Manage Budgets and Financial Plans Assessment BSBFIN501

	You must make sure you have read the information in the box below:
	Answer all parts of all tasks and questions in the spaces provided, unless otherwise directed by or negotiated directly with your assessor. Conduct interactive activities in a simulated business context as required in the respective task. Make no changes to the assessment requirements and ensure such information stays in its original order. Clearly identify which part of the question your response relates to (where applicable). Attach required documents at the end of this workbook as specified in the activities.

	You will be assessed on its effectiveness and accuracy in:
	Demonstrating the knowledge and understanding required by the question. Communicating ideas and information using relevant workplace examples and industry terminology. Presenting a logical, cohesive, correct and complete response. Answers to all questions and their component parts (i.e. 100% of all questions) must meet the stated assessment criteria to be deemed to have satisfactorily completed each assessment task.

	How many attempts do you have?
	You have three (3) attempts for this assessment.

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	Please contact your trainer for learning and assessment support: Tel: 02 9633 3929 Email:admin@lettraining.com.au

Learner Details

Assessment 2 Practical Project

Please complete the following activities and submit this workbook via your online learning account under the unit of BSBFIN501 Manage budgets and financial plans
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	Unit of competency	BSBFIN501 Manage budgets and financial plans
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BSBFIM501 Practical Project Assessment Overview

Task

Activity

Reference

IMPORTANT-MUST READ

Task 1:

Project Task 1: Plan financial management approaches

q Prepare to meet with your manager to clarify budget and negotiate changes:

a. identify two issues of the budget that are not achievable, inaccurate or unclear for clarification;

b. negotiate two changes

q Develop a contingency plan.

1. Read Section 1 and Section 2 of the Learning Module;

2. Read the Big Red Bicycle simulated business information provided in Appendices 1-4 of this Learner Workbook.

Task 2:

Project Task 2: Implement financial management approaches

q Develop a coaching plan;

q Conduct a coaching session (role-play);

q Complete the coaching session record.

1. Read Section 3 of the Learning Module;

2. Read the Big Red Bicycle simulated business information provided in Appendices 7-8 of this Learner Workbook.

Task 3:

Project Task 3: Monitor and control finances

q Create a simple spreadsheet budget to capture monitoring information;

q Produce a variance report;

q Modify the contingency and implementation plans to improve effectiveness.

1. Read Section 3 of the Learning Module;

2. Review the Big Red Bicycle Pty Ltd. simulated business information provided in Appendix 1, and Appendices 11-12 of this Learner Workbook.

Task 4:

Project Task 4: Review and evaluate financial management processes

q Written responses (from Task A to Task E a total of five activities).

1. Read Section 4 of the Learning Module;

2. Review the Big Red Bicycle Pty Ltd. simulated business information provided in Appendix 1, and Appendices 15-16 of this Learner Workbook.

Project Task 1: Plan financial management approaches

Section 1: Performance objective

Objectives:
	In this assessment task, you will need to demonstrate the skills and knowledge required to plan financial management approaches.

Section 2: Assessment description

Description:
	In response to the scenario provided, you will be required to clarify budget plans with your manager and negotiate changes to the budget. You will then be required to identify and analyse risk to the budget and prepare a contingency plan to prevent or minimise the risk.

Section 3: Assessment checklist

Check Point:

Task 1:

q Prepare to meet with your manager to clarify budget and negotiate changes:

q identify two issues of the budget that are not achievable, inaccurate or unclear for clarification;

q negotiate two changes

q Develop a contingency plan.

Section 4: How to complete this task

Task requirements:

Please read the instructions carefully and take a step-by-step approach to complete the following required activities for this task.

1. Read Sections 1 and 2 of the Learning Module, and the Big Red Bicycle simulated business information provided in Appendices 1-4 of this Learner Workbook.

2. Consider your role and Task A in Appendix 2. Prepare to meet with your manager to clarify budget and negotiate changes. Using the spaces provided in Appendix 5.1 to:

a. identify two issues of the budget that are not achievable, inaccurate or unclear for clarification;

b. negotiate two changes. Each change proposal must:

i. include discussion of basic accounting principles

ii. refer to relevant legislation and ATO requirements

iii. refer to principles and techniques of managing budget items.

3. Draft an email to Sam Gellar (the manager) in Appendix 5.2 to clarify the budget and negotiate changes. In your email, you must include:

a. Issues identified for clarification;

b. Changes to the budget you plan to negotiate;

c. Set up a time with your manager to meet

d. Schedule a time to review the updated budget with agreed changes.

2. Consider your role and Task B in Appendix 2. Use the template provided in Appendix 6 in this Learner Workbook to prepare a contingency plan to address persistent risks after budget changes.

3. Submit all documents required in the specifications below. Ensure you keep a copy of all work submitted for your records.

Section 5: Submission checklist and specifications

You must:
1.	q Prepare to meet the manager to clarify budget and negotiate changes (Appendix 5.1 & Appendix 5.2)
2.	q Develop a contingency plan (using the template provided in Appendix 6).

Your assessor will be looking for evidence of:

q numeracy skills to read and understand a budget and negotiate budget re-allocations

q knowledge of basic accounting principles to identify and use account balances

q knowledge of organisational requirements related to financial management contained in organisational policies and procedures

q knowledge of principles and techniques involved in budgeting.

Appendix 1 - About Big Red Bicycle Pty Ltd

Big Red Bicycle Pty Ltd is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.

The senior management structure of the company appears below.

Person	Position
Michelle Yeo	Chief Executive Officer (CEO)
Tom Copeland	Managing Director
John Black	Chief Financial Officer (CFO)
Stuart LaRoux	Operations General Manager
Pat Roberts	Senior Accountant
Sam Gellar	Sales General Manager
Charles Pierce	Production Manager
Holly Burke	HR Manager

According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:

poor sales due to the economic downturn

increases in expenses such as wage expenses.

In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.

Appendix 2 - Big Red Bicycle scenario #1

Refer to the Big Red Bicycle budgets provided in Appendix 4.

Your role

You are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect both the needs and importance to the business of Cost Centre A.

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.

She would like you to look closely at the budget for your cost centre, 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%.

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?low 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 companys 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 companys 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 in Appendix 6

Appendix 3 - Big Red Bicycle budgeting and finance policy

Budget preparations

The business plan will set the key parameters for all financial budgeting.

Variations to the business plan must be approved by the CEO and senior management strategic committee.

Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.

The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and CFO.

A CAPEX budget will be developed from the approved business plan.

A detailed sales budget must be completed before completing the profit budget for the year.

A cash flow budget covering the first three months will be prepared after the profit budget is completed.

A master budget, including profit projections will be completed from which cost centre allocations will be made.

Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available as a separate document. Where possible, the notes should justify the basis on which the estimates were made.

Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.

All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.

The financial cycle for budgeting purposes will be yearly ending 30 June.

Financial delegations

Each manager is responsible for achieving the revenue budgets agreed to by the budget committee.

Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.

Expenditures must be within the budget guidelines for the individual departments.

Format for budgets and reports

All budgets must include the following details:

name of the person who prepared it

cost centre (if applicable)

name of the budget/report (i.e. sales, expenses, CAPEX, cash flow, budget variation report)

period of the budget.

Appendix 4 - Big Red Bicycle budgets

Master budget with profit projections

Big Red Bicycle Pty Ltd
Master Budget FY 2020/2021
		FY	Q1	Q2	Q3	Q4
REVENUE
	Commissions (2% sales)	60,000	15,000	15,000	15,000	15,000
	Direct wages fixed	200,000	50,000	50,000	50,000	50,000
	Sales	3,000,000	750,000	750,000	750,000	750,000
	Cost of Goods Sold	400,000	100,000	100,000	100,000	100,000
Gross Profit		2,340,000	585,000	585,000	585,000	585,000
EXPENSES
General & Administrative Expenses
	Accounting fees	20,000	5,000	5,000	5,000	5,000
	Legal fees	5,000	1,250	1,250	1,250	1,250
	Bank charges	600	150	150	150	150
	Office supplies	5,000	1,250	1,250	1,250	1,250
	Postage & printing	400	100	100	100	100
	Dues & subscriptions	500	125	125	125	125
	Telephone	10,000	2,500	2,500	2,500	2,500
	Repairs & maintenance	50,000	12,500	12,500	12,500	12,500
	Payroll tax	25,000	6,250	6,250	6,250	6,250
Marketing Expenses
	Advertising	200,000	50,000	50,000	50,000	50,000
Employment Expenses
	Superannuation	45,000	11,250	11,250	11,250	11,250
	Wages & salaries	500,000	125,000	125,000	125,000	125,000
	Staff amenities	20,000	5,000	5,000	5,000	5,000
Occupancy Costs
	Electricity	40,000	10,000	10,000	10,000	10,000
	Insurance	100,000	25,000	25,000	25,000	25,000
	Rates	100,000	25,000	25,000	25,000	25,000
	Rent	200,000	50,000	50,000	50,000	50,000
	Water	30,000	7,500	7,500	7,500	7,500
	Waste removal	50,000	12,500	12,500	12,500	12,500
TOTAL EXPENSES		1,401,500	350,375	350,375	350,375	350,375
NET PROFIT (BEFORE INTEREST & TAX)		938,500	234,625	234,625	234,625	234,625
Income Tax Expense (25%Net)		234,625	58,656	58,656	58,656	58,656
NET PROFIT AFTER TAX		703,875	175,969	175,969	175,969	175,969

Sales cost centre expense budget

	Sales Centre A	Sales Centre B	Sales Centre C
Commissions	$20,000	$20,000	$20,000
Wages	$100,000	$100,000	$100,000
Telephone	$3,000	$3,000	$3,000
Office supplies	$1,000	$1,000	$1,000

Appendix 5.1 Prepare to negotiate the budget with the manager

Consider your role and Task A in Appendix 2. Prepare to meet with your manager to clarify budget and negotiate changes:
Identify two (2) issues of the budget that are not achievable, inaccurate or unclear for clarification.
1
2
Negotiate two (2) changes. Each change proposal must a. include discussion of basic accounting principles; b. refer to relevant legislation and ATO requirements; c. refer to principles and techniques of managing budget items.
1
2

Appendix 5.2 Prepare to negotiate the budget with the manager

Draft an email to Sam Gellar (the manager) to clarify the budget and negotiate changes in. In your email, you must include:

a. issues identified for clarification;

b. changes to the budget you plan to negotiate;

c. set up a time with your manager to meet;

d. schedule a time to review the updated budget with agreed changes.

Email subject:
Participants:
(Insert body of message here)
Next meeting scheduled:

Appendix 6 Contingency plan template

Contingency Plan
Company name: Big Red Bicycle Pty Ltd The person developing the plan: Name: Position:
Risk identified

Strategies/activities to minimise the risk	By when	By whom

Project Task 2: Implement financial management approaches

Section 1: Performance objective

Objectives:
	In this assessment task, you will need to demonstrate the ability to implement financial management approaches.

Section 2: Assessment description

Description:

You are required to access and communicate details of the budget to a team member. You will then conduct a training needs analysis and create a coaching plan to support the team member to perform their required role with respect to software resources and systems.

You will need to facilitate a coaching/training session to the team member (role-play) and record the session as required.

Section 3: Assessment checklist

Check Point:

Task 2:

q Develop a coaching plan;

q Conduct a coaching session (role-play);

q Complete the coaching session record.

Section 4: How to complete this task

Task requirements:

Please read the instructions carefully and take a step-by-step approach to complete the following required activities for this task.

1. Read Section 3 of the Learning Module, and the Big Red Bicycle Pty Ltd. simulated business information located in Appendix 1, and Appendices 7-8 of this Learner Workbook.

2. Consider your role and Task A and Task B in Appendix 7. Prepare to communicate budget with the team member, and develop a coaching plan for them (in Appendix 9):

a. Access required budget information (refer to the filename: 07-2 BSBFIN501 Task 2 Budget for Team)

b. Determine organisational needs

c. Identify coaching/training needs of the team member.

d. Use appropriate coaching techniques or models such as the GROW coaching model to plan coaching/training session:

i. outcome: team member produces a spreadsheet to meet management requirements

ii. include activities/elements to instruct, practice, test, motivate

3. Set up a time with your team member to facilitate a (10-15 minutes) coaching/training session (role-play).

How to conduct your coaching session (role-play)

Note: You will need to facilitate a coaching/training session (role play) with at least one (1) other person as participant. The participant may be either a work colleague, family member, or friend. You will need to video-record the session as evidence and ensure the person chosen to role-play the team member is familiar with the situation and your planned approach.

Alternatively, you may choose to conduct the role-play with your assessor. If so, you will need to send an email to assessment@lettraining.com.au to arrange a time, with the email subject: BSBFIN501 Project Task 2 Coaching session role-play

	To: assessment@lettraining.com.au
Subject:	BSBFIN501 Project Task 2 Coaching session role-play

4. Prepare a handout for the session and meet with your team member (role-play) to coach them in the role:

a. Explain the budget and its relevance to team members accountabilities;

b. Use appropriate motivational theory;

c. Train the team member in required spreadsheet techniques, including elements of instruction, practice and testing/feedback;

d. Include recordkeeping requirements for Australian Taxation Office (ATO) and auditing purposes, for items such as petty cash, and GST;

e. Complete the role-play record in Appendix 10.

5. Submit all documents required in the specifications below. Ensure you keep a copy of all work submitted for your records.

Section 5: Submission checklist and specifications

You must submit:
1.	q Identify training needs and prepare a coaching/training plan (Appendix 9).
2.	q Prepare and submit a handout for the coaching/training session (Appendix 10).
3.	q Conduct a coaching/training session to support the team member (role-play) and complete the role-play record in Appendix 10.

Your assessor will be looking for evidence of:

q numeracy skills to read and understand a budget and to communicate a budget

q technology skills to use software associated with financial recordkeeping

q knowledge of basic accounting principles to identify and use account balances in communication and training

q knowledge of organisational requirements related to financial management, such as those contained in organisational policies and procedures

q knowledge of requirements for organisational recordkeeping and auditing with respect to petty cash

q knowledge of principles and techniques involved in budgeting and electronic spreadsheets.

Appendix 7 - Big Red Bicycle scenario #2

Big Red Bicycle Pty Ltd is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers for on-sale in the domestic Australian market.

The senior management structure of the company appears below:

Person	Position
Michelle Yeo	Chief Executive Officer (CEO)
Tom Copeland	Managing Director
John Black	Chief Financial Officer (CFO)
Stuart LaRoux	Operations General Manager
Pat Roberts	Senior Accountant
Sam Gellar	Sales General Manager
Charles Pierce	Production Manager
Holly Burke	HR Manager

According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:

poor sales due to the economic downturn

increases in expenses such as wage expenses.

Your Role

You are the manager of Sales Team A. You manage a small team of sales team members. Your duties include accessing budget information for your team, explaining relevant aspects of budgets and features of budget documents to your team, and supporting team members to achieve performance goals.

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 the 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 control expenses, the spreadsheet will need to provide an ongoing tally of expense by account.

Bills skills include basic accounting. Bill needs to be informed of Big Red Bicycle 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.

Appendix 8 - Big Red Bicycle financial policies and procedures

Expense reimbursement

Purpose of the policy

To detail procedures to be followed in relation to expense reimbursement of expenses that have been incurred on behalf of the organisation.

The policy

Big Red Bicycle will reimburse staff for reasonable and authorised expenses that have been incurred by them on behalf of the organisation or in the course of conducting Big Red Bicycle business.

Procedure

Staff will not be reimbursed in the following circumstances:
1. any late payment penalties (e.g. overdue interest on credit cards)
2. expenses that are usually recovered from a third party

3. penalties and fines (e.g. parking, traffic)

4. those claims that should have been made using the purchase order system

5. those expense claims made by staff as a tax deduction

6. those expenses that were not made for business purposes.

2. Travel expenses claims:

insurance for trip cancellation will be reimbursed

2. mileage allowance will be given for the use of a staff members vehicle when used for work-related travel

3. personal stopovers or indirect routes will not be reimbursed

4. travel reimbursement is provided for the most direct and economical mode of travel available; circumstances will be considered on a case-by-case basis.

3. Accommodation expenses:

reimbursement will cover moderate accommodation expenses; circumstances will be considered on a case-by-case basis

2. items of a personal nature that are charged to a hotel account will not be reimbursed.

4. Employees own meals:

employees on Big Red Bicycle business will be reimbursed for any reasonable and appropriate meal expenses.

5. All relevant and original source documents must be attached to the Expense Reimbursement Form. A statutory declaration may be required where these original documents are not provided.

6. Appropriate advance payments may be authorised.

7. Employees have the authority to approve expenses up to the amount detailed in their individual Job Description. Any expenditure claims above the level prescribed must be forwarded to supervisors for approval.

8. Employees incurring authorised expenditure must submit their reimbursement requests on a signed Expense Reimbursement For

9. Source documents (including tickets, receipts, vouchers, invoices) must be kept for all purchases and expenses claims.

10. The CFO will use discretion to reimburse reasonable but unauthorised expenses.

11. Those claims that have not been adequately prepared, have not been duly authorised, or are lacking in the original documentation, will be returned to the employee with reasons that outline why the claim has not been processed.

Petty cash

Purpose of the policy

To detail procedures to be followed in relation to tracking petty cash expenditure.

The policy

Big Red Bicycle maintains a petty cash system to allow authorised personnel to pay for small expenditures in connection with business activity.

Procedure

One team member is authorised to disburse petty cash with one alternate in case of sickness or emergency.
Petty cash is to be kept secure, locked in safe.
Receipts for cash must be issued.
Receipts must be reconciled at the close of each business day.
Amounts over $800 must be banked.
Petty cash expense will be recorded as miscellaneous expense.

Appendix 9 Develop a coaching plan

Coaching Plan
Employee Name			Manager Name
Organisational needs (Goal/successful measures):

Training needs identified (areas for development)

Use appropriate coaching techniques or models such as the GROW coaching model to plan coaching/training session: outcome: team member produces spreadsheet to meet management requirements include activities/elements to instruct, practice, test, motivate.
Note: You may need to revise the following table to suite the coaching techniques or models you decided to use.
Employee responsibilities			Manager responsibilities
Development area	Employee activities	Successful measures	Manager activities	Milestones	By when

Appendix 10 Coaching/Training Role-Play Record

Coaching Session Handouts

Prepare a handout for the session and meet with your team member (role-paly) to coach them in the role:

a. Explain budget and relevance to team members accountabilities;

b. Use appropriate motivational theory;

c. Train the team member in required spreadsheet techniques; include elements of instruction, practice and testing/feedback;

d. Include recordkeeping requirements for Australian Taxation Office (ATO) and auditing purposes, for items such as petty cash, and GST.

Place your session handouts in the space below. Extend the space as you go.

Submit video-record evidence of coaching session (complete option one), OR you may choose to deliver the presentation to your assessor (complete option two).

Option one: Presentation conducted with my team member (role play)

If you have opted to role-play the scenario with a colleague, family member, and/or friend, you will need to complete this record, and submit a video of the role-play to your assessor as evidence.
Submit the link of your recorded meeting in a video format (can be saved on your G-suite, Onedrive, or Dropbox) for your assessor.
Ensure that you provide the shared link to assessment@lettraining.com.au

Learners name:
Date of coaching:
Start time:		End time:
Recorded meeting access link:

Attendee details:
First name:
Last name:
Contact details (phone number and email address)

Option two: Presentation conducted with LET Training Trainer/s (role play).

Submit and place the presentation invitation email to assessment@lettraining.com.au in sent format. The email must contain the posted date and time in the box below.

Project Task 3: Monitor and control finances

Section 1: Performance objective

Objectives:
	In this assessment task, you will need to demonstrate the ability to monitor and control finances.

Section 2: Assessment description

Description:
	You are required to create a simple spreadsheet budget to capture monitoring information. Using information provided, you will then use the budget spreadsheet to produce a report on expenditure in accordance with organisational policies and procedures. You will also modify a contingency and implementation plan.

Section 3: Assessment checklist

Check Point:

Task 3:

q Create a simple spreadsheet budget to capture monitoring information;

q Produce a variance report;

q Modify the contingency and implementation plans to improve effectiveness.

Section 4: How to complete this task

Task requirements:

Please read the instructions carefully and take a step-by-step approach to complete the following required activities for this task.

1. Read Section 3 of the Learning Module, and the Big Red Bicycle Pty Ltd. simulated business information provided in Appendix 1, and Appendices 11-12 of this Learner Workbook.

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 (refer to the filename: 07-03 BSBFIN501 Task 3 Variation Report Data).

4. Monitor and record actual figures.

5. Consider feedback from team members.

6. Produce a variance report as per organisational requirements in an Excel Spreadsheet.

7. Consider the scenario information and contingency plan provided and analyse the variance report.

8. Modify the contingency and implementation plans provided in the scenario to improve effectiveness in Appendix 14.

9. Submit all documents required in the specifications below. Ensure you keep a copy of all work submitted for your records.

Section 5: Submission checklist and specifications

You must submit:
1.	q create a simple spreadsheet budget to capture monitoring information;
2	q a budget variance report (in Excel Spreadsheet saved separately and attached to this workbook)
2.	q a modified contingency plan and modified implementation plan (Appendix 14)

Your assessor will be looking for evidence of:

q numeracy skills to read and understand a budget and to produce a variance report

q technology skills to use the software associated with financial recordkeeping

q knowledge of basic accounting principles to identify and use account balances

q knowledge of organisational requirements related to financial management

q knowledge of organisational requirements for records and reports

q knowledge of principles and techniques involved in budgeting, profit and loss statements, electronic spreadsheets.

Appendix 11 - Big Red Bicycle scenario #3

Your role

You are the Senior Accountant at Big Red Bicycle. 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 variance report.

The report should conform to organisational requirements in policies and procedures and contain:

columns to show actual account values

absolute variance

percentage variance.

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?low 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 companys 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 companys 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 variance 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 are 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 the team members.

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.

Fifty percent of direct wages costs are attributable to short-term contract employees whose contracts have expired and who are no longer needed.

Employees are 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 implementation plan to bring income and expenses under more effective control.

Contingency plan for Task B

Contingency Plan Company name: Big Red Bicycle Pty Ltd The person developing the plan: Name: Tom Copeland Position: Managing Director
Risk identified: Profit for FY more than 10% less than budgeted
Strategies/activities to minimise the risk	By when	By whom
Produce quarterly variance reports to identify income/ expenditure and profit shortfalls over 10%.	Q2	PR
Implement sales training/coaching.	Q2	PR
Implement incentives program.	Q2	PR
Reduce overtime.	Q2	PR

Contingency implementation plan for Task B

Risk identified: Profit for FY more than 10% less than budgeted
Activity	Monitoring activity and date	Person/s
Monitor variance.	Completion of variance report: Q2.	PR
Analysis of report to identify issues.	Management report: Q2.	PR
Email to warn employees of risk to jobs.	Monitoring of variance report results: Q4.	PR
Email to announce the rise of commission from 2% to 2.5%.	Monitoring of variance report results: Q3.	PR
Email to inform employees that overtime will no longer be approved.	Monitoring of variance report results: Q3.	PR
Email to inform employees of mandatory sales skills training: set program.	Monitoring of variance report results: Q3.	PR
Mandatory training conducted.	Monitoring of variance report results: Q3.	PR

Appendix 12 - Big Red Bicycle budgeting and finance policy

Budget preparations

The business plan will set the key parameters for all financial budgeting.

Variations to the business plan must be approved by the CEO and senior management strategic committee.

Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.

The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and Chief Financial Officer.

A CAPEX budget will be developed from the approved business plan.

A detailed sales budget must be completed before completing the profit budget for the year.

A cash-flow budget covering the first three months will be prepared after the profit budget is completed.

A master budget, including profit projections, will be completed from which cost centre allocations will be made.

Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.

Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.

All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.

The financial cycle for budgeting purposes will be yearly ending 30 June.

Reporting requirements

Software applications to be used in reporting:

Environment - MS Windows.

Accounting information system - MYOB Account Right.

Data analysis - Microsoft Excel, 2019.

Actual results will be produced monthly by the MYOB accounting system. Actual variances to the budget will be produced using Excel with a report prepared for senior management for significant variances.

Financial delegations

Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.

Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.

Expenditures must be within the budget guidelines for the individual departments.

Format for budgets and reports

All budgets must include the:

name of the person who prepared it

cost centre (if applicable)

name of the budget/report (i.e. sales, expenses, CAPEX, cash flow, budget
variance report)

period of the budget.

Appendix 13 Excel Spreadsheets (required to attach to this workbook)

1. Design and develop a spreadsheet to capture budgeted and actual figures to produce a variance report.

2. Access actual budget figures from relevant managers and accounting systems (refer to the filename: 07-03 BSBFIN501 Task 3 Variation Report Data).

3. Monitor and record actual figures.

4. Consider feedback from team members.

5. Produce a variance report as per organisational requirements in an Excel Spreadsheet.

Appendix 14 Monitor and review contingency plan

1. Consider the scenario information and contingency plan provided and analyse the variance report.

2. Modify the contingency and implementation plans provided in the scenario to improve effectiveness.

Contingency plan for Task B

Contingency Plan Company name: Big Red Bicycle Pty Ltd The person developing the plan: Name: Tom Copeland Position: Managing Director
Risk identified: Profit for FY more than 10% less than budgeted
Strategies/activities to minimise the risk	By when	By whom
Produce quarterly variance reports to identify income/ expenditure and profit shortfalls over 10%.	Q2	PR
Implement sales training/coaching.	Q2	PR
Implement incentives program.	Q2	PR
Reduce overtime.	Q2	PR

Modify the contingency plan above to improve effectiveness:

Contingency Plan Company name: Big Red Bicycle Pty Ltd The person developing the plan: Name: Position:
Risk identified: Profit for FY more than 10% less than budgeted?
Strategies/activities to minimise the risk	By when	By whom

Contingency implementation plan for Task B

Risk identified: Profit for FY more than 10% less than budgeted
Activity	Monitoring activity and date	Person/s
Monitor variance.	Completion of variance report: Q2.	PR
Analysis of report to identify issues.	Management report: Q2.	PR
Email to warn employees of risk to jobs.	Monitoring of variance report results: Q4.	PR
Email to announce the rise of commission from 2% to 2.5%.	Monitoring of variance report results: Q3.	PR
Email to inform employees that overtime will no longer be approved.	Monitoring of variance report results: Q3.	PR
Email to inform employees of mandatory sales skills training: set program.	Monitoring of variance report results: Q3.	PR
Mandatory training conducted.	Monitoring of variance report results: Q3.	PR

Modify the contingency implementation plan above to improve effectiveness:

Risk identified: Profit for FY more than 10% less than budgeted?
Activity	Monitoring activity and date	Person/s

Project Task 4: Review and evaluate financial management processes

Section 1: Performance objective

Objectives:
	In this assessment task, you will need to demonstrate the ability to review and evaluate financial management processes.

Section 2: Assessment description

Description:
	You are required to respond to a number of scenario tasks. You will collect and analyse financial data and make recommendations to improve existing processes. You will also create a plan to implement and monitor solutions.

Section 3: Assessment checklist

Check Point:

Task 4:

q Written responses for Task A to Task E.

Section 4: How to complete this task

Task requirements:

Please read the instructions carefully and take a step-by-step approach to complete the following required activities for this task.

1. Read Section 4 of the Learning Module, and the Big Red Bicycle Pty Ltd. simulated business information provided in Appendix 1 and Appendices 15-16 in this Learner Workbook.

2. Consider the scenario, tasks and financial information contained in the appendices of this assessment task. Complete written responses for Task A to Task E (five activities) in the space provided in Appendix 15.

3. Submit your responses as per the specifications outlined below. Ensure you keep a copy of all work submitted for your records.

Section 5: Submission checklist and specifications

You must submit:
1.	q Respond to the five (5) tasks from Task A to Task E in Appendix 15.

Your assessor will be looking for evidence of:

q numeracy skills to read and understand a budget and perform cost accounting calculations

q knowledge of basic accounting principles to identify and use account balances

q knowledge of organisational requirements related to financial management

q knowledge of current requirements of the Australian Taxation Office with respect to GST

q knowledge of principles and techniques involved in:

o budgeting

o cash flow

o electronic spreadsheets

o GST

o ledgers and financial statements

o profit and loss statements

o evaluation of budget and financial plans.

Appendix 15 - Big Red Bicycle scenario #4

Your role

You are the Senior Accountant. As part of your role, you will need to complete the following tasks.

Task A

As you are aware, one risk to the strategic plans of Big Red Bicycle (BRB) is bad debt and poor cash flow due to large trade debtor balances. Consider the following:

According to its policies, BRB offers 30 day terms to debtors.

BRB does not currently train sales staff on credit terms.

There is currently no enforcement of credit terms.

Warehousing of the stock is expensive at current leased premises.

Many bicycles need to be thrown out if parts rust; this problem exacerbates the problem of waste expense.

You have the following information from the Statement of Financial Position and current ledger accounts in the electronic accounting system (MYOB AccountRight).

Account	$
Trade debtors	362,500
Trade creditors	80,000
Opening stock	100,000
Closing stock	300,000
Purchases	1,000,000

Complete the following:
1.	Review the Statement of Financial Performance in Appendix 16 to calculate (show calculations): 1. The average debtor days _______________________________________ 2. The average creditor days ______________________________________ 3. The average stock turnover _____________________________________
2.	Consider the existing BRB ageing debtors budget in Appendix 16. Make two (2) 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.	In the space below, list three (3) sources of information of use to complete this activity.

Task B

In addition to its Australian business, Big Red Bicycle is considering manufacturing a new range of cheaper bicycles in Indonesia. The following information is available:

The Indonesian plant has capacity to manufacture 8,000 units.

Big Red Bicycles strategic goal is to generate a pretax profit of $1,000,000 for the next financial year for Indonesian operations.

Clients will pay a maximum of $500 per bicycle

Possibility exists for movement to an Indian plant with capacity for 10,000 units.

Market for bicycles is growing rapidly and BRB will be able to sell all units produced.

Limited ability to renegotiate costs with suppliers.

Pricing and cost information is as follows:

Bicycle price per unit	$500 (excl. GST)
Current variable costs per unit	$250
Fixed costs	$1,280,000

Complete the following:
1.	In the spaces below, work out: a. how many units at the 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 a profit target at current manufacturing capacity (show calculations).


2.	Make one (1) 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 BRB to take depending on possible future scenarios.

3.	In the space below, list three (3) sources of information of possible use to complete this activity.

Task C

Soon you will need to prepare a Business Activity Statement (BAS) for the first quarter on 2020/21.

Complete the following:
1.	State how many years you will need to keep GST records in order to satisfy ATO requirements. (You may need to conduct research at www.ato.gov.au )

2.	Complete the GST budget on the following page to anticipate GST liability.

	July	August	September
Budgeted cash receipts incurring GST:
Cash sales	20,000	10,000	10,000
Cash revenue (besides sales)	0	0	0
Cash receipts from sale of assets (not stock)	0	0	0
Total receipts for GST	20,000	10,000	10,000
Budgeted non-cash receipts incurring GST:
Debtors sales	180,000	230,000	150,000
Total non-cash receipts	180,000	230,000	150,000
Total budgeted receipts incurring GST	200,000	240,000	160,000
Budgeted cash payments incurring GST:
Cash purchases of stock	0	0	0
Cash expenses	4,300	5,200	5,250
Total cash receipts incurring GST	4,300	5,200	5,250
Budgeted credit payments incurring GST:
Credit purchases of stock incurring GST	25,000	30,000	25,000
Credit purchases of assets (besides stock)	4,300	5,200	5,250
Total cash payments incurring GST	29,300	35,200	30,250
Total budgeted cash payments incurring GST	33,600	40,400	35,500
GST cash budget calculations
a) Cash receipts
b) Cash payments
c) GST liability

Task D

Choose one of the recommendations from Task A or B and develop an action plan to implement and monitor the recommendation. Ensure you include appropriate activities, monitoring, timelines and accountabilities.

Action plan
Task	Area for improvement	Action/Activities	By when	By who	Date to review

Task E

Reflecting on the tasks you have undertaken and on your knowledge of financial management and planning principles:

1. describe basic accounting principles

2. describe cash flows

3. describe ledgers and financial statements

4. describe profit and loss statements.

Summarise your reflections in a short (in about 150 words) written statement in the space below.

Tip: You may revisit the five fundamental principles of accounting. For example, the list is said to be crucial to effective management decision-making:

1. Control - managers need to control and monitor the business.

2. Relevance - decision-makers need information that is timely, useful etc.

3. Compatibility - the accounting systems should match the aims of a company.

4. Flexibility - the accounting systems need to adapt to the companys needs.

5. Cost-benefit - the benefits of the accounting information system need to outweigh the cost.

Appendix 16 - Financial information

Statement of Financial Performance

Big Red Bicycle Pty Ltd
Statement of Financial Performance
For the year ended 30 June 2020
REVENUE
	Sales	2,900,000
	Less direct wages and commissions	272,500
	Opening stock	100,000
	Purchases	300,000
	Closing stock	20,000
	Less cost of goods sold	380,000
Gross Profit		2,247,500
EXPENSES
General & Administrative Expenses
	Travel	22,000
	Legal fees	4,500
	Bank charges	700
	Office supplies	4,000
	Postage & printing	500
	Dues & subscriptions	600
	Telephone	11,200
	Repairs & maintenance	45,000
	Payroll tax	25,000
Marketing Expenses
	Advertising	208,000
Employment Expenses
	Superannuation	45,000
	Wages & salaries	500,000
	Staff amenities	23,000
Occupancy Costs
	Electricity	38,000
	Insurance	100000
	Rates	100,000
	Rent	200,000
	Water	35,000
	Waste removal	60,000
TOTAL EXPENSES		1,422,500
NET PROFIT (BEFORE INTEREST & TAX)		825,000
Income Tax Expense		206,250
NET PROFIT AFTER TAX		618,750

Ageing debtors budget

Big Red Bicycle Pty Ltd
AGED DEBTORS BUDGET 2019/20	TOTAL	Qtr 1	Qtr 2	Qtr 3	Qtr 4
Sales	2,900,000	600,000	900,000	800,000	600,000
?btors Sales		50%	50%	50%	50%
Total Debtors	100%	300,000	450,000	400,000	300,000
Current	65%	195,000	292,500	260,000	195,000
30 Days	20%	60,000	90,000	80,000	60,000
60 Days	12%	36,000	54,000	48,000	36,000
90 Days	3%	9,000	13,500	12,000	9,000

Project Assessment Summary

To be completed by Assessor
Task	Assessment Outcome	Assessor Comments
Task 1	q Satisfactory q Not Yet Satisfactory
Task 2	q Satisfactory q Not Yet Satisfactory
Task 3	q Satisfactory q Not Yet Satisfactory
Task 4	q Satisfactory q Not Yet Satisfactory
Assessors Further Comments:
Assessor Name:
Assessor Signature:			Date Assessed:

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Manage Budgets and Financial Plans Assessment BSBFIN501

BSBFIN501