BSBFIN601 Financial Management Assessment

Assessment 1: Short Answer Questions

Question 1

Explain the requirements of financial probity.

Financial probity requires individuals and organizations to be honest and transparent in their financial dealings, and to adhere to ethical and legal principles in their financial management. Some of the requirements of financial probity include:

1. Accurate record-keeping: Maintaining accurate records of all financial transactions is essential for financial probity. This includes keeping records of income, expenses, assets, and liabilities.
2. Transparency: Transparency in financial dealings means that all financial transactions should be recorded and made available for scrutiny. This can be done through regular audits, detailed financial reporting, and open communication about financial decisions.
3. Ethical behaviour: Financial probity requires high ethical standards and principles. This means avoiding conflicts of interest, acting in the best interest of stakeholders, and avoiding any form of fraud or embezzlement.
4. Compliance with laws and regulations: Organizations need to comply with all relevant financial laws and regulations. This includes tax regulations, financial reporting requirements, and other financial legislation.
5. Risk management: Financial probity requires effective risk management. This includes identifying and assessing risks related to financial transactions and taking steps to mitigate them.
6. Sound financial management practices: Sound financial management practices involve creating and adhering to budgets, setting financial goals, and ensuring that the organization has adequate financial resources to meet its objectives.

Overall, financially probity refers to the transparent, ethical, and responsible management of an organizations financial resources.

Question 2

Personnel working in the financial services division of a company need to understand and be able to explain principles of accounting and financial systems (Accounting and Financial Information Management SystemsAIS and FIS). What are accounting and financial systems and how do they assist business operations?

Accounting and Financial Information Management Systems (AIS and FIS) are software and information systems that help businesses manage their financial operations.

AIS is a system that focuses specifically on accounting processes, recording, analysing and reporting on financial transactions to support and enhance business processes. AIS assist in maintaining accurate financial records, tracking sales, managing expenses and analysing financial data.

It is designed to provide timely and accurate financial information that is useful for decision-making, financial reporting and compliance with governmental regulations. Essentially, AIS helps businesses to manage their financial operations by providing a way to record all financial transactions, track and report on financial performance and create financial statements.

On the other hand, Financial Information Management Systems (FIS) are responsible for the collection, processing and reporting of financial information of a company. FIS are used to manage complex financial data and provide decision support for business operations.

FIS systems provide a comprehensive overview of a companys financial performance, including financial statements, cash flow analysis, and performance reports. The data helps managers to understand the financial health of the organization and make informed decisions.

In summary, accounting and financial systems are important tools in the modern business world. They provide organizations with the financial management tools necessary to maintain accurate accounting records, manage expenses, and monitor performance. They allow businesses to make informed decisions based on accurate data, and ensure compliance with financial regulations by providing up-to-date financial reporting.

Question 3

List and explain at least 4 forms of legislation and conventions (Australian, international and/or local) that could apply to financial management in the organisation.

4 Forms of legislation and conventions that could apply to financial management in organization:

1. Corporations Act2001: This is federal legislation in Australia that sets out the obligations and responsibilities of companies, directors, and officers in relation to financial management. It outlines the requirements for financial information to stakeholders. It also covers various aspects of corporate governance including the composition of boards, the duties of directors and officers, and the rights of shareholders.
2. Australian Securities and Investments Commission (ASIC) Act 2001: This legislation establishes the Australian Securities and Investments Commission (ASIC), which is responsible for regulating financial services and companies in Australia. It sets out the powers and functions of ASIC, including the authority to investigate and take enforcement action against companies and individuals who breach financial management laws and regulations.
3. Anti-money Laundering and Counter-Terrorism Financing Act 2006: This legislation aims to prevent money laundering and terrorist financing by imposing obligations on financial institutions and other organizations to identify manage, and report suspicious activities. It outlines the requirements for customer identification, ongoing monitoring, and record-keeping, and sets out penalties for non-compliance.
4. International Financial Reporting Standards (IFRS): These are a set of accounting standards developed by the International Accounting Standards Board (IASB) for the preparation and presentation of financial statements. The adoption of IFRS is encouraged by many countries, including Australia, as a way of promoting consistency and transparency in financial reporting across borders.

Overall, compliance with these three legislative and convention requirements is crucial for financial management in any organisation, as it helps to ensure accountability, transparency, and ethical conduct in financial activities.

Question 4

Explain the requirements for each of the following:

Goods and Services Tax

Company Tax

PAYG

Goods and Service Tax (GST) is a tax on the supply of goods and services in Australia. Businesses with an annual turnover of &75,000 or more are required to register and pay GST to the Australian Taxation Office (ATO). The GST rate in Australia is currently 10% and businesses must include this tax on their sales invoices and remit it to the ATO at regular intervals, as is a value-added tax, meaning it is levied on the value added at each stage of production and distribution of goods and services.

Company Tax, on the other hand, is a tax levied on the income of companies operating in Australia. The current rate of company tax is 30% although some small businesses may be eligible for lower rates. Companies are required to lodge tax returns with the ATO annually and pay any tax owed on their profits.

Finally, PAG (Pay As You Go) is a system for businesses to pay and report their tax liabilities throughout the year, rather than paying a lump sum at the end of the year. Under this system, businesses are required to estimate the amount of tax they will owe for the current financial year and make regular payments to the ATO based on these estimates. PAYG covers both income tax and other taxes such as withholding tax on payments to employees and contractors.

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