Recent Question/Assignment

BSBFIM501A Manage budgets and financial plans
STUDENT ASSESSMENT GUIDE
SUMMARY SHEET
This summary is to be completed by the AVETA assessor and is used as a final record of student competence.
Student’s evidence and assessor checklists are to be attached to this summary.
Student Name: Student Group:
Student ID No: Completion Date:
Unit Code: BSBFIM501A
Unit Title: Manage budgets and financial plans

Assessment
Method
Assessment
Evidence Result
S - Satisfactory
NS – Not Satisfactory
Assessment 1 Case study/
Direct Observation/
Portfolio of work ? Contingency plan S | NS
Assessment 2 Case study/
Direct Observation/
Portfolio of work ? Coaching/training plan S | NS
Assessment 3
Case study/
Direct Observation/
Portfolio of work/
Report ? Budget variation report,
Modified contingency plan and
Modified contingency implementation plan S | NS
Assessment 4
Case study/
Direct Observation/
Portfolio of work ? Hard copy of satisfactorily completed and typed responses to the five scenario activities S | NS
Final Assessment Result for this unit ? COMPETENT ? NOT YET COMPETENT

Student Declaration: I declare that the evidence I have submitted for Assessment for this unit of competency is my own work and that:
• I have been assessed in this unit.
• I have been provided with feedback.
• I have been advised of my result.
• I am aware of my appeal rights.
Student name:____________________
Signature: _____________________
Date: ____/_____/_____ Assessor Declaration: I declare that:
• Where I have deemed the student as Competent the student has satisfactorily completed all the required assessment tasks for this unit of competency
• Where I have deemed the student Not Yet Competent, the student has not satisfactorily completed all the assessment tasks for the unit
• I have conducted these assessments in accordance with principles of assessment and rules of evidence
• I have provided appropriate feedback to the student
• I believe that the evidence that the student has submitted for this unit of competency to the best of my ability is the students own work.
Assessor name:__________________________
Signature: ____________________________
Date: ____/_____/_____
Comments (If the student is deemed Not Yet Competent the Assessor MUST state the circumstances and reasons why this judgment has been made):
CHEATING & PLAGARISM DECLARATION
Student Declaration: In accordance with AVETA’s Cheating Policy’ and ‘Plagiarism Policy’ I hereby acknowledge by signing this declaration that I have not cheated or plagiarised any work in regards to all the assessment tasks undertaken in this unit of competency except where the work has been correctly acknowledged.
Student name: _______________________________
Signature: ____________________________
Date: ____/_____/_____
Administrative use only
Entered onto Student Management Database ?________________
Date
Initials
Assessment Guidelines for Student:
• You are to complete all the assessments, in accordance with AVETA’S Assessment Policy and that are outlined in this document i.e. Assessment 1, 2, 3 & 4 and present your evidence to the Assessor so that you can be graded as either S – Satisfactory or NS – Not Satisfactory for each assessment task. In either case your Assessor will provide you with feedback.
• If the evidence is graded as NS – Not Satisfactory you will be required to re-submit the evidence within your enrolment period for the qualification.
• In this case you will be provided with clear and constructive feedback based on the assessment decision so that you can improve your skills / knowledge prior to submission of evidence.
• Only when all assessments have been graded as S - Satisfactory you will be deemed C – Competent in this unit of competency; if you do not satisfactorily complete all the assessment tasks you will be deemed NYC – Not Yet Competent for this unit of competency and appropriate feedback will be provided to you by your assigned assessor.
• Your Assessor will use the checklists, in this document, to ensure that all assessment requirements have been met.
Special consideration
• If you require a reasonable adjustment, you should discuss the matter with your assigned assessor in accordance with AVETA’s Special consideration Policy.
• If you are dissatisfied with an assessment decision you should make an appeal to AVETA in writing no longer than 20 days following advice of the assessment decision, in accordance with AVETA’s Complaints and appeals Policy.
ASSESSMENT 1 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
STUDENT INFORMATION
Assessment Description:
You must demonstrate the ability to plan financial management approaches.
In response to the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 in this assessment, you will clarify budget plans with your manager and negotiate changes to the budget. You will then identify and analyse a risk to the budget and prepare a contingency plan to prevent or minimise the risk.
Procedure:
1. Read through the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 of this assessment in order to undertake Task A and B outlined below. Also read Big Red Bicycle Pty Ltd Budgeting and finance policy (under Appendix 2 of this assessment) and Budget information (under Appendix 3 of this assessment) in order to complete Task A and B:
Your role
You are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently out sells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect the both the needs and importance to the business of Cost Centre A.
Task A
The Sales General Manager, Sam Gellar has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the budget projections are achievable, accurate, understandable and fair.
She would like you to look at the budget for your cost centre closely, note any changes you think are necessary, develop an argument for the changes and negotiate those changes with her.
Information you are aware of includes:
? Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) are generally 30% less than the second quarter (Q2).
? Sales in Q2 depend on completion of 90% of repair and maintenance.
? Sales for Q2 have been estimated to be $1,000,000.
? Commission negotiated with members of the sales team is now at 2.5%.
2. Prepare to meet with your manager (assessor) to clarify budget and negotiate changes:
a. Identify areas of the budget that are not achievable, inaccurate or unclear
b. Prepare to negotiate necessary changes to the budget
c. Set up a time with your manager to meet.
3. Meet with your manager (assessor) to clarify budget and negotiate changes:
a. Identify at least two issues for clarification
b. Negotiate at least two changes.
NOTE: Your assessor will be observing your performance throughout this meeting along with enacting as your manager.
Task B
It has come to the attention of the managing director, Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid Q2, when sales data for the company’s product are in.
As a special project, the managing director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%.
4. As per Big Red Bicycle Pty Ltd Budgeting and finance policy given under Appendix 2 of this assessment and using the contingency plan template provided under Appendix 4 of this assessment, you will prepare a contingency plan to manage the risk of sales falling 20% (as described under Task B of Appendix 1 of this assessment).
Submit all the assessment evidence to your assessor within the agreed timeframe. Ensure you keep a copy of all work submitted for your records.
What you must provide:
1. Contingency plan - Appendix 4
Your assessor will be looking for:
• Ability to clarify budget and negotiate changes with your manager
• Numeracy skills to read and understand a budget and negotiate budget re-allocations
• Knowledge of basic accounting principles to identify and use account balances
• Knowledge organisational requirements related to financial management such as contained in organisational policies and procedures
• Knowledge of principles and techniques involved in budgeting.

APPENDIX 1: Big Red Bicycle Pty Ltd scenario
Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.
Organisation name Big Red Bicycle Pty Ltd
Established 01/07/2007
ABN/ACN 87671495227/671495227
ABN Branch 347
Address 1357 Slippery Dip Trail, Bendigo, Victoria, 3101
Postal Address PO Box 4589, Bendigo, Victoria, 3101
Phone (03) 9905 0217
Fax (03) 9905 7210
Email big_red_bicycles@bigpond.com
The senior management structure of the company appears below.
Person Position
Michelle Yeo CEO
Tom Copeland Managing Director
John Black CFO
Stuart LaRoux Operations General Manager
Pat Roberts Senior Accountant
Sam Gellar Sales General Manager
Charles Pierce Production Manager
Holly Burke HR Manager
According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:
? Poor sales due to economic downturn
? Increases in expenses such as wage expenses.
In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
APPENDIX 2: Budgeting and finance policy
Budget preparations
? The business plan will set the key parameters for all financial budgeting.
? Variations to the business plan must be approved by the CEO and senior management strategic committee.
? Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
? The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and finance manager.
? A CAPEX budget will be developed from the approved business plan.
? A detailed sales budget must be completed before completing the profit budget for the year.
? A cash-flow budget covering the first three months will be prepared after the profit budget is completed.
? A master budget including profit projections will be completed from which cost centre allocations will be made.
? Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.
? Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
? All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
? The financial cycle for budgeting purposes will be yearly ending 30 June.
Reporting requirements
Software applications to be used in reporting.
? Environment – Windows
? Accounting Information System – BRB will use Free Accounting Software
? Data analysis – BRB will use Microsoft Excel 2007.
Actual results will be produced monthly by the Free Accounting Software system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.
Financial delegations
? Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.
? Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
? Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
? Name of the person who prepared it
? Cost centre (if applicable)
? Name of the budget/report, i.e. Sales, expenses, Capex, cash flow, budget variation report
? Period of the budget.

APPENDIX 3: Budgets
Master budget with profit projections
Big Red Bicycle Pty Ltd
Master Budget FY 2011/2012
FY Q1 Q2 Q3 Q4
REVENUE
Commissions (2% sales) 60,000 15,000 15,000 15,000 15,000
Direct wages fixed 200,000 50,000 50,000 50,000 50,000
Sales 3,000,000 750,000 750,000 750,000 750,000
Cost of Goods Sold 400,000 100,000 100,000 100,000 100,000
Gross Profit 2,340,000 585,000 585,000 585,000 585,000
EXPENSES
General & Administrative Expenses
Accounting fees 20,000 5,000 5,000 5,000 5,000
Legal fees 5,000 1,250 1,250 1,250 1,250
Bank charges 600 150 150 150 150
Office supplies 5,000 1,250 1,250 1,250 1,250
Postage &printing 400 100 100 100 100
Dues & subscriptions 500 125 125 125 125
Telephone 10,000 2,500 2,500 2,500 2,500
Repairs & maintenance 50,000 12,500 12,500 12,500 12,500
Payroll tax 25,000 6,250 6,250 6,250 6,250
Marketing Expenses
Advertising 200,000 50,000 50,000 50,000 50,000
Employment Expenses
Superannuation 45,000 11,250 11,250 11,250 11,250
Wages &salaries 500,000 125,000 125,000 125,000 125,000
Staff amenities 20,000 5,000 5,000 5,000 5,000
Occupancy Costs
Electricity 40,000 10,000 10,000 10,000 10,000
Insurance 100,000 25,000 25,000 25,000 25,000
Rates 100,000 25,000 25,000 25,000 25,000
Rent 200,000 50,000 50,000 50,000 50,000
Water 30,000 7,500 7,500 7,500 7,500
Waste removal 50,000 12,500 12,500 12,500 12,500
TOTAL EXPENSES 1,401,500 350,375 350,375 350,375 350,375
NET PROFIT (BEFORE INTEREST & TAX) 938,500 234,625 234,625 234,625 234,625
Income Tax Expense (25%Net) 234,625 58,656 58,656 58,656 58,656
NET PROFIT AFTER TAX 703,875 175,969 175,969 175,969 175,969
Sales cost centre expense budget
Sales Centre A Sales Centre B Sales Centre C
Commissions $20,000 $20,000 $20,000
Wages $100,000 $100,000 $100,000
Telephone $3,000 $3,000 $3,000
Office supplies $1,000 $1,000 $1,000
APPENDIX 4: Contingency plan template
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan:
Name Position
Risk identified:
Strategies/activities to minimise the risk By when By whom

ASSESSMENT 1 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
ASSESSOR CHECKLIST
This checklist is to be completed by the assessor and used as a record for student performance for this task.
Student Name:
Student ID No:
Unit Code: BSBFIM501A
Unit Title: Manage budgets and financial plans
Assessment Criteria - Plan financial management approaches Satisfactory Not Satisfactory
Did the student submit the following documents
Contingency plan - Appendix 4 ? ?
Within agreed timeline ? ?
Did the student
Meet with the manager to clarify budget and negotiate changes ? ?
Access budget/financial plans information for Big Red Bicycle Pty Ltd ? ?
Clarify budget/financial plans with relevant personnel within the organisation to ensure that documented outcomes are achievable, accurate and comprehensible i.e. Student should discuss at least two of the following:
? Discrepancy between profit company profit goals and budget projections
? Discrepancy between commissions negotiated and in budget
? Sales spread too evenly over the year to be accurate
? Budget for repairs and maintenance not realistic
considering need. ? ?
Negotiate any changes required to be made to budget/financial plans with relevant personnel within the organisation i.e. student should negotiate at least two of the following:
? More commission allotted to Sales Centre A
? More wages allotted to Sales Centre A
? More telephone expense, etc. Allotted to Sales Centre A. ? ?
Prepare contingency plans in the event that initial plans need to
be varied i.e. student should develop a contingency plan with at least two of the following:
? Restructuring or renegotiating wages
? Diversification of product range
? Exploring overseas options for manufacturing and new markets unaffected by domestic downturn
? Increasing sales through marketing
? Reducing wastage
? Seeking funding to finance investment put at risk by poor profits.
Contingency plan should include completion of tasks required for implementation by Q2.
Contingency plan should include person accountable. ? ?
Demonstrate numeracy skills to read and understand a budget and negotiate budget re-allocations ? ?
Demonstrate understanding of basic accounting principles to identify and use account balances ? ?
Demonstrate understanding of organisational requirements related to financial management such as contained in organisational policies and procedures ? ?
Demonstrate understanding of principles and techniques involved in budgeting. ? ?
? Satisfactory
? Not Yet Satisfactory
(Please tick the assessment result for this task) If Not Yet Satisfactory – Please identify the re-assessment arrangements:

Student Declaration: I declare that I have been assessed in this assessment task, have been provided with feedback and I have been advised of my result. I also am aware of my appeal rights
Student name: __________________________
Signature: ____________________________
Date: ____/_____/_____ Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback
Assessor Name: __________________________
Signature: ____________________________
Date: ____/_____/_____

Comments/ Feedback (If the student is deemed Not Satisfactory the Assessor MUST state the circumstances and reasons why this judgment has been made):

ASSESSMENT 2 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
STUDENT INFORMATION
Assessment Description:
You are required to demonstrate the ability to implement financial management approaches.
In response to the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 in this assessment, you will access and communicate details of budget to a team member (assessor). You will then support the team member to perform their required role with respect to software resources and systems.
Procedure:
1. Read through the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 of this assessment in order to undertake Task A and B outlined below. Also read Big Red Bicycle Pty Ltd Financial policies and procedures (under Appendix 2 of this assessment) in order to complete Task A and B:
Your role
You are the manager of Sales Team A. You manage a small team of sales team members. Your duties include accessing budget information for your team, explaining relevant aspects of budgets and features of budget documents to your team, and supporting team members to achieve performance goals.
Task A
You have determined that you will need to access budget information from the Senior Accountant to explain to your team. You will explain the overall financial objective of the business, provide an overview of the budget and explain how the budget translates to expense allocations for the team.
Task B
You have determined that one team member, Bill Goodale, will be responsible for tracking expenses and petty cash throughout the financial year. To meet organisational needs, this duty will need to be performed in accordance with policies and procedures.
You have determined that expenses will need to be divided equally and tracked by quarter. Bill will need to develop a spread sheet to keep track of actual expenditure by account. To help you control expenses, the spread sheet will need to provide an ongoing tally of expense by account.
Bill’s skills include basic accounting. Bill needs to be informed of Big Red Bicycle policies and procedures for petty cash. Bill is familiar with Microsoft Excel but does not know how to use formula and functions to sum columns or rows of figures.
2. Prepare to meet with your team member(assessor) to communicate budget information and then coach and train them in new role for tracking expenses and petty cash:
a. Access required budget information from Senior Accountant (assessor). Microsoft Excel Spread sheet is available under APPENDIX A: BSBFIM501A_AT2_Budget_for_Team.xlsx and will be provided by your assessor.
b. Determine organisational needs
c. Identify coaching/training needs of team member
d. Plan coaching/ training session:
i. Outcome : team member produces spreadsheet to meet management requirements
ii. Include activities/elements to instruct, practice, test, motivate
iii. You may use Coaching plan template provided under Appendix 3 of this assessment.
e. Set up a time with your team member to conduct the coaching/training session
3. Meet with your team member (assessor) to coach them in role for tracking expenses and petty cash:
a. Explain the budget and its relevance to team member’s accountabilities
b. Use appropriate coaching techniques or models such as GROW
c. Use appropriate motivational theory
d. Train learner in required spreadsheet techniques. Include elements of instruction, practice and testing/feedback
Submit all the assessment evidence to your assessor within the agreed timeframe. Ensure you keep a copy of all work submitted for your records.
What you must provide:
1. Coaching/training plan - Appendix 3
Your assessor will be looking for:
? Role-play to support team member, so that they can competently perform required roles associated with the management of finances
? Numeracy skills to read and understand a budget and to communicate a budget
? Technology skills to access and use Microsoft excel for data analysis
? Financial skills to work with and interpret budgets and petty cash.
? Knowledge of basic accounting principles to identify and use account balances in communication and training
? Knowledge of organisational requirements related to financial management such as contained in organisational policies and procedures
? Requirements for organisational record keeping and auditing with respect to petty cash
? Knowledge principles and techniques involved in budgeting and electronic spreadsheets.

APPENDIX 1: Big Red Bicycle Pty Ltd scenario
Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers for on-sale in the domestic Australian market.
Organisation name Big Red Bicycle Pty Ltd
Established 01/07/2007
ABN/ACN 87671495227/671495227
ABN Branch 347
Address 1357 Slippery Dip Trail, Bendigo, Victoria, 3101
Postal Address PO Box 4589, Bendigo, Victoria, 3101
Phone (03) 9905 0217
Fax (03) 9905 7210
Email big_red_bicycles@bigpond.com
The senior management structure of the company appears below:
Person Position
Michelle Yeo CEO
Tom Copeland Managing Director
John Black CFO
Stuart LaRoux Operations General Manager
Pat Roberts Senior Accountant
Sam Gellar Sales General Manager
Charles Pierce Production Manager
Holly Burke HR Manager
According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:
? Poor sales due to economic downturn
? Increases in expenses such as wage expenses.
In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
APPENDIX 2: Financial policies and procedures
Expense Reimbursement
Purpose of the policy
To detail procedures to be followed in relation to expense reimbursement that has been incurred on behalf of the organisation.
The policy
Dolly’s Delight will reimburse staff for reasonable and authorised expenses that have been incurred by them on behalf of the organisation or in the course of conducting Dolly’s Delight business.
Procedure
1. Will not reimburse staff in the following circumstances:
a. Any late payment penalties, e.g. Overdue interest on credit cards
b. Expenses that are usually recovered from a third party
c. Penalties and fines, e.g. Parking, traffic
d. Those claims that should have been made using the purchase order system
e. Those expense claims made by staff as a tax deduction
f. Those expenses that were not made for business purposes.
2. Travel expenses claims:
a. Insurance for trip cancellation will be reimbursed
b. Mileage allowance will be given for the use of a staff member’s vehicle when used for work-related travel
c. Personal stopovers or indirect routes will not be reimbursed
d. Travel reimbursement is provided for the most direct and economical mode of travel available; circumstances will be considered on a ‘case-by-case’ basis.
3. Accommodation expenses:
a. Reimbursement will cover moderate accommodation expenses; circumstances will be considered on a ‘case-by-case’ basis
b. Items of a personal nature that are charged to a hotel account will not be reimbursed.
4. Employee’s own meals:
a. Employees on Dolly’s Delight business will be reimbursed for any reasonable and appropriate meal expenses.
5. All relevant and original source documents must be attached to the Expense Reimbursement Form. A statutory declaration may be required when these original documents are not provided.
6. Appropriate advance payments may be authorised.
7. Employees have authority to approve expenses up to the amount detailed in their individual job description. Any expenditure claims above the level prescribed must be forwarded to supervisors for approval.
8. Employees incurring authorised expenditure must submit their requests on a signed Expense Reimbursement Form.
9. Source documents (including tickets, receipts, vouchers, invoices) must be kept for all purchases and expenses claims.
10. The Financial Controller will use discretion to reimburse reasonable but unauthorised expenses.
11. Those claims that have not been adequately prepared, have not been duly authorised, or are lacking in original documentation, will be returned to the employee with reasons that outline why the claim has not been processed.
Petty Cash
Purpose of the policy
To detail procedures to be followed in relation to tracking petty cash expenditure
The policy
Big Red Bicycle maintains a petty cash system to allow authorised personnel to pay for small expenditures in connection with business activity.
Procedure
1. One team member is authorised to disburse petty cash with one alternate in case of sickness or emergency.
2. Petty cash is to be kept secure, locked in safe.
3. Receipts for cash must be issued.
4. Receipts must be reconciled nightly.
5. Amounts over $800 must be banked.
6. Petty cash expense will be recorded as miscellaneous expense.

APPENDIX 3: Coaching plan template
Employee:
Coach/Manager:
Date of session:
Questions
Goal
What are your KPI s?
What are your targets?
Reality

Options

Will

ASSESSMENT 2 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
ASSESSOR CHECKLIST
This checklist is to be completed by the assessor and used as a record for student performance for this task.
Student Name:
Student ID No:
Unit Code: BSBFIM501A
Unit Title: Manage budgets and financial plans
Assessment Criteria - Implement financial management approaches Satisfactory Not Satisfactory
Did the student submit the following documents
Coaching/training plan – Appendix 3 ? ?
Within agreed timeline ? ?
Did the student
Role-play to support team member, so that they can competently perform required roles associated with the management of finances ? ?
Access budget/financial plans for the work team i.e. student must:
• Access budget spreadsheet from Senior Accountant (assessor) - Appendix A: BSBFIM501A_AT2_Budget_for_Team.xlsx ? ?
Disseminate relevant details of the agreed budget/financial plans to team member. Student must:
• Explain budget and explain relevance to team member’s (assessors) accountabilities. ? ?
Provide support to ensure that team member can competently perform required roles associated with the management of finances, i.e. student must:
? Develop a coaching/ training plan for explaining petty cash duties to team member and training team member to develop an appropriate spreadsheet to track expense; plan should contain activities to motivate team member
? Deliver coaching/training to team member:
o Training must include elements of instruction, practice and feedback
o Coaching should be positive and motivational
o Coaching should be collaborative (student should allow input from learner i.e. team member). ? ?
Determine and access resources and systems to manage financial management processes within the work team i.e. student must:
? Set and communicate accountabilities
? Assist team member to develop spreadsheet to meet management requirements
(For possible outcome refer to ANSWER-APPENDIX A- BSBFIM501A_AT2_Budget_for_Team_sample.xlsx) ? ?
Demonstrate numeracy skills to read and understand a budget and to communicate a budget ? ?
Demonstrate technology skills to access and use Microsoft Excel for data analysis ? ?
Demonstrate financial skills to work with and interpret budgets and petty cash. ? ?
Demonstrate understanding of basic accounting principles to identify and use account balances in communication and training ? ?
Demonstrate understanding of organisational requirements related to financial management such as contained in organisational policies and procedures ? ?
Demonstrate understanding of requirements for organisational record keeping and auditing with respect to petty cash ? ?
Demonstrate understanding of principles and techniques involved in budgeting and electronic spreadsheets. ? ?
? Satisfactory
? Not Yet Satisfactory
(Please tick the assessment result for this task) If Not Yet Satisfactory – Please identify the re-assessment arrangements:

Student Declaration: I declare that I have been assessed in this assessment task, have been provided with feedback and I have been advised of my result. I also am aware of my appeal rights
Student name: __________________________
Signature: ____________________________
Date: ____/_____/_____ Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback
Assessor Name: __________________________
Signature: ____________________________
Date: ____/_____/_____

Comments/ Feedback (If the student is deemed Not Satisfactory the Assessor MUST state the circumstances and reasons why this judgment has been made):

ASSESSMENT 3 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK/ REPORT
STUDENT INFORMATION
Assessment Description:
You are required to demonstrate the ability to monitor and control finances.
In response to the the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 in this assessment, you will Implement processes to monitor actual expenditure and to control costs across the work team. Using information provided to you by your assessor (APPENDIX A of this unit), you will create a simple spreadsheet to capture monitoring information to produce a budget variance report on expenditure in accordance with organisational policies and procedures (Big Red Bicycle Pty Ltd Budgeting and finance policy given under Appendix 2 of this assessment). You will also implement, monitor and modify a contingency plan given in this assessment, as required to maintain financial objectives of the organisation.
Procedure:
1. Read through the Big Red Bicycle Pty Ltd scenario provided under Appendix 1 of this assessment in order to undertake Task A and B outlined below. Also read Big Red Bicycle Pty Ltd Budgeting and finance policy (under Appendix 2 of this assessment) in order to complete Task A and B:
Your role
You are the Senior Accountant at Big Red Bicycle. A major component of your role is setting budgets and monitoring budgetary performance for the organisation.
Task A
The Managing Director, Tom Copeland has asked you to implement a process to monitor expenditure and income. He has asked you to prepare a Budget Variance spread sheet to capture and compare actual income and expenditure to budgeted figures given under APPENDIX A - BSBFIM501A -AT2_Budget_for_Team.xlsx (To be provided by your assessor).
You must ensure that your spread sheet contains columns for each of the four quarters of the financial year. You are required to gather actual income and expenditure data from the relevant managers i.e. Sales General Manager (your assessor) to complete your budget variation report.
The report should conform to organisational requirements in policies and procedures and contain:
? Columns to show actual account values
? Absolute variation
? Percentage variation.
Task B
It has come to the attention of the managing director, Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by midway through the second quarter (Q2), when sales data for the company’s product are in.
Consider the contingency plan and the implementation plan for the contingency below. You have already implemented a portion of the contingency plan, namely the monitoring of budget performance in the variation report you have prepared. You should now analyse the report to determine the effectiveness of the contingency plan and its implementation.
You have received the following feedback from team members:
? Full-time workers and sales people resentful of time wasting and distracting contract employees
? Overtime not used but employees resentful of suggestion it might not be approved if needed
? Training suited the needs of many sales team members but was not relevant to about half
? Sales team members were happy with the incentives program and tried hard to make sales in the third quarter (q3); however they were also resentful at the threatening tone of emails and soon lost enthusiasm
? Effect of one-day training wearing off
? 50% of direct wages costs are attributable to short-term contract employees whose contracts have expired and who are no longer needed
? Employees concerned about lack of attention paid to wastage: water; electricity: paper; raw materials
? Employees feel left out of budgetary decision-making in general.
The managing director would like you to submit a revised contingency plan and contingency plan implementation to bring income and expenses under more effective control.
Contingency plan for Task B
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan:
Name: Tom Copeland Position: Managing Director
Risk identified: Profit for FY more than 10% less than budgeted
Strategies/activities to minimise the risk By when By whom
Produce quarterly variation reports to identify income/ expenditure and profit shortfalls over 10%. Q2 PR
Implement sales training/coaching. Q2 PR
Implement incentives program. Q2 PR
Reduce overtime. Q2 PR
Contingency implementation plan for Task B
Risk identified: Profit for FY more than 10% less than budgeted
Activity Monitoring activity and date Person/s
Monitor variance. Completion of report: Q2. PR
Analysis of report to identify issues. Management report: Q2. PR
Email to warn employees of risk to jobs. Monitoring of variation report results: Q4. PR
Email to announce rise of commission from 2% to 2.5%. Monitoring of variation report results: Q3. PR
Email to inform employees that overtime will no longer be approved. Monitoring of variation report results: Q3. PR
Email to inform employees of mandatory sales skills training: set program. Monitoring of variation report results: Q3. PR
Mandatory training conducted. Monitoring of variation report results: Q3. PR
2. Design and develop a spreadsheet to capture budgeted and actual figures to produce a budget variance report.
3. Access budgeted figures from APPENDIX A: BSBFIM501A_AT2_Budget_for_Team.xlsx (To be provided by your assessor)
4. Access actual figures from relevant managers (assessor) to prepare a budget variance report.
5. Monitor and record actual figures on a quarterly basis.
6. Calculate absolute variation ($) and percentage variation (%) in your budget variation report as per organisational requirements given under Big Red Bicycle Pty Ltd Budgeting and finance policy - Appendix 2 of this assessment.
7. Consider the contingency plan provided above under heading “Contingency plan for Task B” and analyse the variance report to identify cost variations and expenditure overruns.
8. Modify the “Contingency plan for Task B” and “Contingency implementation plan for Task B” provided above in this assessment task to improve effectiveness and to maintain financial objectives of the organisation.
Submit all the assessment evidence to your assessor within the agreed timeframe. Ensure you keep a copy of all work submitted for your records.
What you must provide:
1. A budget variation report
2. A modified contingency plan
3. A modified contingency implementation plan.
Your assessor will be looking for:
• Numeracy skills to read and understand a budget and to update a budget, in order to produce a variance report
• Technology skills to access and use Microsoft Excel for creating budget variance report.
• Financial skills required to work with and interpret budgets.
• Knowledge of basic accounting principles to identify and use account balances
• Knowledge of organisational requirements related to financial management
• Knowledge of organisational requirements for records and reports
• Knowledge of principles and techniques involved in budgeting, profit and loss statements and electronic spread sheets.

APPENDIX 1: Big Red Bicycle Pty Ltd scenario
Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.
Organisation name Big Red Bicycle Pty Ltd
Established 01/07/2007
ABN/ACN 87671495227/671495227
ABN Branch 347
Address 1357 Slippery Dip Trail, Bendigo, Victoria, 3101
Postal Address PO Box 4589, Bendigo, Victoria, 3101
Phone (03) 9905 0217
Fax (03) 9905 7210
Email big_red_bicycles@bigpond.com
The senior management structure of the company appears below.
Person Position
Michelle Yeo CEO
Tom Copeland Managing Director
John Black CFO
Stuart LaRoux Operations General Manager
Pat Roberts Senior Accountant
Sam Gellar Sales General Manager
Charles Pierce Production Manager
Holly Burke HR Manager
According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:
? Poor sales due to economic downturn
? Increases in expenses such as wage expenses.
In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
APPENDIX 2: Budgeting and finance policy
Budget preparations
? The business plan will set the key parameters for all financial budgeting.
? Variations to the business plan must be approved by the CEO and senior management strategic committee.
? Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
? The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and finance manager.
? A CAPEX budget will be developed from the approved business plan.
? A detailed sales budget must be completed before completing the profit budget for the year.
? A cash-flow budget covering the first three months will be prepared after the profit budget is completed.
? A master budget including profit projections will be completed from which cost centre allocations will be made.
? Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.
? Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
? All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
? The financial cycle for budgeting purposes will be yearly ending 30 June.
Reporting requirements
Software applications to be used in reporting.
? Environment – Windows
? Accounting Information System – BRB will use Free Accounting Software
? Data analysis – BRB will use Microsoft Excel 2007.
Actual results will be produced monthly by the Free Accounting Software system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.
Financial delegations
? Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.
? Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
? Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
? Name of the person who prepared it
? Cost centre (if applicable)
? Name of the budget/report, i.e. Sales, expenses, Capex, cash flow, budget variation report
? Period of the budget.

ASSESSMENT 3 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK/ REPORT
ASSESSOR CHECKLIST
This checklist is to be completed by the assessor and used as a record for student performance for this task.
Student Name:
Student ID No:
Unit Code: BSBFIM501A
Unit Title: Manage budgets and financial plans
Assessment Criteria - Monitor and control finances Satisfactory Not Satisfactory
Did the student submit the following documents
A budget variation report ? ?
A modified contingency plan ? ?
A modified contingency implementation plan ? ?
Within agreed timeline ? ?
Did the student
Implement processes to monitor actual expenditure and to control costs across the work team i.e. student should design and develop a budget variation spreadsheet to capture budgeted and actual figures as per the Big Red Bicycle Pty Ltd scenario (Appendix 1) given in this assessment. ? ?
Access budgeted figures from APPENDIX A: BSBFIM501A_AT2_Budget_for_Team.xlsx (to be provided by the assessor) ? ?
Access actual figures from relevant managers i.e. Sales General Manager (assessor) to prepare a budget variance report ? ?
Monitor and record actual expenditure and costs on an agreed cyclical basis i.e. student must ensure that the budget variation spreadsheet contains columns for each of four quarters of the financial year as per the Big Red Bicycle Pty Ltd scenario (Appendix 1) and Budgeting and finance policy (Appendix 2) of this assessment. ? ?
To identify cost variations and expenditure overruns, student must calculate absolute variation ($) and percentage variation (%) in their budget variation report as per organisational requirements given under Big Red Bicycle Pty Ltd Budgeting and finance policy (Appendix 2) of this assessment. ? ?
Implement, monitor and modify contingency plans as required to maintain financial objectives i.e. student must produce modified contingency plan and implementation plan to include most of (or similar):
? Reduce contract employees by 50%
? Remove unnecessary changes to overtime policy
? Make training or coaching a regular activity
? Make training or coaching consultative to receive views before implementation
? Make training/coaching relevant to actual need
? Ensure communication is positive and stresses incentives; reduce use of email for positive messages
? Introduce consultative program to gather employee views on reducing waste and increasing efficiency
? Ensure communication includes opportunity for feedback and underscores team member’s role in the strategic aims of company. ? ?
Prepare a report on budget and expenditure in accordance with organisational protocols i.e. student should produce a budget variance report to satisfy scenario and organisational needs under Appendix 1 & 2 of this assessment.
(Refer to BSBFIM501A_AT3_VarR_assessor_sample for example report) ? ?
Ensure that the budget variation report conforms to organisational requirements given in policies and procedures of Big Red Bicycle Pty Ltd (Appendix 2) :
? Title
? Name
? Time period. ? ?
Demonstrate numeracy skills to read and understand a budget and to update a budget, in order to produce a variance report ? ?
Demonstrate technology skills to access and use Microsoft Excel for creating budget variance report ? ?
Demonstrate financial skills required to work with and interpret budgets. ? ?
Demonstrate understanding of basic accounting principles to identify and use account ? ?
Demonstrate understanding of organisational requirements related to financial management ? ?
Demonstrate understanding of organisational requirements for records and reports ? ?
Demonstrate understanding of principles and techniques involved in budgeting, profit and loss statements and electronic spread sheets. ? ?
? Satisfactory
? Not Yet Satisfactory
(Please tick the assessment result for this task) If Not Yet Satisfactory – Please identify the re-assessment arrangements:

Student Declaration: I declare that I have been assessed in this assessment task, have been provided with feedback and I have been advised of my result. I also am aware of my appeal rights
Student name: __________________________
Signature: ____________________________
Date: ____/_____/_____ Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback
Assessor Name: __________________________
Signature: ____________________________
Date: ____/_____/_____

Comments/ Feedback (If the student is deemed Not Satisfactory the Assessor MUST state the circumstances and reasons why this judgment has been made):

ASSESSMENT 4 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
STUDENT INFORMATION
Assessment Description:
You will demonstrate the ability to review and evaluate financial management processes.
Using the Big Red Bicycle Pty Ltd scenario information supplied under Appendix 1 in this assessment, you will respond to a number of scenario activities within Appendix 1. You will collect and analyse financial data and make recommendations to improve existing processes. You will also create a plan to implement and monitor solutions.
Procedure:
Your role
You are the Senior Accountant for the accounts team at Big Red Bicycles Pty Ltd. As part of your role, you will need to complete the following five activities (under Appendix 1 of this assessment) for your work team.
1. Consider the five scenario activities along with the Big Red Bicycle Pty Ltd scenario background information provided under Appendix 1 of this assessment, financial information contained in Appendix 1 and Appendix 2 in this assessment and Budgeting and finance policy under Appendix 3 of this assessment.
2. On a separate electronic document (Microsoft word), provide satisfactory responses to the five scenario activities under Appendix 1 of this assessment
3. Submit the document containing your responses to your assessor as per the specifications and within an agreed timeframe. Ensure you keep a copy of all work submitted for your records.
What you must provide:
1. Hard copy of satisfactorily completed and typed responses to the five scenario activities (Appendix 1)
Your assessor will be looking for:
• Numeracy skills to read and understand a budget and perform cost accounting calculations
• Technology skills to use software associated with financial record keeping to create supplier and customer cards along with recording transactions in Free accounting software
• Financial skills required to work with and interpret budgets, ageing summaries, cash flow, petty cash, GST, and profit and loss statements
• Knowledge of basic accounting principles to identify and use account balances
• Knowledge of organisational requirements related to financial management
• Knowledge of relevant legislation and current requirements of the Australian taxation office with respect to GST.
• Knowledge of requirements for organisational record keeping and auditing
• Knowledge of the record keeping requirements for the ATO and for auditing purposes.
• Knowledge of principles and techniques involved in:
? Budgeting
? Cash flows
? GST
? Ledgers and financial statements
? Profit and loss statements.
APPENDIX 1: Big Red Bicycle scenario background information
Big Red Bicycle is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.
Organisation name Big Red Bicycle Pty Ltd
Established 01/07/2007
ABN/ACN 87671495227/671495227
ABN Branch 347
Address 1357 Slippery Dip Trail, Bendigo, Victoria, 3101
Postal Address PO Box 4589, Bendigo, Victoria, 3101
Phone (02) 9905 0217
Fax (02) 9905 7210
Email big_red_bicycles@bigpond.com
The senior management structure of the company appears below:
Person Position
Michelle Yeo CEO
Tom Copeland Managing Director
John Black CFO
Stuart LaRoux Operations General Manager
Pat Roberts Senior Accountant
Sam Gellar Sales General Manager
Charles Pierce Production Manager
Holly Burke HR Manager
According to company strategic plans, the company had aimed to achieve a net profit before tax of $1,000,000. Actual figures showed the company fell about $175,000 short of goals.
After successful labour cost cutting measures and improved sales team performance, the company aims to generate a net profit before tax of $1,200,000 from Australian operations alone.
This year, in addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
The board of directors of Big Red Bicycles feels that more cash will be needed to make investments to achieve strategic aims. One chief risk to plans is bad debt and poor cash flow due to large and unsustainable trade debtors balances quarter by quarter.
Note: Strategic plans dictate that Big Red Bicycles must reduce its debt levels and so additional financing to increase cash flow is not an option.
Role
You are the Senior Accountant. As part of your role, you will need to complete the following five activities.
Activity 1
As you are aware, one risk to the strategic plans of Big Red Bicycle (BRB) is bad debt and poor cash flow due to large trade debtors balances. Consider the following:
? According to its policies, Big Red Bicycles offers 30 day terms to debtors
? Currently, BRB does not train sales staff on credit terms
? There is currently no enforcement of credit terms
? Warehousing of stock is expensive at current leased premises
? Many bicycles need to be thrown out if parts rust; this problem exacerbates the problem of waste expense.
You have the following information from the Statement of Financial Position and current ledger accounts in the electronic accounting system (MYOB Account Right).
Account $
Trade debtors 362,500
Trade creditors 80,000
Opening stock 100,000
Closing stock 300,000
Purchases 1,000,000
Complete the following:
1. Review the Statement of Financial Performance under Appendix 2 of this assessment to calculate:
a. The average debtor days
b. The average creditor days
c. The average stock turnover
d. Show calculations and results on your response document for this assessment task.
2. Consider the existing BRB ageing debtor’s budget under Appendix 2 of this assessment. On your response document, make two recommendations for improvement to existing financial management processes to improve cash flow. To support your recommendations, refer to data sources, organisational needs, and analytical techniques, for example:
a. Statement of financial performance
b. Ledger accounts
c. Scenario information
d. Ageing debtors budget
e. Ratios.
3. On your response document, list three sources of information of use to complete this activity.

Activity 2
In addition to its Australian business, Big Red Bicycles is considering manufacturing a new range of cheaper bicycles in Indonesia. The following information is available:
? The Indonesian plant has capacity to manufacture 8000 units
? Big Red Bicycle’s strategic goal is to generate a pretax profit of $1,000,000 for the next financial year for Indonesian operations
? Clients will pay a maximum of $500 per bicycle
? Possibility exists for move to Indian plant with capacity for 10,000 units
? Market for bicycles is growing rapidly and BRB will be able to sell everything produced
? Limited ability to renegotiate costs with suppliers
? Pricing and cost information is as follows.
Bicycle price per unit $500 (ex GST)
Current variable costs per unit $250
Fixed costs $1,280,000
Complete the following:
1. On your response document, work out:
a. How many units at current variable cost would need to be produced to achieve profit target (show calculations)
b. What the variable costs per unit would need to be to achieve profit target at current manufacturing capacity (show calculations).
2. On your response document, make one recommendation based on your analysis. To support your recommendation ensure you refer to the organisational needs or situation, and any analytical techniques used. You may also suggest possible actions for BRB to take depending on possible future scenarios.
3. On your response document, list three sources of information of possible use to complete this activity.

Activity 3
Soon you will need to prepare a business activity statement (BAS) for the first quarter on 2012/13.
Complete the following:
1. State how many years you will need to keep GST records in order to satisfy ATO requirements and also state the relevant legislation with regards to GST?
2. Complete the GST budget on the following page to anticipate GST liability (Complete the grey sections)
July August September
Budgeted cash receipts incurring GST:
Cash sales 20,000 10,000 10,000
Cash revenue (besides sales) 0 0 0
Cash receipts from sale of assets (not stock) 0 0 0
Total receipts for GST 20,000 10,000 10,000
Budgeted non-cash receipts incurring GST:
Debtors sales 180,000 230,000 150,000
Total non-cash receipts: 180,000 230,000 150,000
Total budgeted receipts incurring GST 200,000 240,000 160,000
Budgeted cash payments incurring GST
Cash purchases of stock 0 0 0
Cash expenses 4,300 5,200 5,250
Total cash receipts incurring GST 4,300 5,200 5,250
Budgeted credit payments incurring GST
Credit purchases of stock incurring GST 25,000 30,000 25,000
Credit purchases of assets (besides stock) 4,300 5,200 5,250
Total cash payments incurring GST 29,300 35,200 30,250
Total budgeted cash payments incurring GST 33,600 40,400 35,500
GST cash budget calculations
a) Cash receipts
b) Cash payments
c) GST liability
Activity 4
Complete the following:
1. Choose one of the recommendations from Activity 1 or 2 and develop an action plan to implement and monitor the recommendation. Ensure you include appropriate activities, monitoring, timelines and accountabilities.
2. Identify at least five financial records that need to be maintained by BRB for the ATO and for auditing purposes.

Activity 5
You have found 2 missing invoices from this quarter. You will need to record the transaction information given below in the appropriate journals. The supplier and customer are both new, so you will need to create new cards in Free accounting software and demonstrate your ability to use technological skills to record the following transactions for Big Red Bicycle in Free accounting software and complete the journal templates given in this activity.
Invoice 1
TAX INVOICE
From: Shim Pty Ltd
ABN: 32 123 456 789
10/06/2014
To: Big Red Bicycle Pty Ltd
Qty Description Unit price GST Total
10 XT Race WH-M785 26’ Centerlock Wheel $300 $27.27 $3,272.73

$3,272.73
Total price includes GST
Invoice 2
TAX INVOICE
From: Big Red Bicycle Pty Ltd
ABN: 87671495227
10/06/2014
To: Bikes Pty Ltd
Qty Description Unit price GST Total
7 Bicycles $560 $50.90 $4,276.36

$4,276.36
Total price includes GST
Journal templates
Purchases Journal (PJ01) – Invoice 1 – Complete the grey section
1 2 3 4 5 6 7
Date Creditor details Account code Tax Code Purchases GST paid Creditors control

Sales Journal (SJ01) – Invoice 2 – Complete the grey section
1 2 3 4 5 6 7
Date Debtor details Account code Tax Code Sales GST collected Debtors control

Appendix 2: Financial information
Statement of Financial Performance
Big Red Bicycle
Statement of Financial Performance
For the year ended 30 June 2012
REVENUE
Sales 2,900,000
Less direct wages and Commissions 272,500
Opening stock 100,000
Purchases 300,000
Closing stock 20,000
Less cost of goods sold 380,000
Gross Profit 2,247,500
EXPENSES
General & Administrative Expenses
Travel 22,000
Legal fees 4,500
Bank charges 700
Office supplies 4,000
Postage &printing 500
Dues & subscriptions 600
Telephone 11,200
Repairs &maintenance 45,000
Payroll tax 25,000
Marketing Expenses
Advertising 208,000
Employment Expenses
Superannuation 45,000
Wages &salaries 500,000
Staff amenities 23,000
Occupancy Costs
Electricity 38,000
Insurance 100000
Rates 100,000
Rent 200,000
Water 35,000
Waste Removal 60,000
TOTAL EXPENSES 1,422,500
NET PROFIT (BEFORE INTEREST & TAX) 825,000
Income Tax Expense 206,250
NET PROFIT AFTER TAX 618,750
Ageing Debtors budget
Big Red Bicycle
AGED DEBTORS BUDGET 2011/12 TOTAL Qtr 1 Qtr 2 Qtr 3 Qtr 4
Sales 2,900,000 600,000 900,000 800,000 600,000
% Debtors Sales 50% 50% 50% 50%
Total Debtors 100% 300,000 450,000 400,000 300,000
Current 65% 195,000 292,500 260,000 195,000
30 Days 20% 60,000 90,000 80,000 60,000
60 Days 12% 36,000 54,000 48,000 36,000
90 Days 3% 9,000 13,500 12,000 9,000
APPENDIX 3: Budgeting and finance policy
Budget preparations
? The business plan will set the key parameters for all financial budgeting.
? Variations to the business plan must be approved by the CEO and senior management strategic committee.
? Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
? The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and finance manager.
? A CAPEX budget will be developed from the approved business plan.
? A detailed sales budget must be completed before completing the profit budget for the year.
? A cash-flow budget covering the first three months will be prepared after the profit budget is completed.
? A master budget including profit projections will be completed from which cost centre allocations will be made.
? Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.
? Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
? All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
? The financial cycle for budgeting purposes will be yearly ending 30 June.
Reporting requirements
Software applications to be used in reporting.
? Environment – Windows
? Accounting Information System – BRB will use Free Accounting Software
Note: Create an account for Big Red Bicycle on http://www.freeaccountingsoftware.com.au/
? Data analysis – BRB will use Microsoft Excel 2007.
Actual results will be produced monthly by the Free Accounting Software system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.
Financial delegations
? Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.
? Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
? Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
? Name of the person who prepared it
? Cost centre (if applicable)
? Name of the budget/report, i.e. Sales, expenses, Capex, cash flow, budget variation report, BAS
? Period of the budget.

ASSESSMENT 4 – CASESTUDY/ DIRECT OBSERVATION/ PORTFOLIO OF WORK
ASSESSOR CHECKLIST
This checklist is to be completed by the assessor and used as a record for student performance for

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