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ASSESSMENT 2.
Qualification: BSB61015 Advanced Diploma of Leadership and Management
Unit of Competency: BSBFIM601 Manage finances
Student Name:
Student ID:
Assessment Due Date: 7/9/2018

BSBFIM601 Manage finances
This unit describes the skills and knowledge required to undertake budgeting, financial forecasting and reporting and to allocate and manage resources to achieve the required outputs for the business unit. It includes contributing to financial bids and estimates, allocating funds, managing budgets and reporting on financial activity.
Elements Performance Criteria
1. Plan for financial management 1.1 Review and analyse previous financial data to establish areas which have generated a profit or loss
1.2 Undertake research to review reasons for previous profit and loss
1.3 Review business plan to establish critical dates and initiatives that will require or generate resources in the next financial cycle
1.4 Analyse cash flow trends
1.5 Review statutory requirements for compliance and liabilities for tax
1.6 Review existing software and its suitability for financial management
2. Establish budgets and allocate funds 2.1 Use previous financial data to determine allocations for resources
2.2 Make informed estimates of new items for inclusion in budget
2.3 Prepare budgets in accordance with organisational requirements and statutory requirements
3. Implement budgets 3.1 Circulate budgets and ensure managers and supervisors are clear about budgets, reporting requirements and financial delegations
3.2 Manage risks by checking there are no opportunities for misappropriation of funds and that systems are in place to properly record all financial transactions
3.3 Review profit and loss statements, cash flows and ageing summaries
3.4 Revise budgets, as required, to deal with contingencies
3.5 Maintain audit trails to ensure accurate tracking and to identify discrepancies between agreed and actual allocations
3.6 Ensure compliance with due diligence
4. Report on finances 4.1 Ensure structure and format of reports are clear and conform to organisational and statutory requirements
4.2 Identify and prioritise significant issues in statements, including comparative financial performances for review and decision making
4.3 Prepare recommendations to ensure financial viability of the organisation
4.4 Evaluate the effectiveness of financial management processes
Performance Evidence
Evidence of the ability to:
• plan for financial management
• read and review profit and loss statements, cash flows and aging summaries
• prepare, implement and revise a budget which aligns with the business plan, is based on research and analysis of previous financial data and cash flow trends, and meets all compliance requirements
• contribute to financial bids and estimates
• establish a budget and allocate funds in accordance with statutory and organisational requirements
• communicate with other people including:
o reporting on financial activity and making recommendations
o identifying and prioritising significant issues
o ensuring managers and supervisors are clear about budgets.
• analyse the effectiveness of existing financial management approaches including reviewing financial management software, managing risks of misappropriation of funds, ensuring systems are in place to record all transactions, maintaining an audit trail and complying with due diligence.
Knowledge Evidence
To complete the unit requirements safely and effectively, the individual must:
• identify the requirements for financial probity
• describe the principles of accounting and financial systems
• explain Australian, international and local legislation and conventions that are relevant to financial management in the organisation
• outline the requirements of the Australian Tax Office, including Goods and Services Tax, Company Tax, Pay As You Go.
Foundation Skills
Reading • Interprets, analyses and evaluates complex information to determine and adhere to organisational or legislative requirements and to assist with financial decision making
Writing • Develops and records information which incorporates a detailed analysis of factual and forecasted information
• Prepares documents using format, content and layout appropriate to audience, purpose and regulatory requirements
Oral Communication • Explains financial decisions and outcomes clearly and uses listening and questioning techniques to exchange information and obtain agreement
Numeracy • Reviews and analyses numerical data embedded in organisational documentation and legislation
• Compares and contrasts complex numerical data to analyse and evaluate financial position and processes.
• Uses appropriate formulae to analyse financial data to assess and manage risk and identify discrepancies
Navigate the world of work • Recognises, understands and adheres to legislative and organisational requirements in undertaking own work
Interact with others • Selects and uses appropriate conventions and protocols when communicating with supervisors and managers to share information or seek agreement
Get the work done • Uses logical processes in planning, implementing and evaluating complex tasks to achieve stated goals
• Uses formal analytical thinking techniques to identify issues, investigate underlying causes and generate possible solutions, seeking input from others as required
• Uses a range of digital technology to access, filter, compile, integrate and logically present complex information from multiple sources
• Investigates new digital technologies and applications to manage and manipulate data

ASSESSMENT INFORMATION:
To be deemed competent for this unit of competency, you are required to satisfactorily complete two (2) assessment tasks:
• Assessment Task 1: Prepare budgets
• Assessment Task 2: Monitor and review budget
Assessment Instructions
Your assessment will be required to be typed in Arial font size 12 only. You will provide your completed assessment for all of questions in one document and MUST be uploaded into MOODLE (No other method of submission will be accepted).
You are required to professionally format your document including spell-check and indicating each Task answer [e.g. Task 1 (a.) then the answer, Task 1 (b.) then the answer etc.] according to this Assignment requirement. You may lose marks if you have not spell-checked your document (as this is a professional formatting requirement, a business skill).
This assessment can be completed in one of several ways. Assessment candidates may identify unit requirement within their own work environment or organisation, or with reference to a scenario provided by the trainer/assessor.
Be sure to properly reference your sources of information using the Harvard referencing system. For more information go to:-
• Student Handbook - latest version
• Ask your Trainer/Assessor to provide you with this information
In order to determine if you are addressing this assignment adequately in terms of competency/comprehension (prior to due date) a draft copy of your assessment should be discussed during class time in consultation with your Trainer/Assessor. For this feedback/ support from your Trainer/Assessor, you will need to bring to class your “draft copy” with any evidence of the research you have conducted to produce the assessment.
If, as a student you feel you have special needs that require your Trainer/Assessor to apply a reasonable adjustment – please discuss this with your Trainer/Assessor at the beginning of the subject studies.
Your Assignment must:
a. Be of a professional standard (spelling, grammar, punctuation)
b. Size 12, Arial Font
c. 1.5 Spacing
d. All pages must have a Header/Footer with the following details:
o Name
o Student ID
o The course & unit of competency
o Date
o Page numbering
e. Title page
f. Index page
g. Body of work
h. Referencing
How to upload your answered assessment into MOODLE
To upload your assignment into Moodle, follow these steps.
1. Log-in to Moodle and access the subject that you will be submitting the assignment in.
2. Locate the assessment you will be uploading into by scrolling down to the week that the assessment is due in and then click on the assessment submission link.
3. Click on the name of the assignment.
4. Click the Browse button.
5. Select the file and click Open.
6. Click the Upload this file button.
7. If you have more than one file, repeat the process (steps 4-6) to attach additional files up to the assignment's limit.
8. Once happy with your submission click the Send for marking button. The files are locked and the student can no longer delete, or upload more, files.
Note: The date and time of the submission is recorded when the files are sent for marking, not when they are first uploaded.

ASSESSMENT TASK 2: MONITOR AND REVIEW BUDGET
Performance objective
This assessment task requires you to monitor the implementation of a budget and report on the variances, trends and performance of the established budget for a fictional business and provide recommendations for ongoing financial viability.
Assessment description
You will need to review the provided current case study information and compare it to the budget you established in Assessment Task 1. After evaluating these you will need to report on the following:
? significant issues
? variances from budget
? comparative performances
? recommendations for ongoing financial viability
? evaluation of financial management processes.
Procedure
1. Read the case study provided in this task.
2. Develop a variance report based on the format and template provided by Houzit.
3. Complete a cash flow analysis on the average length of time it takes Houzit to collect funds from its debtors to determine the trend based on the financial reports in Assessment Task 1.
4. Examine the sales budget, profit budget, cash flow budget and debtor ageing summary to identify the following in a report:
a. Issues:
i. Identify, describe and prioritise significant issues that are evidenced in the provided case study information and describe reasons or causes of these issues. Include in this issues of financial probity that you have identified or considered when monitoring these budgets.
b. Variances:
i. Complete an actual-to-budget variance report, using the template provided in the case study.
ii. Identify variances by comparing actual results with the established budget, and provide reasons why these variances may have occurred.
c. Performance:
i. Compare financial performance of the organisation (according to financial information provided) to industry benchmarks for this organisation in line with the retail trade sector.
ii. Respond to the performance questions provided by the CEO, as provided by the board of Houzit,
iii. Determine a trend of the average debtor days and the impact to the cash flow of Houzit.
d. Recommendations:
i. Outline your recommendations for ongoing financial viability for the organisation, based on your assessment of the issues, reasons for variances and organisational performance you have identified (Steps 1–3).
ii. Include in this section your plans for a revised budget, effectively managing contingencies and issues that have been identified in feedback and monitoring of the budgets.
e. Evaluation:
i. Provide a summary review of the financial management processes in place for the organisation, in light of your assessment of the issues, reasons for variances and organisational performance you have identified. Include in this section any recommendations you have for modifying management processes.
5. Prepare for and undertake the role-play presentation.
a. Arrange a time with Jim Schneider, CEO of Houzit Pty Ltd (your assessor), and another senior manager (played by a course colleague), to present an oral explanation of your variance report. Ensure that your assessor and role-play colleagues have copies of or access to documents you will be referring to by circulating the budget the day prior to allow time to prepare questions.
b. Deliver the presentation of your variance report.
i. Summarise your findings (issues, variances, financial performance).
ii. Prioritise and present your recommendations.
iii. Outline reporting requirements and required financial delegations.
c. Ask for questions, either during or at the end of the presentation, to:
i. demonstrate your oral communication skills
ii. use questioning and listening techniques
iii. demonstrate competent exchange of information
iv. use appropriate conventions and protocols
v. ensure the manager and CEO are clear about budgets before seeking approval.
d. Seek approval of (or discuss as required) your recommendations in the report, and implement budget by distribution to managers after approval.
Specifications
You must submit:
? a complete actual-to-budget variance report
? a completed report detailing the issues, variances, performance, recommendations and evaluations identified from the financial information for Houzit Pty Ltd.
Your assessor will be looking for:
? Evidence that you reviewed the provided case study information to develop an evaluative report concerning the progress of the budget.
Case study: Houzit Pty Ltd
Soon after the end of the first quarter, Jim Schneider the CEO of Houzit, asked you to follow up with Celina Patel, Houzit’s accountant, to see how the actual results compared with the budget you had prepared three months ago. You explained that you had a meeting with Celina that afternoon to get the results and that you would report back as soon as you had done some analysis.
The key questions that the board was most interested to have answered from the budgets and the variance reports were:
? ‘To what extent do the reports support the view of the board that Houzit is financially viable?’
? ‘Will we be able to maintain our gross profit margins in the predicted downturn?’
Jim and you both agreed that it had been a tough quarter with the economy still in recession and the impact this was having on the retail sector. Banks are raising interest rates in line with the increased upward international pressure and Houzit has a significant part of their loan funds on a variable interest rate which changes directly with market conditions. Jim was pleased that the sales seem to be holding up reasonably well as first quarter results are generally impacted by factors relating to public and school holidays but he was concerned about the discounts that had to be given to generate these sales.
‘That’s going to hurt us at some point’ Jim said. ‘Just a pity we could not get into some national magazines this quarter to promote the store offers. I’m sure that would have helped us exceed the budgets you set. I guess we will just have to spend that advertising money in the next quarter’ Jim said. ‘I still think we are running our wages and salaries a bit high. The industry benchmark for wages and salaries is close to 11% of sales’
Jim went on to explain, ‘One of our contingency plans in a slowing economy is to reduce our exposure to debt by applying our profits to the repayment of the long term debt. This will help reduce the interest burden on the business and take some pressure off the diminishing profits. It would also be of interest to determine the impact that our debtors has on the cash flow of the business from 2010/11.’
You are a beneficiary of the company’s profit bonus scheme that is based on the profitability of the company’s financial reports which you are required to prepare. You also prepare the departmental reports that form the basis of the performance review of the managers. You are the manager of the finance/administration and prepare this department’s report as well.
You met that afternoon with Celina and she provided you with the following report on the actual results for the quarter ended 30 September 2011.
Houzit Pty Ltd
Actual Results Qtr 1
Revenue
Sales 3,371,200
– Cost Of Goods Sold 1,955,296
Gross Profit 1,415,904
Gross Profit % 42%
Expenses
– Accounting Fees 2,500
– Interest Expense 28,150
– Bank Charges 380
– Depreciation 42,500
– Insurance 3,348
– Store Supplies 790
– Advertising 150,000
– Cleaning 3,325
– Repairs & Maintenance 16,150
– Rent 660,127
– Telephone 3,100
– Electricity Expense 5,245
– Luxury Car Tax 12,000
– Fringe Benefits Tax 7,000
– Superannuation 37,404
– Wages & Salaries 410,500
– Payroll Tax 19,741
– Workers’ Compensation 8,312
Total Expenses 1,410,572
Net Profit (before tax) 5,333
Income Tax 1,600
Net Profit 3,733
GST cash flow – Actual
Cash flow analysis – GST Qtr 1
GST Collected 337,120
Less GST Paid 279,988
GST Payable 57,132
Aged debtors – Actual
AGED DEBTORS BUDGET Qtr 1
Sales 3,371,200
% Debtors Sales 22%
Total Debtors 741,664
Current 585,915
30 days 111,250
60 days 37,083
90 days 7,417
Total Debtors 741,664
Budget variance report template
According to the organisational policy and procedures, the following format is to be used when preparing a budget variance report.
Houzit Pty Ltd
Variance to Budget
xxx Quarter ended mmm-yyyy
Actual Results Budget-Qx Actual-Qx $
Variance % Variance F or U
Sales x,xxx x,xxx x,xxx x% F or U
– Cost Of Goods Sold x,xxx x,xxx x,xxx x% F or U
Gross Profit Calculation Calculation Calculation x% F or U
Gross Profit % % % % x% F or U
Expenses
– Accounting Fees x,xxx x,xxx x,xxx x% F or U
– Interest Expense x,xxx x,xxx x,xxx x% F or U
– Bank Charges x,xxx x,xxx x,xxx x% F or U
– Depreciation x,xxx x,xxx x,xxx x% F or U
– Insurance x,xxx x,xxx x,xxx x% F or U
– Store Supplies x,xxx x,xxx x,xxx x% F or U
– Advertising x,xxx x,xxx x,xxx x% F or U
– Cleaning x,xxx x,xxx x,xxx x% F or U
– Repairs & Maintenance x,xxx x,xxx x,xxx x% F or U
– Rent x,xxx x,xxx x,xxx x% F or U
– Telephone x,xxx x,xxx x,xxx x% F or U
– Electricity Expense x,xxx x,xxx x,xxx x% F or U
– Luxury Car Tax x,xxx x,xxx x,xxx x% F or U
– Fringe Benefits Tax x,xxx x,xxx x,xxx x% F or U
– Superannuation x,xxx x,xxx x,xxx x% F or U
– Wages & Salaries x,xxx x,xxx x,xxx x% F or U
– Payroll Tax x,xxx x,xxx x,xxx x% F or U
– Workers’ Compensation x,xxx x,xxx x,xxx x% F or U
Total Expenses Calculation Calculation x,xxx x% F or U
Net Profit (Before Tax) Calculation Calculation x,xxx x% F or U
Income Tax Calculation Calculation x,xxx x% F or U
Net Profit Calculation Calculation x,xxx x% F or U
Note: F = Favourable, U = Unfavourable
Debtor ageing ratio template
2009/10 2010/11 2011/12
Trade Debtors
Sales
Debtor Days
Anticipate that the trade debtors for the 2011/12 financial period maintain the same growth as that which took place between 2009/10 to 2010/11.

OVERALL ASSESSMENT RECORD
Student Name:
Student Number:
Unit of Competency: BSBFIM601 Manage finances
Assessor Name: Deepika Chandwani.
Assessment Date 12/9/2018

Assessment 2:
Did the candidate: Satisfactory
Yes No
Provide responses for issues?
(As necessary and appropriate; answers provided may not be exhaustive.)
Provide responses for variances?
(As necessary and appropriate; answers provided may not be exhaustive.)
Provide responses for performance?
(As necessary and appropriate; answers provided may not be exhaustive.)
Provide responses for recommendations?
(As necessary and appropriate; answers provided may not be exhaustive.)
Provide responses for evaluation?
(As necessary and appropriate; answers provided may not be exhaustive.)
Provide a report that used the formats as required by the Houzit policy and procedures?
Prepare for and undertake a role-play presentation of their Variance Report?
Assessor Feedback:
Overall Assessment Outcome: 0 Competent
0 Not Yet Competent

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