Reference no: EM133169375

BSBFIM601 Manage finances

1. Plan for financial management
2. Establish budgets and allocate funds
3. Implement budgets

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:
• reporting on financial activity and making recommendations
• identifying and prioritising significant issues
• 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.

Assessment : Knowledge Questions

Question 1. Identify and describe financial probity requirements for businesses.

Question 2. Identify four examples of what would be consider fraudulent behaviour in regard to company finances.

Question 3. Identify the requirements for audited accounts and the purpose of an audit report.

Question 4. Describe the principle of cash accounting one advantage and one disadvantage of cash accounting.

Question 5. Describe the principle of accrual accounting and one advantage and one disadvantage of accrual accounting.

Question 6. Explain the four main taxation and superannuation obligations for a business. Briefly discuss each obligation.

Question 7. Identify the Act that details requirements for financial reporting and auditing and, explain the requirements for companies for preparing and lodging financial reports under this Act.

Question 8. Explain the requirements for registered foreign companies regarding preparing and lodging financial reports.

Question 9. Identify the current company tax rate for both smaller and larger businesses.

Question 10. Explain the process by which a business reports GST to the Australian Tax Office.

Question 11. Identify the penalty rate to be applied if a supplier does not provide an ABN?

Question 12. A non-profit organisation needs to register for GST after it has a turnover of more than how much?

Question 13. Explain the difference in Pay As You Go withholding obligations for employees and contractors.

Assessment: Financial Management Planning Project

Task summary
You are required, in the role of the General Manager for Grow Management Consultants, to review existing financial information and prepare budgets for the following financial year based on your review. This task will also require to you review existing financial software to ensure that it is meeting the company's needs.

You are then required to meet with the management team (your assessor) to discuss the budgets you have prepared for the upcoming financial year, as well as to confirm reporting requirements and financial delegations as documented in the financial management policy and procedure.

You are also required to research and report on as a guide for managers about the business's financial compliance requirements, as well as tax liabilities.

Carefully read the following:

Grow Management Consultants specialises in leadership consultancy. It has been operational for five years. The company offers a range of services to assist companies to assess leadership behaviour of existing managers and performance metrics. They also design and implement customized leadership programs based on the assessment. Services are offered Australia-wide.

The company employs a General Manager (you), 2 Principal Consultants (who are also Directors), 1 Senior Consultant, an Administration Officer and Receptionist.

Over the last two years, the company has diversified, and now offers regular professional development workshops on all aspects of leading and managing staff. These workshops are conducted approximately every 3 months in all major cities including Sydney, Brisbane and Melbourne. In 2016 - 2017, the company ran a total of 36 workshops. The company has also recently produced an E-book about leadership techniques.

The intention is to replace the workshops with the annual conference in the next financial year, as the workshops were not well attended. Client feedback and continued business indicates a personalized, company focused approach in the form of consulting services is the service of choice.

The E-book has had reasonable sales, but there needs to be a wider selection of books, as well as more marketing. The plan is to generate $10,000 worth of sales for the e-books during the next financial year and increasing over time.

As the General Manager for the company and with responsibility for finances, you are currently completing the financial planning for the year ahead. This involves a review of the company's business plan, previous year's profit and loss statement, the current business plan and strategic directions and cash flow statements. Based on the review, you will be establishing budgets and allocating funds.

In developing the budget, you are to assume a 5% increase in cost of sales, as well as a 10% increase in sales for consulting services and executive search.

As set out in the business plan, the company plans to run an annual conference each year starting in 2018. The costs for the conference have been estimated by the Principal Consultant and are set out in the Estimated Costs and Income document. Conference attendance is aimed at 100 people paying $750 each.

The Principal Consultant has also asked you to review the current accounting software used by business. The company is currently using MYOB but as it has grown, the Principal Consultant wishes to review whether this is the best accounting software available for their needs. He has also requested that the software have a cloud feature. 

Complete the following activities:

1. Prepare a financial performance report
Review the case study scenario above, as well as the information provided in Profit and Loss 2016/17 and Cash Flow Statement 2016/17 Using this information, identify areas of the business that have generated a profit and those that have generated a loss.

Conduct research to establish why those areas have made a profit or loss. Your research should include a review of the financial data provided to you and economic conditions and business trends that may have resulted in the profit or loss.

Your report should include the following:
• Overview of the purpose of the report.
• Analysis of the previous year's (2016 - 2017) profit and loss statement for Grow Management Consultant, including revenue generated, cost of sales, as well as gross profit/loss margin and net profit/loss margin.
• Analysis of overall business performance, as well as performance of each of the income streams for 2016 - 2017.
• Outline of reasons for profit or loss based on your analysis of the data and research on economic conditions and business trends.
• Analysis of the organisation's goals and priorities for the upcoming financial year as documented in the Strategic Business Plan and financial resources required to achieve these goals, as well as key dates.
• An analysis of cash flow trends as per the cash flow statements.
• Review and analysis of at least three other financial software products that the business could use, including the advantages and disadvantages of each, as well as the advantages and disadvantages of MYOB that is currently used.

Use Finance Report Template to guide your work.

2. Develop budget forecasts
Develop budget forecasts, ensuring that the analysis of the previous year's data and future plans as indicated in the business plan is taken into account in determining projected income and expenditure.
Use the Budget Forecast Template to guide your work.

Ensure that your budget includes the estimated income and costs for the conference and e-book to be implemented in 2018 in the document Costs and Income
Assume a 5% increase in all general costs, as well as a 10% increase in income for consulting and executive recruitment service. Input costs and income for the conference and e-book as set out in the Costs and Income data.

3. Develop report on key financial compliance requirements and liabilities for tax.
So that financial risks are managed in relation to the misappropriation of funds and recording of transactions, you are also required to outline reporting requirements and financial delegations as outlined in the company's financial policy and procedures.

You should also research and report on the company's compliance requirements and tax liabilities.

Research and report on the business' key financial compliance requirements and liabilities for tax.

The report should explain:
• GST reporting requirements (the company is required to report quarterly)
• PAYG withholding obligations
• PAYG income tax instalment
• Payroll tax obligations (state government)
• Superannuation entitlements and requirement to comply with legislation regarding frequency of payment, choice of fund and reporting to staff.

4. Send an email to the Principle Consultant (your assessor).
The text of the email should be in grammatically correct English, written in an appropriate (polite, business-like) style.

It should introduce and summarise the contents of the attachments. Ask them to read the documents in preparation for discussing them at the upcoming meeting.

Attach the following to the email:
• Your financial report
• Your budget forecasts
• Your financial compliance and tax liabilities report

5. Prepare for meeting
The Principal Consultant has approved your budget for the upcoming financial year, 2017 - 2018. You are now required to meet with the Senior Managers to communicate the budgets you have developed.

Print off a copy of the following to take with you to the meeting:
• The budget that you have developed.
• The Financial Policy and Procedures. You will be required to explain key reporting requirements to the Managers attending the meeting, as well as financial delegations. Review this document and highlight the relevant passages.
• Your report on key financial compliance requirements and liabilities for tax

At the meeting, you will need to:
• Discuss the budget you have developed and the rationale for the budget figures.
• Discuss the amounts allocated to activity, including the conference and the e-book.
• Explain that there will be no more workshops conducted.
• Provide an outline of the financial policy and procedure. to ensure that roles and responsibilities are understood and risks of misappropriation of funds/incorrect recording of financial transactions is minimised.
• Explain the company's key financial compliance requirements and tax liabilities.

6. Conduct meeting
Conduct the meeting as set out in the requirements above, making sure that you provide the team with all the required documentation.

During the meeting, demonstrate effective communication skills including:
• Speaking clearly and concisely
• Using non-verbal communication to assist with understanding
• Asking questions to identify required information
• Responding to questions as required
• Using active listening techniques to confirm understanding

Assessment Task 3: Budget Review Project
Task summary
This assessment task requires you to review Grow Management Consultants' Profit and Loss and Cash Flow statements for 2017-18.

Required
• Computer and Microsoft Office
• Access to the internet for research
• Profit and Loss 2017/18
• Cash Flow Statement 2017/18

Carefully read the following:

It is now 1 year later and you are required to review the profit and loss account for 2015 - 2016, as well as the cash flow statement.

The Principal Consultant has also asked you to focus on reviewing the conference costs as, while there was very positive feedback from the conference and the company wishes to run it next year, there needs to be revisions to the budget and a potential price increase for the conference fee to make the conference profitable.

The Principal Consultant would like you to report on a proposed conference fee given a 10% increase in all the recorded costs for the conference as shown in the profit and loss statement (and that match the conference costs for the document you reviewed in Assessment Task 2) and assuming 70 people will attend the 2017 conference. The Principal Consultant would also like a 20% return on the conference costs.

Complete the following activities:

7. Write a financial performance report.
Analyse the information provided in Profit and Loss 2017/18 and Cash Flow Statement 2017/18.
Based on your analysis, develop a short report for the Principal Consultant that includes
• Review of overall performance and gross/net profit margins.
• Calculation of variation in actual versus budgeted amounts for each income source.
• Calculation of variation in actual versus budgeted costs, focusing particularly on conference costs.
• Recommended revisions to the budget for conference costs for 2017/18.
• Proposed conference fee for 2018 conference assuming attendance of 70 people and to make a profit of at least 20%.

8. Send an email to the Principle Consultant (your assessor).
The text of the email should be in grammatically correct English, written in an appropriate (polite, business-like) style.

Assessment Task 4: Debtor Management Project

Task summary
This assessment task requires you to review and evaluate financial management processes in relation to debtor management and to ensure Grow Management's financial due diligence.

This task will be completed in the simulated work environment at your RTO.
Required
• Computer with Microsoft Office and internet access
• Aged Debtor Summary
Complete the following activity:

1. Write a debtor management report.
Review the Aged Debtor Report, noting that the company's usual terms are payment 10 days from invoice.

Using the Internet, research best practice debtor management and make notes on your findings.

Your report should be approximately 1 page.

Provide a report for your CEO based on your analysis that includes:
• A summary: an interpretation of the information in the aged debtor report.
• Good practice debtor management
• Develop at least 5 recommendations that could be adopted by the company in response to your analysis. This will also be based on the debtor management research you conducted.
2. Send an email to the CEO (your assessor).
The text of the email should be in grammatically correct English, written in an appropriate (polite, business-like) style.

It should introduce and summarise the contents of the attachment and seek approval to implement best practice debtor management processes.