Assessment Task 2 BSBFIN601 Manage Organisational finances

Monitor and review budget

Submission details

Candidate’s name Phone no.

Assessor’s name Phone no.

Assessment site

Assessment date/s Time/s

The assessment task is due on the date specified by your assessor. Any variations to this
arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for
details.

Performance objective

This assessment task requires you to monitor the implementation of a budget and report
on the variances, trends and performance of the established budget for a fictional
business and provide recommendations for ongoing financial viability.

Assessment description

You will need to review the provided current case study information and compare it to the
budget you established in Assessment Task 1. After evaluating these you will need to
report on the following:

● significant issues

● variances from budget

● comparative performances

● recommendations for ongoing financial viability ● evaluation of financial

management processes.

Procedure

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 1 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances
1. Read the case study.

2. Develop a variance report based on the format and template provided by Houzit.

3. Complete a cash flow analysis on the average length of time it takes Houzit to
collect funds from its debtors to determine the trend based on the financial reports
in Assessment Task 1.

4. Examine the sales budget, profit budget, cash flow budget and debtor ageing
summary to identify the following in a report:

a. Issues:

i. Identify, describe and prioritise significant issues that are evidenced in

the provided case study information and describe reasons or causes of
these issues. Include in this issues of financial probity that you have
identified or considered when monitoring these budgets.

b. Variances:

i. Complete an actual-to-budget variance report, using the template

provided in the case study.

ii. Identify variances by comparing actual results with the established

budget, and provide reasons why these variances may have occurred.

c. Performance:

i. Compare financial performance of the organisation (according to

financial information provided) to industry benchmarks for this
organisation in line with the retail trade sector.

ii. Respond to the performance questions provided by the CEO, as

provided by the board of Houzit,

iii. Determine a trend of the average debtor days and the impact to the
cash flow of Houzit.

d. Recommendations:

i. Outline your recommendations for ongoing financial viability for the

organisation, based on your assessment of the issues, reasons for
variances and organisational performance you have identified (Steps
1–3).

ii. Include in this section your plans for a revised budget, effectively
managing contingencies and issues that have been identified in
feedback and monitoring of the budgets.

e. Evaluation:

i. Provide a summary review of the financial management processes in

place for the organisation, in light of your assessment of the issues,
reasons for variances and organisational performance you have

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 2 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances
identified. Include in this section any recommendations you have for
modifying management processes.

5. Prepare for and undertake the role-play presentation:

a. Arrange a time with Jim Schnieder, CEO of Houzit Pty Ltd (your assessor), to
present an oral explanation of your variance report. Ensure that your
assessor has copies of or access to documents you will be referring to.

b. Deliver the presentation of your variance report

i. Summarise your findings (issues, variances, financial performance) ii.

Prioritise and present your recommendations.

c. Ask for questions, either during or at the end of the presentation, to:

i. demonstrate your oral communication skills ii. use questioning and

listening techniques iii. demonstrate competent exchange of

information iv. use appropriate conventions and protocols

v. ensure the manager/CEO is clear about budgets

d. Seek approval (or discuss as required) of your recommendations in the

report.

Specifications

You must submit:

● a complete actual-to-budget variance report

● a completed report detailing the issues, variances, performance, recommendations

and evaluations identified from the financial information for Houzit Pty Ltd.

Your assessor will be looking for:

● Evidence that you reviewed the provided case study information to develop an
evaluative report concerning the progress of the budget.

Adjustment for distance-based learners

● No changes to the task are required.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 3 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances

Case study: Houzit Pty Ltd

Soon after the end of the first quarter, Jim Schneider the CEO of Houzit, asked you to
follow up with Celina Patel, Houzit’s accountant, to see how the actual results compared
with the budget you had prepared three months ago. You explained that you had a
meeting with Celina that afternoon to get the results and that you would report back as
soon as you had done some analysis.
The key questions that the board was most interested to have answered from the budgets
and the variance reports were:

● ‘To what extent do the reports support the view of the board that Houzit is
financially viable?’

● ‘Will we be able to maintain our gross profit margins in the predicted downturn?’

Jim and you both agreed that it had been a tough quarter with the economy still in
recession and the impact this was having on the retail sector. Banks are raising interest
rates in line with the increased upward international pressure and Houzit has a significant
part of their loan funds on a variable interest rate which changes directly with market
conditions. Jim was pleased that the sales seem to be holding up reasonably well as first
quarter results are generally impacted by factors relating to public and school holidays
but he was concerned about the discounts that had to be given to generate these sales.
‘That’s going to hurt us at some point’ Jim said. ‘Just a pity we could not get into
some national magazines this quarter to promote the store offers. I’m sure that
would have helped us exceed the budgets you set. I guess we will just have to
spend that advertising money in the next quarter’ Jim said. ‘I still think we are
running our wages and salaries a bit high. The industry benchmark for wages and
salaries is close to 11% of sales’
Jim went on to explain, ‘One of our contingency plans in a slowing economy is to
reduce our exposure to debt by applying our profits to the repayment of the long
term debt. This will help reduce the interest burden on the business and take some
pressure off the diminishing profits. It would also be of interest to determine the
impact that our debtors has on the cash flow of the business from 2010/11.’

You are a beneficiary of the company’s profit bonus scheme that is based on the
profitability of the company’s financial reports which you are required to prepare. You also
prepare the departmental reports that form the basis of the performance review of the
managers. You are the manager of the finance/administration and prepare this
department’s report as well.
You met that afternoon with Celina and she provided you with the following report on the
actual results for the quarter ended 30 September 2011.
BSBFIN601 Manage Organisational finances 1st edition version: 1
Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 4 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances
Houzit Pty Ltd
Actual Results Qtr 1
Revenue
Sales 3,371,200
– Cost Of Goods Sold 1,955,296
Gross Profit 1,415,904
Gross Profit % 42%
Expenses
– Accounting Fees 2,500
– Interest Expense 28,150
– Bank Charges 380
– Depreciation 42,500
– Insurance 3,348
– Store Supplies 790
– Advertising 150,000
– Cleaning 3,325
– Repairs & Maintenance 16,150
– Rent 660,127
– Telephone 3,100
– Electricity Expense 5,245
– Luxury Car Tax 12,000
– Fringe Benefits Tax 7,000
– Superannuation 37,404
– Wages & Salaries 410,500
– Payroll Tax 19,741
– Workers’ Compensation 8,312

Total Expenses 1,410,572

Net Profit (before tax) 5,333

Income Tax 1,600

Net Profit 3,733

GST cash flow – Actual Aged debtors – Actual

Cash flow analysis – GST Qtr 1 AGED DEBTORS BUDGET Qtr 1

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 5 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances

GST Collected Sales337,120 3,371,200

Less GST Paid % Debtors

279,988
Sales 22%

GST Payable Total Debtors

57,132 741,664

Current 585,915

30 days 111,250

60 days 37,083

90 days 7,417

Total Debtors 741,664

Budget variance report template

According to the organisational policy and procedures, the following format is to be used
when preparing a budget variance report.
Houzit Pty Ltd

Variance to Budget

xxx Quarter ended mmm-yyyy

$ % Variance
Actual Results Budget-Qx Actual-Qx Variance F or U
Sales x,xxx x,xxx x,xxx x% F or U

– Cost Of Goods Sold x,xxx x,xxx x,xxx x% F or U

Gross Profit Calculation Calculation Calculation x% F or U

Gross Profit % % % % x% F or U

Expenses

– Accounting Fees x,xxx x,xxx x,xxx x% F or U

– Interest Expense x,xxx x,xxx x,xxx x% F or U

– Bank Charges x,xxx x,xxx x,xxx x% F or U

– Depreciation x,xxx x,xxx x,xxx x% F or U

– Insurance x,xxx x,xxx x,xxx x% F or U

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 6 of 7
 Assessment Task 2 BSBFIN601 Manage Organisational finances
– Store Supplies x,xxx x,xxx x,xxx x% F or U

– Advertising x,xxx x,xxx x,xxx x% F or U

– Cleaning x,xxx x,xxx x,xxx x% F or U

– Repairs & Maintenance x,xxx x,xxx x,xxx x% F or U

– Rent x,xxx x,xxx x,xxx x% F or U

– Telephone x,xxx x,xxx x,xxx x% F or U

– Electricity Expense x,xxx x,xxx x,xxx x% F or U

– Luxury Car Tax x,xxx x,xxx x,xxx x% F or U

– Fringe Benefits Tax x,xxx x,xxx x,xxx x% F or U

– Superannuation x,xxx x,xxx x,xxx x% F or U

– Wages & Salaries x,xxx x,xxx x,xxx x% F or U

– Payroll Tax x,xxx x,xxx x,xxx x% F or U

– Workers’ Compensation x,xxx x,xxx x,xxx x% F or U

Total Expenses Calculation Calculation x,xxx x% F or U

Net Profit (Before Tax) Calculation Calculation x,xxx x% F or U

Income Tax Calculation Calculation x,xxx x% F or U

Net Profit Calculation Calculation x,xxx x% F or U

Note: F = Favourable, U = Unfavourable

Debtor ageing ratio template
2009/10 2010/11 2011/12

Trade Debtors

Sales

Debtor Days
Anticipate that the trade debtors for the 2011/12 financial period maintain the same
growth as that which took place between 2009/10 to 2010/11.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 7 of 7