ASSESSMENT TASK ONE

Short answer questions

Instructions

• The purpose of this task is to assess your knowledge relating to managing finances.
• You must answer all twelve (12) questions. Where applicable, a guide to the length
of your response for each question is provided next to each question.
• You must complete this task by the due date set by your trainer and assessor.
• You will need access to the following resources to complete this task:
o Learner Guide and Class notes
o Computer with MS Office Suite (or similar) and internet access.
• You must provide your responses in your own words. You can refer to the Learner
Guide or other sources, but you are not allowed to copy sentences and/or
paragraphs directly from these sources. If your responses found to have been copied
directly from learner guide or other sources, your result for this task will be Not
Satisfactory.
• You will complete this task at home in your own time.
• You must submit evidence as per the ‘Evidence Submission Checklist’ by the due
date.

Questions

1. Identify and describe financial probity requirements for businesses. (in 60 to 80

words each)
Financial probity requirements for businesses typically include adherence to
strict accounting standards, transparent financial reporting, and ethical
financial management. Businesses must maintain accurate and honest
financial records, disclose all relevant financial information to stakeholders,
and ensure compliance with taxation laws and regulations.

2. Identify four (4) examples of what would be consider fraudulent behaviour in regard
to company finances. (in 50 to 70 words)

Examples of fraudulent behavior in company finances include embezzlement, where

employees misappropriate company funds for personal use; financial statement
manipulation, such as inflating revenues or understating expenses to mislead
investors; insider trading, which involves trading stocks based on non-public,
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 material information; and fictitious transactions, where fictitious sales or expenses
are recorded to manipulate financial statements.

3. Describe (in 20 to 30 words) the type of entity that is required to have financial
reports audited.

Entities required to have financial reports audited often include publicly traded
companies, large corporations, non-profit organizations, and government agencies.
These audits are essential to ensure the accuracy and reliability of their financial
statements and provide confidence to investors, stakeholders, and the public in the
entity's financial health and integrity.

4. Explain (in 100 to 120 words) the purpose of a financial audit and auditor’s report.
The purpose of a financial audit is to independently review a company's financial
statements and internal controls to ensure they are accurate, reliable, and in compliance
with accounting standards. The auditor's report summarizes the audit findings, expressing
an opinion on whether the financial statements present a true and fair view of the
company's financial position and whether they are free from material misstatements,
providing stakeholders with assurance regarding the company's financial health.

5. Describe the principle of cash accounting one (1) advantage and one (1)
disadvantage of cash accounting. (in 40 to 50 words)
Cash accounting records transactions when cash is received or paid. An advantage is its
simplicity, but a disadvantage is that it may not accurately represent a company's financial
performance, as it doesn't consider revenue or expenses until cash changes hands.

6. Describe the principle of accrual accounting and one (1) advantage and one (1)
disadvantage of accrual accounting. (in 40 to 50 words)
Accrual accounting records transactions when they occur, providing a more accurate
picture of a company's financial health. An advantage is its accuracy, but a disadvantage is
that it can be more complex and may not reflect cash flow accurately.

7. Explain the four (4) main taxation and superannuation obligations for a business. (in
20 to 30 words each)

The four main taxation and superannuation obligations for a business include
income tax payments, Goods and Services Tax (GST) reporting and payments,
superannuation contributions for employees, and Pay As You Go (PAYG)
withholding for employees and contractors.

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 8. Identify the Act that details requirements for financial reporting and auditing and,
explain the requirements for companies for preparing and lodging financial reports
under this Act. (in 20 to 30 words)
The Act detailing financial reporting and auditing requirements in Australia is the
Corporations Act 2001. Under this Act, companies are required to prepare and
lodge annual financial reports, including a balance sheet, income statement, and
cash flow statement, to the Australian Securities and Investments Commission
(ASIC).

9. Explain the requirements for registered foreign companies regarding preparing and
lodging financial reports. (in 30 to 40 words)
Registered foreign companies operating in Australia are also subject to the
financial reporting requirements of the Corporations Act. They must prepare and
lodge financial reports to ASIC if they have substantial operations in Australia,
ensuring transparency and accountability.

10. Identify the current company tax rate for both smaller and larger businesses. (in 80 to
100 words)
The current company tax rate for smaller businesses (with an aggregated turnover of
less than $50 million) is 26%, while larger businesses (with a turnover exceeding $50
million) are subject to a 30% tax rate in Australia.

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 11. Explain the difference in Pay As You Go withholding obligations for employees and
contractors. (in 40 to 50 words)

The difference in Pay As You Go (PAYG) withholding obligations for employees

and contractors is that employers withhold income tax from employees' wages and
remit it to the Australian Taxation Office (ATO) on their behalf. In contrast,
contractors are responsible for their own tax liabilities and aren't subject to PAYG
withholding.

12. Answer the following questions related to Australian Taxation system.

a) Explain the process by which a business reports GST to the Australian Tax
Office. (in 10-20 words)

Businesses report GST to the Australian Tax Office by submitting a

Business Activity Statement (BAS) or an Instalment Activity Statement
(IAS) on a regular basis, typically monthly or quarterly.

b) What is the penalty rate to be applied if a supplier does not provide an ABN?
The penalty rate applied if a supplier does not provide an Australian Business Number
(ABN) is 47% of the payment made to them, withheld by the payer and remitted to the
ATO.
c) A non-profit organization needs to register for GST after it has a turnover of more
than how much?

A non-profit organization needs to register for GST after it has a turnover of more
than $150,000 per year.

Evidence Submission Checklist

Evidence to be submitted Have I completed this?

Answers to all questions 🖵

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BSBFIN601 Assessment Manual Version 2.0, June 2023 Page 2 of 15