Reference no: EM133173936

Assessment Task: Project - Review and Analyse Financial Information

TASK OUTCOMES:
This assessment task is designed to:

» Review profit and loss statements, cash flows and ageing summaries and revise, where required
» Identify discrepancies between agreed and actual allocations using audit trails
» 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
» Uses a range of digital technology to access, filter, compile, integrate and logically present complex information from multiple sources
» manage finances for at least one organisation or work area.
» In the course of the above, the candidate must: review previous financial statements
» prepare, implement and revise a budget that: is based on research and analysis of previous financial data and cash flow trends
» analyse effectiveness of existing financial management approaches, including: managing risks of misappropriation of funds
» maintaining audit trail
» complying with due diligence

TASK SUMMARY:

This assessment task is designed to develop your knowledge and skills to Review and Analyse Financial Information

This task will require you to review financial performance information and conduct variance analysis to identify the causes of variance between budgeted allocations and actual performance. You will also be required to identify and manage the risks of misappropriation of funds arising from the identified causes of variances.

Use your workplace/organisation's template to complete this task or use the generic Budget Variance Analysis template and generic Financial Transaction Risk Management Plan template provided at the Bounce Fitness site.

This task is divided into two parts:

Part A. Review Financial Performance Information and Conduct Budget Variance Analysis
To complete this task, you must:
» Access and review the following financial information from your workplace/organisation for the current financial year-to-date.
The financial information must be for the period from 1 July to the most recent completed month of the current financial year.
o Profit & Loss Statement (P&L) and budget allocations
o Cash Flow Statement and budget allocations
o Ageing Summaries for accounts receivable (AR) and accounts payable (AP)
These are listings of unpaid invoices and other receivables/payables grouped by their due dates. This is done to estimate which invoices are overdue for payments and by how many days.
o Audit trail reports for the Profit & Loss Statement and Cash Flow Statement
An audit trail is the documented flow of transactions. It shows how a source document (e.g. an invoice) was translated into an accounting entry and inserted into the financial statement.
» Complete the Budget Variance Analysis template. You must:
o Calculate the variances between the budget allocations and actual year-to-date performance for the line items in the Profit & Loss Statement. Then interpret the variances as favourable or unfavourable.
Line items must include at least:
• Total Revenue
• Total Cost of Goods Sold/ Cost of Sales
• Gross Profit
• Total Operating Costs
• Operating Profit
• Net Profit
o Calculate the variances between the budget allocations and actual year-to-date performance for the line items in the Cash Flow Statement. Interpret the variance for Cash from Operating activities as favourable or unfavourable.
Opening and Closing Cash Balances should reconcile with Total Cash increase/decrease during the period.
Line items must include at least:
• Cash from Operating activities
• Cash from Investing activities
• Cash from Financing activities
• Total Cash
o Identify discrepancies between the budget allocations and actual performance as follows:
• At least two discrepancies using audit trail reports.

• At least two discrepancies using ageing summaries for accounts receivable (AR) and accounts payable (AP).
o Recommend revisions that will align the discrepancies with the budgeted allocation for their respective line items.
For example, the discrepancy in local promotion expenses may have been a legitimate result of a one-off approval taken from Head Office and have caused an unfavourable variance of $50,000. The revision to the budget would need to be an increase of $50,000 to remove the effect of the discrepancy.
Whether or not such a budget revision is permitted in your organisation will depend on the organisational policies & procedures. For this task, it is sufficient to identify the revision required.

Part B. Identify and Manage the Risks of Misappropriation of Funds
To complete this task, you must:
» Access and review the organisational risk management policies and procedures related to due diligence of the organisation's financial processes.
» Complete the Financial Transaction Risk Management Plan template.
o Identify at least two discrepancies between the budget allocations and actual performance which cannot be fully explained using the audit trail reports and hence require further investigation.
For example, the discrepancy may be traced in the audit trail report to a funds transfer to an external party without sufficient information on the party or the purpose of transfer.
o Identify the following risk management components to manage the risk of misappropriation of funds for each discrepancy you have identified.
Any transaction that you have identified as needing further investigation to explain it fully can be potentially fraudulent and open to misappropriation of funds.
Your ratings for the aspects below must correspond with the organisational risk management tools specified in the organisational policies and procedures. If your organisation does not have risk management tools, your responses must correspond with the risk rating matrices provided in the generic Financial Transaction Risk Management Plan template.
• Risk Description
• Risk Assessment. This includes:
- Likelihood (L)
- Impact (I)
- Risk Rating (R)
- Priority Level
- Control Measure

Review Workplace Project Task 4 - Assessor's Checklist before starting this task. This form outlines the following:
» Resources you are required to access to complete the task.
» All criteria your submission must address to satisfactorily complete this task.
You assessor will discuss these resources with you, and the criteria outlined in this form prior to this assessment.
Review the templates you will use to complete this task. If you are using a template from your workplace/organisation, discuss with your assessor to ensure that the template covers all requirements that apply to this task.
Submit the completed Budget Variance Analysis and Financial Transaction Risk Management Plan to your assessor. Include any supplementary documents/sources used to complete this task, such as:
» A copy of the following workplace/organisation's documents that were reviewed for the current financial year-to-date:
o Profit & Loss Statement and budget allocations.

o Cash Flow Statement and budget allocations.
o Ageing Summaries for accounts receivable (AR) and accounts payable (AP)
o Audit trail reports for the Profit & Loss Statement and Cash Flow Statement
» A copy of the organisational risk management policies and procedures related to due diligence of the organisation's financial processes.