Task 1 – Theory: Short Answer Questions
Task 1 requires the Learner to demonstrate their knowledge of managing finances. To enable you to do this answer the following questions. If you require more space use your own paper placing your name and group identifier at the top and the question number beside your answer.
BSBFIM601 Manage Finances Assignment
If you use your own business include copies of all documentation to which you refer to for your Assessor.
1a Identify the requirements for financial probity.
When under taking Public Construction Procurement Agencies must:
• Conduct Public Construction Procurement in a manner that is consistent with Public Sector Values;
• Treat tender participants and potential tender participants fairly and equally and avoid giving one tender participant an improper advantage over another;
• Main tain confidentiality of participants confidential information including commercially sensitive information and intellectual property;
• Ensure tender processes negotiations evaluation processes and contract management processes are auditable transparent and accountable and
• Proactively identify and manage conflicts of interest whether real, potential or perceived appropriately and in accordance with applicable legal and policy requirements, including applicable Victorian Public Sector Codes of conduct.
1b Describe the principles of accounting and financial systems.
Introduction to Accounting Principles
There are general rules and concepts that govern the field of accounting These general rules referred to as basic accounting principles and guidelines form the groundwork on which more detailed, complicated, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards. If a company distributes its financial statements to the public it is required to follow generally accepted accounting principles in the preparation of those statements. Further if a company’s stock is publicly traded federal law requires the company’s financial statements be audited by independent public accountants. Both the company’s management and the independent accountants must certify that the financial statements and the related notes to the financial statements have been prepared in accordance with GAAP. GAAP is exceedingly useful because it attempts to standardize and regulate accounting definitions, assumptions, and methods. Because of generally accepted accounting principles we are able to assume that there is consistency from year to year in the methods used to prepare a company’s financial statements. And although variations may exist,we can make reasonably confident conclusions when comparing one company to another or comparing one company’s financial statistics to the
BSBFIM601 Manage Finances Assignment
1c Explain Australian international and local legislation and conventions that are relevant to financial arrangements in Australia.
To manage finances organisations should follow the procedure practices and disclosure requirements included in the Australian Accounting Standards maintained by the AASB an Australian Government agency whose functions are set out in the Australian Security and Investments Commission Act 2001 (Cth). The standards are applied to organisations within the public and private sectors. The Standards follows those issued by the International Accounting Standards Board (IASB) – the independent accounting standard-setting body of the International Financial Reporting Standards Foundation (IFRS Foundation. More information about the AASB Standards at:
International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are under standable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable under standable reliable and relevant as per the users internal or external. International Financial Institutions Legislation Amendment Bill 2010 (Australia): A Bill for an Act to amend the law relating to some international financial institutions, and for related purposes.
1d Outline the requirements of the Australian Tax Office including Goods and Services Tax Company Tax and Pay As You Go Tax.
Australian Taxation Office (ATO): Reporting of income and expenditure for GST purposes is required through out the year, as are estimates of business and investment income, with a final detailed statement of income and eligible deductions at the end of each financial year. Companies are also required to pay their income at to the ATO quarterly using a business activity statement and prepare an income tax return at the end of each year in accordance with the requirements of the Income Tax Assessment Act 1997 (Cth).
The calculation and submission of taxation liability is an important part of an organisation meeting its statutory reporting requirements.
Managers need to be aware of specific forms of taxation such as GST liability and payroll tax which must be calculate and provide for on a regular basis. Here is a description of some of the major forms of taxation:
Good and Services tax :-
Most organisations with an annual turnover of $75.000 or more are required to register for the goods and services tax (GST). Not for profit organisations must register for GST if their annual turnover exceeds $150.000. Annual turnover is the total revenue from sales and services provide for the year excluding GST. Organisations registered for GST must comply with legislative requirements. It may be your responsibility to obtain the information from the organisation’s accounts.
Payroll tax :- Payroll tax is a state/territory tax imposed on organisations with a total Australian payroll that exceeds the payroll tax-free threshold. The threshold applicable varies between the states and territories. Calculation of the total Australian payroll includes payments made to or on behalf of employees.
Organisations registered for payroll tax are required to complete a monthly payroll tax return and submit it to the state revenue office with the payment by a specified date for example in Victoria it is the seventh day following the end of the month.
Fringe benefits tax :
Organisations that provide employees with payments in the form of non cash benefits may have to register for and remit fringe benefits tax (FBT) at the rate equal to the top marginal rate of personal taxation plus the Medicare levy because the benefit is deemed to be a substitute for taxable income. The FBT year runs from 1 April to 31 March, and the rate is subject to change as the Australian financial climate dictates. Employers must calculate the amount of FBT payable and complete an FBT return form. Amounts are recorded as liabilities in the general ledger. The timing of the FBT payment is determined by the total amount that is payable and weather the employer has previously lodged an FBT return.
BSBFIM601 Manage Finances Assignment
Pay as you go :-
Pay as you go (PAYG) is a system of taxation on income. PAYG legislation is found in Schedule 1 of the Taxation Administration Act 1953 (Cth) and is broken down into two areas: PAYG with holding and PAYG instalments. The required data to calculate PAYG can be obtained from the payroll accounts of the organisation. Organisations pay tax instalments on their business and investment income allowing them to pay their tax obligation as they go rather than being required to pay a lump sum amount of tax at the end of the financial year.
Superannuation :-
All employers are required to contribute to a complying superannuation fund for all eligible employees currently a minimum of 9.5 per cent of gross ordinary income. When a company fails to make these contributions, the government effectively fines the business an equivalent amount and holds it on behalf of the employees until the organisation makes arrangements with a complying fund. The government also charges interest on the amount involved and an administrative fee per employee.
Task 2 – Practical: Review Budgets
Task 2 requires you plan for financial management.
Access the Bounce Fitness website to print and use the financial documents of the organisation. On your own paper using appropriate report formats (see Bounce Fitness StyleGuide) and using the reports you have accessed:
2a Review the Financial and Budget Policy and the Business Plan Objectives and Key Performance Indicators and discuss whether the goals of these documents are being met.
Affording to the budget policy, the cost should maintain stable which is not happening.
The whole company have to apply the policy along with trainings and bonus for employee who achieve the goals. None of the offices were able to reduce cost during the period analyses, so new action plan has to be direct to each Centreand the board of directors should be monitoring reliably.
2b Review the financial data including profit and loss statements cash flows and ageing summaries comment on areas that have generated a profit or loss and suggest reasons why this could have occurred.
• In Brisbane, there was an increase in sales and the company kept the cost stable during the period
which isvery positive for the profitability and wealth of the company.
• In Cairns the growth of cost is a major concern once is making the company lose money for two years in arow.
• The head office is doing pretty well and has increase the net profit.
• The Melbourne office is doing slightly good but the team has to focus on cost reduction once the net profit has deceased from one year to another.
• Sydney is the best market which follows the highest net profit as well the bigger increase either in sales and net profit.
BSBFIM601 Manage Finances Assignment
2c Review the Business Plan of Bounce Fitness and determine the critical dates and initiatives that will require or generate resources in the next financial cycle.
The company offers a discount for members to pay in full for the services which is a initiative to make the cash flow positive in advance.The decision was made to lease the equipment which will start saving money in a long run.The lease of the facilities will be contracted via a three-year contract which put the organization in a better position to exchange the rental price.
2d Review the statutory requirements of the Australian Taxation Office and discuss whether they are being met efficiently. Make recommendations if appropriate.
According to budget there is no evidence of PAYG, superannuation IAS. It does starts taxes and payroll expenses. Therefore in my opinion it is not possible to analyses whether Bounce Fitness has been met allstatutory requirements.
2e Based on the information gathered evaluate and recommend improvements to the overall financial processes in Bounce Fitness.
Over all Bounce Fitness has showed pretty good cash flow management in the majority of Centre’s. Mostly actual results have positive and improve projections in terms of cash flow. Financial objectives are easily being met. Membership has increased as well as casual attendance. In most cases the out flow was reduced over time. The strategy to lease equipment has been proved very effective rather than purchase the equipment. It generates low cost and less depreciation. For the Cairns centre, management team should conduct a market research as well as internal survey to collect feedback from customers to understand the significant decrease in casual attendance. Bounce Fitness should develop specific financial and management strategies in order to manage cash flow more efficiently. The centre might requires a change in management and overall staff. Additional training programs and innovation actions are recommended.
2f Consider the software that you are using for this assessment and discuss whether it is suitable for the business needs or whether you need to change to a new software package. Explain why it is appropriate or not and how a different package would provide benefit.
BSBFIM601 Manage Finances Assignment
Microsoft excel is an excellent tool for financial management for small business. As Bounce Fitness in growing really fast it is just a matter of time the market will require a bigger and more professional software. To stay on the top of the market the organization should start searching for partnerships and new technologies in order tofollow the market growth.
Print and include any documents you use from the Bounce Fitness website and reference any other information for your Assessor.
Task 3 – Practical: Allocate Funds
Task 3 requires you to establish a budget and allocate funds. On your own paper using appropriate rep
(see Bounce Fitness Style Guide) for your budget and your report (answers to questions):
3a Review the Financial and Budget Policy and the Business Plan, Objectives and Key P Indicators and discuss whether the goals of these documents are being met.
According to the budget policy, the cost should maintain stable which is not happening. company have to enforce the policy along with trainings and bonus for employee who achieve None of the offices were able to reduce cost during the period analyses so new action plan direct to each center and the board of directors should be monitoring consistently.
3b Review the financial data including profit and loss statements, cash flows and ageing summaries comment on areas that have generated a profit or loss and suggest reasons why this could have occured.
The Mel bourne office is doing slightly good but the team has to focus on cost reduction once the net profit has deceased from one year to another.
Sydney is the best market which follows the highest net profit as well the bigger increase either in sales and net profit. In Brisbane, there was an increase in sa company kept the cost stable during the period which is very positive for the profitability and wealth of the company. In Cairns, the growth of cost is a major concern once is making the company lose two years in a row. The head office is doing pretty well and has increase the net profit.
3c Review the cash flows of Bounce Fitness Centres. Are they sufficient to maintain the should changes be made? If you recommend changes discuss what you would recommend to be done and what impact you would expect this to have.
BSBFIM601 Manage Finances Assignment
Cash flow In most Centre’s are positive and exceeds budget therefore sufficient to maintain the centre. The Cairns centre however had a negative ending balance cash flow which means that the centre does not have sufficient financial resource or solvency to maintain itself in the market the centre has been ineffective in retaining customers. Even though the increase in out flows might represent an increase in investment, for example increase in advertising. The negative b balance might represent poor cash flow management from previous years therefore Inst only reduce costs, Cairns centre should focus on changing marketing and management s increase sales and increase casual attendances like the other centres.
Task 4 – Practical: Implement Budgets
Task 4 requires you to implement budgets.
Your Assessor and training group will act as the manager and supervisors who need to be clear about the budgets reporting requirements and financial delegations.
To complete the following tasks use the information found at:
• Policies tab / Financial Policy and Budget Policy
• Performance tab / Head Office Cairns / HO Financial Reports / 20XX Projected Budget Head Office and Profit and Loss – Head Office
• Performance tab / Brisbane / Brisbane Financial / 20XX Projected Budget for BrisbaneCentre and Profit and Loss – Brisbane
• Performance tab / Cairns / Cairns Financial / 20XX Projected Budget for Cairns Centre and Profit and Loss – Cairns
• Performance tab/Melbourne/Melbourne Financial/20XX Projected Budget for Melbourne Centre and Profit and Loss Melbourne
• Performance tab / Sydney / Sydney Financial / 20XX Projected Budget for Sydney Centre and Profit and Loss – Sydney
• Documents tab / Finance / The Centre Manager’s Budget Checklist.
Once you have this information explain to the Assessors and others nominated by the Assessor as supervisors and discuss with them:
• Circulate budgets and ensure managers and supervisors are clear about budgets reporting requirements and financial delegations
According to the discussion all the managers are clear about the budgets after the presentation.
Reporting requirements were part of the meeting and financial delegations were made once every body agreed with the real situation.
• Check there are no opportunities for mis appropriation of funds and that systems are in place to properly record all financial transactions
After a formal conversation with the accountant team the company is completely under the law and its financial records are in accordance with the policies. All the financial transactions and theallocation of funds were revised and will be monitored every month.
• Review profit and loss statements, cash flows and ageing summaries
All the offices increased the cost which is a critical challenge the company is facing but the action plan was put into practice and managers will encourage employees to follow as well as monitor the performance strictly.
• Revise budgets as required to deal with contingencies
Cost reduction and contingencies are part of the next year plan of Bounce Fitness, as a way to put the company at the highest level of the industry.
• Main tain audit trails to ensure accurate tracking and to identify discrepancies betweenagreed and actual allocations
No discrepancies were found between agreed and actual allocations, which is a sign that the company isgoing towards the right way of growth.
You will need to find viable solutions to their questions and demonstrate your ability to ensure they under stand and can apply the information.
Task 5 – Practical: Report on Finances
Task 5 requires you to report on finances. Using the Bounce Fitness documents, create a report in an appropriate format for your Assessor. Your report must be clear and conform to organisational and statutory requirements.
You must identify and prioritise any significant issues in statements, including comparative financial performances for review and decision making and prepare recommendations to ensure financial viability of the organisation and demonstrate how the budget aligns with the Business Plan. If it does not you must make recommendations to correct this. Also evaluate the effectiveness of financial management processes.
BSBFIM601 Manage Finances Assignment
Task 6 – Evidence Record
To be used if the Learner has used their own organisation for the Assessment Tasks.
This form provides verification and evidence that Learner has demonstrated the skills and applies the knowledge required to undertake budgeting, financial forecasting and reporting and to allocate and manage
resources to achieve the required outputs for the business unit.
It includes contributing to financial bids and estimates allocating funds managing budgets and reporting on financial activity.
It applies to individuals who have managerial responsibilities which include over seeing the management of financial and other resources across a business unit, a series of business units or teams or an organisation.
It covers all areas of broad financial management.
In a larger organisation this work would be supported by specialists in financial management.
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