NAME – SHAIK JALEEL

SUBJECT- BSBFIM601E

ASSIGNMENT
 Activity 1A

WRITTEN ACTIVITY 

For this assessment you will need to perform the following tasks. These tasks will need to be completed and
submitted in a professional, word processed, format. Each task must be 1000 words minimum in length.

Task 1

You will need to write a report outlining the following:

1. What methods would you use to plan for financial management including:
1. What you would analyse in order to find information on previous profit/loss?
2. How would investigate the reasons for previous profit/loss?
3. How would you analyse identify future expenses etc…?
4. How would you analyse cash flow trends?
5. What requirements might you have in relation to taxation?
6. What types of software might you need for financial management?
b. Then discuss the steps involved in creating a budget:
c. Then you will need to discuss the methods you will use to implement a budget including:
1. Circulation methods
2. Risk management
3. Review methods
4. Contingencies 
5. Tracking
6. Compliance and statutory requirements
7. Identifying types discrepancies
b. Then discuss the types of reports you would need to prepare and how you would prepare them
including:
1. Formats for reports
2. Who they would be distributed to?
3. Who recommendations would be addressed to?

Once you have completed this assessment you must submit it to your trainer for marking.
Task 1
Answers:

To this activity may vary however, should make reference to the following points:
 Financial data may include:
o budgets, forecasts and variations
o cash flow/profit reports
o financial/operational statements and reports (e.g. expenditures and receipts, profit and
loss statements)
o market valuations
 Organisational requirements may include:
o financial analysis assessments
o financial management manuals
o legal and organisational policies, guidelines and requirements
o occupational health and safety policies, procedures and programs
o price and exchange parameters
o quality assurance and/or procedures manuals
o recording and filing systems
o reporting requirements
o standard financial analysis techniques
 Statutory requirements may include:
o delegated authorities
o internal control procedures
o limits on volumes and types of financial transactions
o reporting of duty, excise and other overseas government charges
o reporting periods
o taxation and payment timings
 Discrepancies may include:
o absence of auditable trail
o expenditure report mismatches
o inappropriate authorisations
o incorrect payments
o incorrect report formats
o unreconciled cash flows and operating statements
o variances from budget and phasing
 Format may include:
o audits
o balance sheets
o cash flow statements
o electronic forms
o financial year reports
o operating statements
o spreadsheets
 o statutory forms
 Issues may include:
o cost structures
o internal controls
o losses and returns
o profitability
o statutory obligations

o suppliers and market

Recommendations may include:

o cash flow
o changes in business activity including markets, goods or services traded
o consolidation
o expenses and overheads
o labour costs including decisions to move production to other locations or sites
o loss
o profit
o write-off

Task 2

For this task you must discuss in your own words the answers to the following questions: 

1. Identify the requirements for financial probity:

Answer:
Probity is the strict adherence to a code of ethics based on undeviating honesty, especially in
commercial (monetary) matters and beyond legal requirements.
Probity decisions should be:
 Helpful: Probity should be used to facilitate discussion of current approaches to market with
suppliers in order to promote genuine engagement,
 Inclusive: Probity processes should be designed to enable innovative approaches to be
adopted if required.
 Tailored: Probity roles can be tailored to the business need and range from using internal
expertise through to engaging external specialist advice.
 Sensible: Each individual process may require a different approach; one size will not fit all.

Probity is the evidence of ethical behavior, and can be defined as complete and confirmed integrity, uprightness
and honesty in a particular process.

1. The principles underpinning ethics and probity in Australian Government Procurement are:
a. Officials must act ethically, in accordance with the APS Values (set out in section 10 of the
Public Service Act 1999) and Code of Conduct (set out in section 13 of the Public Service Act
1999), at all times in undertaking procurement.
b. Officials must not make improper use of their position.
c. Officials should avoid placing themselves in a position where there is the potential for claims
 of bias.
d. Officials must not accept hospitality, gifts or benefits from any potential suppliers.
e. Agencies must not seek to benefit from supplier practices that may be dishonest,
Unethical or unsafe.
f. All tenderers must be treated equitably. This means that all tenderers must be treated fairly -
it does not necessarily mean that they are treated equally.
g. Conflicts of interest must be managed appropriately.
h. Probity and conflict of interest requirements should be applied with appropriate and
proportionate measures informed by sound risk management principles.
i. Value for money outcomes are best served by effective probity measures that do not
exclude suppliers from consideration for inconsequential reasons.
j. Confidential information must be treated appropriately during and after a procurement
process.
k. External probity specialists should only be appointed where justified by the nature of the
procurement.
2. Mechanisms for assuring probity should be applied sensibly in procurement processes, with the
management of probity issues tailored to each individual process.
3. Importantly, probity should not be used to justify avoiding reasonable discussion with potential
suppliers during a tender. Officials are able to discuss current tenders in the market with potential
suppliers. The level of detail and formality in providing information should be appropriate to the risk
of the procurement. The procurement's level of risk will inform how officials engage with potential
suppliers:

a. For lower risk (typically low cost and complexity procurements run via limited tender), in line
with the probity principles above, officials can discuss the procurement. This process can
reasonably be dealt with by the tender contact officer with limited requirements for formalized
or rigid probity processes. Information can be discussed in a meeting or over the telephone, or
where necessary, via written correspondence (e.g. email). Any information provided to the
potential supplier that would be useful for other potential suppliers should be de-identified and
provided to them also.
b. For higher risk (typically higher cost and complexity procurements run via open tender), it is
appropriate to implement more rigor in dealing with suppliers. This may include formalised
approaches to handling requests from suppliers, specified probity roles and utilizing additional
expertise where necessary.

2. Describe the principles of accounting and financial systems:

Answer:
In order for accounting information to be useful, it must contain certain qualities and meet certain standards.
The Australian Accounting Standards Board (AASB) establishes and maintains generally accepted accounting
principles (GAAP) that set forth the qualities and standards of accounting information. Unless a company’s
accounting records meet GAAP standards, an auditor cannot certify the company’s records.
Australian GAAP is annual publication that provides a description of the major requirements of
Accounting Standards, Interpretations and the Framework issued by the Australian Accounting
Standards Board (AASB) used to prepare a general purpose financial report.
Australian GAAP has been written to assist preparers, those charged with governance, auditors, users,
regulators, academics and students to understand the rules governing the preparation of general purpose and
special purpose financial statements. Specifically, Australian GAAP should assist: Accountants in commerce,
government, industry and public practice who need a ready reference of all the major requirements of the
Australian financial reporting framework
 CA and CPA program candidates studying financial reporting modules
 Under graduates students requiring an insight to the standard-structure, regulatory
environment, and accounting pronouncements
 Those wanting an update on the financial reporting developments
 Directors and others charged by governance responsibilities would want a comprehensive and
easily understandable reference tool for financial reporting1

3. Explain Australian, international and local legislation and conventions that are relevant to financial
management in the organisation
Answer:
Most companies in Australia will conform to statutory requirements governed by one or more of the
following authorities:
• The Corporations Act 2011 (supervised by ASIC)
The Corporations Act 2011 is an act of the Commonwealth of Australia that sets out the laws dealing with
business entities in Australia at federal and interstate level. It focuses primarily on companies, although it
also covers some laws relating to other entities such as partnerships and managed investment schemes.
• Australian Securities and Investment Commission
The Australian Securities & Investments Commission (ASIC) is an independent Australian government body that
acts as Australia's corporate regulator. ASIC's role is to enforce and regulate company and financial services
laws to protect Australian consumers, investors and creditors.
• Australian Taxation Office
The Australian Taxation Office (ATO) is an Australian Government statutory agency and the principal revenue
collection body for the Australian Government. The ATO has responsibility for administering the Australian
federal taxation system and superannuation legislation. Responsibility for the operations of the ATO are within
the portfolio of the Treasurer of the Commonwealth of Australia.
• Australian Securities Exchange
ASX Limited (ASX), an Australian public company, operates Australia's primary securities exchange, the
Australian Securities Exchange. It was created in July 2006 through the merger of the Australian Stock
Exchange and the Sydney Futures Exchange.
• Financial Reporting Council
The Financial Reporting Council (FRC) is responsible for overseeing the effectiveness of the financial reporting
framework in Australia. Its key functions include the oversight of the accounting and auditing standards setting
processes for the public and private sectors, providing strategic advice in relation to the quality of audits
conducted by Australian auditors, and advising the Minister on these and related matters to the extent that
they affect the financial reporting framework in Australia.
• Australian Accounting Standards Board
The AASB is an Australian Government agency that performs a number of functions under the
Australian Securities and Investments Commission Act 2001.
• International Accounting Standards Board
The IFRS Foundation is an independent, not-for-profit organisation working in the public interest. Its primary
mission is to develop a single set of high quality, understandable, enforceable and globally accepted
International Financial Reporting Standards (IFRS) based upon clearly articulated principles. For Australian
companies, the Australian Accounting Standards Board stipulates in detail the data and inclusions required in
each report, register or record. The documents themselves each serve a purpose, particularly in respect to
disclosure and adherence to the law, and as such form the basis for sustainable and ethical commerce in
Australia.
 4. Outline the requirements of the Australian Tax Office, including Goods and Services Tax, Company
Tax, Pay As You Go.
Answer:
GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.
Generally, businesses and other organisations registered for GST will:
 Include GST in the price of sales to their customers
 Claim credits for the GST included in the price of their business purchases
So, while GST is paid at each step in the supply chain, businesses do not actually bear the economic cost of
the tax. The cost of GST is borne by the final consumer, who can't claim GST credits.
While businesses don't bear the economic cost of GST, they collect it. As a GST registered business, you'll
need to put aside the GST you have collected so it can be paid when due.
If you carry on an enterprise and have a GST turnover of $75,000 or more ($150,000 or more for non- profit
organisations), or provide taxi travel, you must:
 Register for GST
 Work out whether your sales are taxable (that is, subject to GST, GST-free or input taxed)
 Include GST in the price of your taxable sales
 Issue tax invoices for your taxable sales
 Obtain tax invoices for your business purchases that have GST included in the price
 Account for GST on either a cash or non-cash basis
 Report sales and purchases by lodging activity statements (even if the amount to be
reported is zero), work out whether they have any adjustments and pay GST
GST-registered organisations can also claim GST credits for GST included in the price of most business
purchases.
There is a range of GST concessions that can affect how you pay GST.
If your GST turnover falls below the registration threshold, you can choose to cancel your GST registration. You
must cancel your GST registration if you are not carrying on an enterprise. You may also be required to cancel
your GST registration if your structure changes (for example, a partnership change).
Company tax - Like individuals, companies are required by law to pay tax on any profits. Currently,
Australian companies must pay tax at a rate of 30% of profits. This rate is consistent across all companies,
and doesn’t vary depending on the amount of profits.
PAYG - Sole traders declare their business income (or loss) in their personal income tax returns and pay tax at
individual tax rates. When the ATO receive an income tax return for a sole trader, partnership or company they
advise the business owners if they are to pay PAYG installments. Installments paid are credited against the
income tax assessment raised after you lodge your income tax return at the end of the financial year. Until you
start paying PAYG installments you need to budget for the income tax you will have to pay. You can choose to
put money aside in a separate account, or you can arrange with the ATO to make voluntary payments.

QUESTIONS
The following questions may be answered verbally with your assessor or you may write down your answers.
Please discuss this with your assessor before you commence. Short Answers are required which is
approximately 4 typed lines = 50 words, or 5 lines of handwritten text.

Your assessor will take down dot points as a minimum if you choose to answer them verbally.
Answer the following questions either verbally with your assessor or in writing.

1. What does a balance sheet enable you to do?

Answer:
 Quickly see the financial strengths and capabilities of your business;
 Review the level of assets, debt and working capital of your business;
 Compare the increase or decrease in value of your business over time;
 See the relative liquidity of your business;
 Analyse your ability to pay all short-term and long-term debts as they come due; and
 Review the composition of assets and liabilities, the relative proportions of debt and equity
financing and the amount of retained earnings

2. Poor cash flow may arise from what?

Answer:
 Significant increases in stock levels
 Inadequate credit control
 Increasing debtor days
 Bad debt incurred
 Poor accounting practices including late invoicing
 Inaccurate forecasting by management
 Failure to plan for capital and/or exceptional expenditure

3. Monitoring expenditure has important advantages. What are they?

Answer:
 It allows shortfalls and successes to be quickly identified so appropriate action can be taken.
 It gives clear indications of the business’s requirements and expectations.
 Monitoring - or impending monitoring - can assist to improve an individual or a team’s
motivation to perform to the standards required.
 Monitoring can provide a tool to reward excellence, by having a clear and measurable
bench-mark, against which performance can be compared.

4. Why do you need a good financial record keeping system?

Answer:
 Assists with decision-making - A good financial record keeping system provides accurate and
timely information for decision-making purposes. If the record keeping is not complete or is
incorrect, any decisions made based on those records will also be wrong.
 Monitors business performance - A good financial record keeping system monitors the
performance of the business and all business units or products. Depending on the level of
sophistication of the bookkeeping system, it may be possible to track the financial performance
of different products or sales, or different departments within the business.
 Helps with budgeting - A good financial record keeping system helps with budgeting for future
periods and planning future activities. As well as assessing the current performance of the
business, it is also necessary to be able to plan for future activities and their financial effect on the
business performance. Having the right information at your fingertips can greatly assist you with
future projections and pursuing the correct course of action to achieve a desired outcome.
 Assists in preventing errors and fraud - A good financial record keeping system assists in preventing
and detecting errors and fraud and safeguards valuable assets. If the accounting records reveal the
amount of cash or goods that should be present, the dangers of misappropriation are reduced.
 Help determine the need for extra funds - A good financial record keeping system provides the
 information required to assess if you need extra funds. The correct bookkeeping system will also
help you decide whether these funds should be provided from within the business (equity) or from
external finance (debt).
 Provides information for others - A good financial record keeping system provides information
for suppliers, creditors and outside investors. You may need to get credit from suppliers or other
creditors, or you may need to bring in outside parties to invest in your business. These people are
going to need to see your records and your financial statements. The decision to invest in your
business or to provide you credit will be made much easier if they can have a clear picture of
your business' past performance.
 Aids account and tax preparation - A good financial record keeping system provides information for
preparation of your financial accounts and income tax return. Keeping good records will enable
your accountant to prepare financial accounts and the income tax return easily and in a timely
manner. If the records are not kept properly your accountant may charge more. Penalties are also
likely according to be charged if the returns are not filed on time, and there is the possibility of
overpayment or underpayment of taxes.
 Helps meet tax requirements - A good financial record keeping system helps with meeting taxation
and other governmental responsibilities. Responsibilities such as Work Cover payments, lodgment
of business activity statements, payment of superannuation guarantee, amongst others, are more
accurately assessed if the information is relevant and easily retrievable from your record keeping
system.

5. Give a description of the 3 most common programs used for financial input.

Answer:
 MYOB (Mind your own business) is a common software system used to input financial data to
create reports and can interact directly with your accountant or financial advisor for Tax purposes
 Xero – is a SaaS (Software as a Service) software – it is accessible directly from the internet cloud
through a standard browser. Xero provides free reporting and practice management software to
partners that make running an accounting practice or bookkeeping business easy. Collaborating
with clients online through the single ledger establishes a new type of working relationship that
goes beyond meeting compliance requirements. This supports the approach of the modern practice,
where advisor expertise and experience is more valued, and time-based billing is displaced by value
pricing
 QuickBooks: Bookkeeping software that combines a variety of accounting processes into one user-
friendly system. The software's primary function is to alleviate the use of multiple tables,
spreadsheets, and tracking sheets necessary to document and maintain accounting tasks at a
company. Accounting figures are also easily reconciled for tax purposes with QuickBooks. The
software was developed by Intuit and can be customized based on the needs of the business
utilizing the software

6. Give a detailed description of the below types of expenditure and income:

1. Gross profit
Answer:

 This is also called first profit. It is the calculation of:

o Sales – cost of sales (stock) = Gross Profit
 Gross profit margin is the amount by which the sell price exceeds the cost price, and is normally
expressed as a percentage. .It is calculated by dividing the dollar mark-up by the sell price.
  Selling goods is not the challenge in retail - selling them at a profit is the difficult part. Goods
must be sold at a profit that will sustain the business and allow it provide an adequate return
on investment.

2. Net profit:
Answer:

 Net profit is the final profit figure, for a department or business.

 It is the amount left after providing for all other costs. Cost deductions include: rent, rates,
electricity, wages etc.

3. Stock turnover

Answer:

 Stock turn is the number of times the average stock of the business is sold, during a set period of
time.
 This gives a theoretical guide to how often the business “turns over” its stock holding, usually
for 6 and 12 months.
 High stock turns indicate quick sales with little stock remaining unsold for long periods. However, if
the stock turn becomes too high, it probably indicates that stock shortages are resulting in lost sales.
 Different types of businesses have different stock turn averages. For example: fresh food businesses
normally have a very high stock turn annually, while a top-range furniture business may have a
much lower stock turn.
 Stock turn can be calculated by dividing the annual or progressive sales by the average stock
holding of the business.

b. Describe what the following 3 phrases mean in detail:

1. Converting financial data to ratios or percentages
2. A ration by itself means little unless it is benchmarked
Answer:
 Comparing the absolute dollar values over time is not very meaningful and does not provide a
complete view of your business. It does not correct for inflation or allow you to make
comparisons with other businesses in your industry. We can overcome many of these shortfalls
when we convert the financial data to ratios or percentages.
Answer:
 A ratio needs to be compared to some expected or required outcome. For example, ratios might
be compared to different time periods in the same business or to industry expectations to
determine whether there has been a significant change.

3. The benefits of financial analysis

Answer:
 Financial analysis can tell you a lot about the performance of your business and will help you to
determine the overall financial health of your business. Issues such as liquidity (does the business have
enough cash to pay its debts on time) and profit (the percentage of net profit to total sales) are only
part of the financial analysis of your business that puts the information from your financial statements
into perspective. Financial analysis will help you identify problems, implement the necessary corrective
actions, and improve your operations.
b. What does “Tax Liability” mean?
Answer:
 A tax liability is the total amount of tax that an entity is legally obligated to pay to an authority as the
result of the occurrence of a taxable event. Tax liability can be calculated by applying the appropriate
tax rate to the taxable event's tax base. Taxable events include, but are not limited to, annual income,
the sale of an asset, a fiscal year-end or an inheritance.
 Compliance with ATO requirements and calculation of the correct amount of tax payable will differ
depending on your business structure.

c. Effectively auditing a budget requires an estimation process that is acceptable and/or reasonable. What
are some issues to consider?
Answer:
 What methods were used to develop the budget?
 What assumptions were made when this budget was framed?
 Were the methods/assumptions used consistently?
 How accurate is the supporting information used to frame this budget?
 How does this budget compare with previous budgets?
 How does this budget compare to similar budgets in this industry?

d. Explain the terms used to describe variations and what can the unfavourable variances be further
classifies into?
Answer:
 Favourable (F): The report has highlighted a positive indicator for the business i.e. an
increase in sales or a reduction in the cost of goods sold
 Unfavourable (U): The report has highlighted a negative indicator for the business i.e. a drop in
the level of sales or an increase in labour costs
Unfavourable variances (U) can be further classified into:
 Cost variance caused by the unit cost prices being higher than estimated
 The turnover of stock being greater than estimated
 Sales variance where sales prices were lower than forecast
 The number of sales was lower than expected
 The sale of different products was fluctuating from the sales history

e. What are 3 pieces of financial documentation necessary to verify expenditure? Give an explanation for
each.

Answer:
 Purchase orders - Purchase orders are a formal request for goods or services and constitute an
undertaking to buy those goods or services at an agreed price. A purchase order should always have
an identifying number and clearly identify the project, the goods or services required, the agreed
price, the supplier, the date of order and supply, appropriate authorisation, method of payment and
reflect the appropriate budget category. The purchase order should also clearly state your company
details. This information is central to accurately assessing current expenditure. It is also invaluable in
forecasting forward commitments for cost reporting and cash flow purposes.
 Invoices - Invoices may be received from suppliers of goods or services. Suppliers of goods and
services must provide an appropriate invoice to trigger payment. An invoice should be dated and
quote a purchase order number. It should clearly identify the supplier and provide contact details,
 any relevant tax details, a description of the goods or services and the price.
 Petty cash - You may need to allocate a petty cash ‘float’ to each department. You don’t really want
to have to write out cheques for minor items like sticky tape and coffee. Accumulated, these costs
can add up to hundreds of dollars and at some stage will need to be factored back into categories
and item costs, or else your budget tracking and reporting will be out by the amount of petty cash
you’ve floated. The usual way of doing this is to work with petty cash forms that require the head of
department to keep receipts and itemise costs. The receipts will be attached to each petty cash
form. You may decide each department will get one hundred dollars as a float.

f. To ensure that you are in a good position to negotiate your budget submission what should you do?

Answer:
 Consult all relevant staff during the budget preparation
 Enter the negotiations in a spirit of compromise
 Be aware of the overall business policy and objectives
 Be able to explain all aspects of your budget in a clear and persuasive manner
 Have fall back positions prepared; what is the least that you will accept or need
 Seek clarification promptly when areas of uncertainty or disagreement occur