As the leader of the group, it is essential to find a means that will work effectively for the audience(team). The second step is delivering the information on a personal basis. Research has it that most viewers can connect to the message being delivered if a person addresses them. Thirdly, we will provide the information in bits considering that the project is done on parts. Providing this information in these parts will increase the chances of understanding for the team and will also not burden them. The last step in delivering a message is illustrating. As the team sees the practicality of the message being delivered, they will understand more, and it is also a better way to appeal to their dedication.

(b)        The roles and responsibilities that you would allocate to your team before the implementation of the budgets and financial plans.

Team members are the main contributors of either the success or failure of an organization. As such, a leader must assign the team duties and responsibility to enhance the effective management of the budget system. For instance, I can assign the team the responsibility of counterchecking the records. This can be done by analysing the cash flow statement against the general ledger. Secondly, I can allocate another group to analyze the records of uncertainties of the economic forces and the predictions that were made at these times to evaluate the information effectively. Through the division of labour in conducting the financial analysis, we can come to an informed decision about the most effective budget plans.

• The resources and systems you would/have used to ensure your team members can perform their allocated tasks competently.

I am planning on using the performance contract form, in which I will list the tasks against the names of every member of the team. Through this, they will indicate when they have completed and at the same time, rate their performance.

5. After the implementation of a budget or financial plan it is essential to monitor actual money spent to identify cost variation and expenditure overrun. Explain the organisational process in:

(a)        Monitoring expenses, including associated timeframes.

Monitoring the budget is an essential role of the firm since through this, it sees to it that the firm’s operational and capital plans are being implemented. The firm can implement various methods that can effectively work in the budget monitoring process. In this case, for instance, we adopted two methods, one for the first round and the other one for counterchecking. We have set up the budget monitoring system, that works through monitoring the budget against the expenses. It also providesPeriodical Variance reports to control and plan Expenses (Inan, G. Gurkan, and Umit S. Bititci). Secondly, we have the ERP system that not only accounts for all expenses that have been incurred as well as the amount of money that was allocated for a project. As such, we can check the financial status of the projects and at the same time account for amounts that were used. We have to, however, physically be on the ground to ensure that the money released is being used for the intended purpose, and within the stipulated time.

(b)        Controlling costs.

The costs of the projects can only be controlled through the timely accomplishment of the assigned tasks. Considering that the agricultural sector is affected by different seasons, it is essential to not that different seasons come with different expenses of prices of the products as well as the overall cost of production. As such, it is essential that the budgeted timeline is met and everything is completed within that duration. This can be done by active involvement in monitoring and instructing.

6. Based on a variance in a budget or financial plan:

• Describe how you would or have implemented, monitored and modified your plan to ensure the financial objectives were/will be met.

Regardless of the variance that has been noted in the process of implementation, the expected plans and results must be met. This can be done by injecting more funds in the project to ensure the production of the quality that was initially desired.

(b)   Explain the relevant organisational procedures or protocols for reporting budgets to ensure compliance requirements are met.

The organization ensures that budget control is done based on outlined procedures that effectively cause organized and orderly budgeting. For instance, focusing on the central costs, which include financial plans, non-salary expenditure, capital budget and the budget time table (Balseiro). Additionally, there is the financial forecasting stage which involves aspects such as capital projects and budget variations. Offering supporting documents at this stage is essential in that it contributes to the creation of a cohesive budget.

(c)       Describe an area in financial management that needs or has been identified to require improvement. Document or recommend the actions taken/to be taken to improve the existing processes.

The record-keeping part of budgeting should be considered when making improvements for the firm. This can be improved through reinforcing the process by making it a to-do daily in the task list.

BSBFIM501

Manage budgets and financial plans

Assessment 2

written test

Assessment due date:        5.00pm, <insert date>

Assessment type:   Individual assessment

Assessment format:          Knowledge-based questions

Submission details

• This assessment task is due to be submitted at reception by 5.00 pm on the <insert date>.

Ø  Any variations to this arrangement must be approved in writing by your assessor. Students may request alternative arrangements subject to individual circumstances in consultation with the course coordinator and trainer of the unit.

Ø  A printed version of your assessment must be submitted with any required evidence attached.

• A completed cover sheet must be submitted with all assessments.
• Failure to submit your complete assessment by the date specified will be deemed as non-submission.
• You are required to fill in, sign the academic honesty statement, and attach the assessment cover sheet to the front of your submitted assessment. Ensure you sign the receipt form when submitting.
• Plagiarism: Failure to adhere to the plagiarism policy, as outlined on the assessment cover sheet, will lead to the non-acceptance of the submitted assessment, as well as a written warning for breach of the policy.

Performance objective and Assessment description

Students should demonstrate their knowledge of a range of topics in organisational record keeping, finance management and auditing.Students are required to, using their own words, apply the knowledge they have gained from the course to their written responses.

Instructions for the student

Assessment 2 is compulsory. You are required to achieve competency in all questions to be deemed Competent for this unit.

Read the questions carefully and try to answer all questions. This assessment constitutes of short-answer knowledge questions where students are required to complete all questions and submit it before or on the due date. The questions cover a range of topics from this unit.

Please note that you are required to complete this task individually and demonstrate your own understanding of the topics and concepts through examples, analysis and additional research.  You must use your own words to demonstrate your understanding and back your claims with examples and references to common practice, theory etc.

Questions:

1. (a) What information is required to manage an organisation’s finances effectively?

Financial management is an essential aspect of any investment because it is the determinant of either profits or losses in a business. One of the most essential information that is required is the budget. This is an indication of the amounts projected and allocated for various activities of the firm(Dudin). Secondly, bookkeeping is an essential aspect of sufficient financing since it points out the multiple allocation of funds, including the money ploughed back as well as the expenditure. Information from various reports is also essential, especially when finding out about anymiscellaneous. Internal controls will also enhance a good financing schedule. The internal controls include random but frequent checks by the organization to ensure that everything is working as planned.

• Why do organisations need to maintain accurate and timely financial information?

Maintaining an accurate as well as timely financial information is useful in measuring the health of the business. In this case, for instance, it aids in determining whether the firm has room for improvement and its position financially as at now. Additionally, from this information, the firm gets to project and predict the future financial needs of the firm. It is also useful in determining the nature of the market at the time and some years in the future.

• Identify the relevant legislation and current requirements of the ATO?

For any business, the following are the requirements for ATO,

• receipts and other evidence of all sales and purchases you made for your business.
• All documents about GST.
• records of the purchase,
• sale and other costs of any business assets, such as land.
• tax invoices, wage and salary records

2. Who is usually responsible for an organisation’s financial management? Explain how they may support the work team to achieve required financial outcomes.

Similar to most organisations, Beta Botanical Cosmetics, has the financial manager and the finance department is responsible for managing the finances of the firm. These people can support the team through tracking day to day activities of the team. They can also contribute to effectiveness by making suggestions on the best financing model to use on a specific project. They also take part in the process of making financial decisions regarding a plan and through this, they can effectively work on supporting the team to achieve the financial outcomes necessary.

3. Describe the10 basic Accounting Principles and Guidelines.

These are the general rules and principles that are used to guide the operations in the accounting field.

• There is the Economic Entity Assumption, which stipulates that the businesses of a sole proprietor differ from the personal transactions of the person.
• Secondly, the Monetary Unit Assumption, which explains that economic activities are to be measured in dollars and only these transactions can be recorded.
• The Period Assumption, which assumes that there is a possibility of recording complex and on-going activities of a business in short time intervals. For example, eight months ended May 31, 2020.
• Cost Principle, states that amounts are not adjustable upward for inflation. As such, the cost of something is its price at the time it was bought.
• Full disclosure principle, which states that any important information to the investor has to be disclosed in the papers or during the contract,
• Going concern principle, which holds the belief that all companies will exist until they meet the objective of their formation and not even one will be dissolved in the near future.
• The matching principle explains that all the expenses in the accounting sectors should be matched with the revenues (Venkat).
• Revenue recognition principle states that as long as a product is sold or service delivered, the revenue is recognized regardless of when the money is issued.
• The materiality principle allows an accountant to violate another accounting principle as longs as the amount involved is insignificant.
• Conservatism principle explains that if there are two way available for reporting an item, the accountant has to choose a method that will lead to a less net income. Also known as breaking a tie.

4. (a) What is GST, and how is it implemented?

Goods and services taxis an indirect tax that applies to certain goods and services. This is also the value-added tax. This tax is incorporated in the price of a product, and as long as one purchases the product, he or she has paid the fee.

(b)        Who is required to register for GST?

Registration for GST is required for the businesses whose revenue is above Rs. 40 Lakhs. Also, the casual taxable person should register (Venkat). Agents of a supplier, the people who pay taxes through the reserved charge mechanism are also expected to register, and every e-commerce aggregator.

5. (a) What is a Business Activity Statement (BAS)?

This a form that existing and registered business entities present to the Australian Taxation Office in a way to report their tax obligations. This report caters for all types of taxes that these people are exposed to.

(b)        What are the three reporting cycles for business activity statements (BAS)?

Some of the most common reporting cycles for the BAS includes monthly, quarterly and annually.

(c)        What are the records that a business must maintain to prepare Business Activity Statements?

Some of these records include, receipts, bank statements, invoices, and tax return documents.

6. Explain how a manager ensures that legislative requirements for financial management are complied with, i.e.reporting and auditing requirements. Include all items that must be reported to the Australian Taxation Office.

Record keeping for the ATO should include a record of all the running, changing as well as the record relevant to the tax when selling the business.

7. a) Explain the critical requirements for financial record keeping.

Record keeping is essential in financial record keeping. First of all, record keeping will require an understanding of the law that applies to the business. In this case, for instance, using the electronic record keeping will require that a person have a hard copy of the ATO. Secondly, for financial reporting, a person will need to have the ASIC’s Regulatory index – financial reporting. Lastly, one will have to keep the financial records for five years.

(b)    Identify at least THREE benefits of maintaining accurate business record keeping.

• Documents that are kept well in an orderly manner are an implication of tax saving
• Good accounting also proves to be useful as the back-up for the financial transactions that took place during the time of auditing
• Keeping records effectively is also a requirement of the law.

8. (a)        What are financial audits?

Financial audits are the independent, evaluation of the financial reports and the record-keeping process.

(b)        What are the THREE financial areas that are reviewed in an internal audit?

• Documentation of the company’s financial statements
• Accounting Entries and Data
• Tax returns

9. (a) Explain why cashflow management or forecasting is essential in business.

An effective cash flow management system ensures that the firm can pay salaries in time and at the same time, retain money for its day to day activities, as well as the expansion of the business.

(b)    Detail FOUR principles and techniques for managing cash flow:

Cash flow management techniques include

• keeping track of the cash flow to know the status of the cash flow.
• Additionally, cutting out inefficiencies is important in controlling expenditure and maximizing the profits.
• A continued investment in the people, as well as the resources, is a step to stabilizing the cash flow system.
• Invoice financing is also essential since it not only keeps the records of the items but at the same time account for the amount used.

10. Name THREE common business principles and techniques for managing electronic spreadsheets.

• Creating and Managing folders
• Property/ Saving Documents
• Safety of Documents

11. What is a general ledger? Describe the principles and techniques involved in managing ledgers and financial statements.

This is the main document of the accounting records of a firm.  Maintaining ledgers require keenness and commitment since they cater to all the financial records and materials that are in use in an organization. As such, a person has to post entries on the ledger regularly. Secondly, total the general ledger accounts, thirdly, preparation of preliminary trial balances are effective in supporting the ledger. The adjustable journal entries can also be effective in managing the ledgers.

12. (a) Explain what a profit and loss statement/report is.

A profit and loss statement is a report that shows a summary of all the revenues, the cost and the expenses that a company incurred during a specified duration. Most of the time, the profit and loss statement is done in a quarter of a year.

(b)        Describe THREE principles and techniques in managing profit and loss statements.

The management of the profit and loss statement can be done in three major ways. The first one is the initial financial assessment, which involves the management of the current financial position of the company. This is mainly done through a comparison of the data with the revenue data within the past years.

Secondly, the management can be done by preparing analytical tools. This involves making documents such as the common size income statements, which gives the managers the chance to identify and isolate the costs that are likely to reduce the profits (Venkat). Thirdly, there is the approach through sales review. Here, the manager has to look at the sales and take note of the various conditions and seasons that might contribute to the changes that are noted in the sales. By doing this, the manager can know what to do in the future when he or she notices irregularities in the projected income.

13. (a) List at least FIVE sources of data or information you would use to evaluate the effectiveness

of the financial management process

• Budget
• Profit and Loss statement
• Balance sheet
• Cash count and bank reconciliation
• Payment processing forms

(b)       Explain the approach you would use to analyse the data and information that you

gathered to identify any future improvements in financial management processes

Data analysis is essential in the decision-making process. As such, making the right choice of the data analysis approaches will be useful in making the right financial decisions. When conducting analysis, I will employ several strategies that will guide me into making the right decision regarding the finances of the firm. First of all, I will look into the statistical analysis, in which I will evaluate all the data presented and collected over the years relating to the various parts of the firm. Through this method, I will be in a position to analyse the data against those that were collected years back and make conclusions about the performance of the organization.

I will also conduct a diagnostic analysis, wherein I will try to answer the question, Why did it happen?By knowing the push factors for a specific change in the finances of an organization, I can get a better position to make informed financial decisions.

14. Describe THREE principles and techniques for managing the budgeting.

• Tracking adjustments: this is important since it enables a person to effectively meet the invested amount as well as the expenses that it was associated with.
• Making projections of the future, in a month or two, based on the data that is collected on the past.
• Check budgets on the screen: this is the application of the rules that aid in controlling the expenditure so that it does not exceed the planned price.

Works Cited

Balseiro, Santiago, et al. “Budget management strategies in repeated auctions.” Proceedings of the 26th International Conference on World Wide Web. 2017.

Dudin, Mihail, et al. “The organization approaches peculiarities of an industrial enterprises financial management.” Life Science Journal 11.9 (2014): 333-336.

Inan, G. Gurkan, and Umit S. Bititci. “Understanding organizational capabilities and dynamic capabilities in the context of micro enterprises: a research agenda.” Procedia-Social and Behavioral Sciences 210.2 (2015): 310-319.

Lacy, Shawnteeonia, et al. “Accounting System Features.” (2019).

Mundy, Julia, et al. “Rethinking budgetary slack as budget risk management.” Journal of Applied Accounting Research (2011).

Venkat, A. Mahesh. “GST Model for India.” The Management Accountant Journal 51.4 (2016): 27-29.