Reference no: EM132604199

 BSBFIM501 Manage budgets and financial plans

Assessment Task 1 Case Study (Plan Financial Management Approaches)

Assessment Objective
The candidate will demonstrate the ability to plan financial management approaches.

Assessment Requirements
1. Read through the scenario provided and tasks A and B.
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
4. Submit all documents required in the deliverables to your assessor. Ensure you keep a copy of all work submitted for your records.

Appendix 1 - Smith's Auto Pty Ltd scenario

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 whether the budget projections are achievable, accurate, understandable and fair.
You will need to complete the analysis then email Sam Gellar (Your trainer) and arrange a meeting to present the information as required.
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%.
This means that you may/will need to adjust the master budget.

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%.
As per organisational policy you should use the contingency plan template provided.

Assessment Task 2 Role play (Implement Financial Management Approaches)

Assessment Objective

The candidate will demonstrate the ability to implement financial management approaches.

Assessment Requirements
1. Consider the scenario provided and tasks A and B
2. Prepare to meet with your team member (another student) to communicate budget and then coach and train them in new role:
a. access required budget information from 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
e. Set up a time with your team member to have coaching/training session
3. Meet with your team member (another student) to coach them in role:
a. Explain budget and 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
4. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.

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 spreadsheet to keep track of actual expenditure by account. To help you control expenses, the spreadsheet will need to provide an ongoing tally of expense by account.
Bill's skills include basic accounting. Bill needs to be informed of Smith's Auto 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.

Assessment Task 3 Report (Monitor and Control Finances)

Assessment Requirements
1. Read through the scenario provided and tasks A and B.
2. Design and develop a spreadsheet to capture budgeted and actual figures to produce a variance report.
3. Access actual budget figures from relevant managers and accounting systems (assessor).
4. Monitor and record actual figures.
5. Produce a variance report as per organisational requirements.
6. Consider the scenario information and contingency plan provided and analyse the variance report.
7. Modify the contingency and implementation plans provided in the scenario to improve effectiveness.
8. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.

Role
You are the Senior Accountant at Smith's Auto. 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 spreadsheet to capture and compare actual income and expenditure to budgeted figures. Your spreadsheet must contain columns for each of the four quarters of the financial year. You are required to gather data from the relevant managers (your assessor) to complete a 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 salespeople 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 percent 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.

Assessment Task 4 - Activities (Review and Evaluate Financial Management Processes)

Assessment Objective
The candidate will demonstrate the ability to review and evaluate financial management processes.

Activity 1

As you are aware, one risk to the strategic plans of Smith's Auto (SMITH'S AUTO) is bad debt and poor cash flow due to large trade debtors balances. Consider the following:
1. according to its policies, Smith's Autos offers 30 day terms to debtors
2. currently, SMITH'S AUTO does not train sales staff on credit terms
3. there is currently no enforcement of credit terms
4. warehousing of stock is expensive at current leased premises
5. many bicycles need to be thrown out if parts rust; this problem exacerbates the problem of waste expense

Complete the following:

1. Review the Statement of Financial Performance in the appendices 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 SMITH'S AUTO ageing debtor's budget. On your response document, make two written 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, Smith's Auto is considering manufacturing a new range of cheaper Bikes in Indonesia. The following information is available:
• the Indonesian plant has capacity to manufacture 8000 units
• Smith Auto strategic goal is to generate a pre-tax profit of $1,000,000 for the next financial year form their Indonesian operations
• clients will pay a maximum of $500 per Bike
• possibility exists for move to Indian plant with capacity for 10,000 units
• market for Bikes is growing rapidly and SMITH'S AUTO will be able to sell everything produced
• limited ability to renegotiate costs with suppliers
• pricing and cost information is as follows
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 written 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 SMITH'S AUTO 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
2. Complete the GST budget on the following page to anticipate GST liability.

Activity 4
Choose one of the recommendations from Activity 2 and develop an action plan to implement and monitor the recommendation. Ensure you include appropriate activities, monitoring, timelines and accountabilities.

Attachment:- Manage budgets and financial plans.rar