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Implement financial management approaches
Submission details
Candidate’s name
Jasvir Kaur Mander
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
The candidate will demonstrate the ability to implement financial management approaches.
Assessment description
In response to the scenario provided, you will access and communicate details of budget to a team member (assessor). You will then support the team member to perform their required role with respect to software resources and systems.
Procedure
Read the scenario provided in Appendix 1 to this assessment task and tasks A and B.
Prepare to meet with your team member (assessor) to communicate budget and then coach and train them in new role:
access required budget information from assessor
determine organisational needs
identify coaching/training needs of team member.
plan coaching/training session:
outcome: team member produces spreadsheet to meet management requirements
include activities/elements to instruct, practice, test, motivate
keep notes
Set up a time with your team member to have a coaching/training session.
Meet with your team member (assessor) to coach them in role:
Explain budget and relevance to team member’s accountabilities
Use appropriate coaching techniques or models such as GROW
Use appropriate motivational theory
Train learner in required spreadsheet techniques, include elements of instruction, practice and testing/feedback
Include recordkeeping requirements for Australian Taxation Office (ATO) and auditing purposes, for items such as petty cash, and GST.
Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
Specifications
You must:
meet with your assessor to role-play support of team member
submit coaching/training plan.
Your assessor will be looking for:
numeracy skills to read and understand a budget and to communicate a budget
technology skills to use software associated with financial recordkeeping
knowledge of basic accounting principles to identify and use account balances in communication and training
knowledge of organisational requirements related to financial management, such as those contained in organisational policies and procedures
requirements for organisational recordkeeping and auditing with respect to petty cash
knowledge of principles and techniques involved in budgeting and electronic spreadsheets.
Adjustment for distance-based learners
No variation of the task is required.
Documentation can be submitted electronically or posted in the mail.
Appendix 1 – Scenario
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 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.
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 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.
Bill’s 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 2 – 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:
any late payment penalties, e.g. overdue interest on credit cards
expenses that are usually recovered from a third party
penalties and fines, e.g. parking, traffic
those claims that should have been made using the purchase order system
those expense claims made by staff as a tax deduction
those expenses that were not made for business purposes.
Travel expenses claims:
insurance for trip cancellation will be reimbursed
mileage allowance will be given for the use of a staff member’s vehicle when used for work-related travel
personal stopovers or indirect routes will not be reimbursed
travel reimbursement is provided for the most direct and economical mode of travel available; circumstances will be considered on a ‘case-by-case’ basis.
Accommodation expenses:
reimbursement will cover moderate accommodation expenses; circumstances will be considered on a ‘case-by-case’ basis
items of a personal nature that are charged to a hotel account will not be reimbursed.
Employee’s own meals:
employees on Big Red Bicycle business will be reimbursed for any reasonable and appropriate meal expenses.
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.
Appropriate advance payments may be authorised.
Employees have 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.
Employees incurring authorised expenditure must submit their reimbursement requests on a signed Expense Reimbursement Form.
Source documents (including tickets, receipts, vouchers, invoices) must be kept for all purchases and expenses claims.
The CFO will use discretion to reimburse reasonable but unauthorised expenses.
Those claims that have not been adequately prepared, have not been duly authorised, or are lacking in 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.
Task A
Budget Objective
To provide the entire cost of the operation carried out by Big Red Bicycle Pvt. Ltd., along with the net profits generated before and after tax. The objective of this report is also to focus on the costs which are taken up by the wages, commissions, telephone costs and the office supplies.
Budget Explanation
The wages of the Sales Centre A make up about $100,000 with the commission agreed upon at about 2.5%. With the sales team of Sales Centre A making up about the same number of sales as both sales Centre B and C combined, we will take a closer look at the commission which is set for the sales team of Sales Centre A.
Sales Commission (Sales Centre A)
The commission for Sales Centre A is calculated in the table below,
Budget Plan (Sales)
Revenue
FY
Q1
Q2
Q3
Q4
Total Sales
3,100,000
700,000
1,000,000
700,000
700,000
Sales made by Sales Centre A
1,550,000
350,000
500,000
350,000
350,000
Commission for Sales Centre A (2.5% Sales)
38,750
8,750
12,500
8,750
8,750
The budget for the Sales centre A referring to the commissions is double than the commissions for the sales team of sales centre A and B. This has been collected with respect to the total budget and provided in the form of highlighted text provided in the table above. This is due to the fact that the sales made by the sales team A is equal to the sales made by the sales teams of sales centre B and C.
Wages (Sales Centre A)
The wages for the sales team A can be seen in the table below,
Budget Plan (Wages)
Revenue
FY
Q1
Q2
Q3
Q4
Direct Wages (Fixed)
300,000
75,000
75,000
75,000
75,000
Wages budget for Sales Centre A
100,000
25,000
25,000
25,000
25,000
It can be seen in the table provided above that the budget plan for the wages are set at about $100,000 for each sales centre. This is under negotiation as we are trying to increase the wages of employees and specifically our sales centre as the sales made by our centre are more than all of the other sales centres (B and C) combined.
Employment Expenses (Sales Centre A)
The budget for the employment expenses can be seen below,
Budget Plan (Employment Expenses)
Revenue
FY
Q1
Q2
Q3
Q4
Superannuation
45,000
11,250
11,250
11,250
11,250
Staff amenities
16,500
4,125
4,125
4,125
4,125
Superannuation budget for Sales Centre A
15,000
3,750
3,750
3,750
3,750
Staff amenities budget for Sales Centre A
5,500
1,375
1,375
1,375
1,375
It can be seen that the budget for superannuation and staff amenities is presented in the table above. The total budget for the superannuation and staff amenities has been equally divided among the sales centres.
Occupancy Costs
Occupancy costs include the costs taken up by the bills and other essential costs taken up by the office and its employees. These are provided in the table below,
Budget Plan (Occupancy Costs)
Revenue
FY
Q1
Q2
Q3
Q4
Electricity
40,000
10,000
10,000
10,000
10,000
Insurance
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
Electricity budget for Sales Centre A
15,000
3,750
3,750
3,750
3,750
Insurance budget for Sales Centre A
33,333.33
8,533.33
8,533.33
8,533.33
8,533.33
Rent budget for Sales Centre A
66,666.66
16,666.66
16,666.66
16,666.66
16,666.66
Water budget for Sales Centre A
10,000
2,500
2,500
2,500
2,500
Waste Removal budget for Sales Centre A
16,666.66
4,166.66
4,166.66
4,166.66
4,166.66
The occupancy costs are fixed and are provided above for the sales centre A.
Expense reimbursement
Purpose of the policy
This section of the report includes the detail which is to be followed with respect to the expense reimbursement of the expenses which have been incurred on behalf of the organization.
The policy
The company will reimburse the staff for the authorized and reasonable expenses which have been incurred by them on behalf of the organization or in course of conducting the business by Big Red Bicycle Company.
Procedure
Staff is not going to be reimbursed by the company if:
Late payment penalty i.e. if there is an overdue interest on the credit cards.
There are expenses which have been recovered from a third party.
Fines and penalties i.e. traffic and parking.
Such claims which are made through the purchasing order system.
Expenses made by the staff as the tax deductions.
Such expenses which are not made for the business purposes.
Claims can be made regarding the reimbursement of the travel expenses in case of:
If a trip is cancelled, the insurance cost would be reimbursed by the company.
Any trip related to work would mean that the mileage allowance would be provided to the staff members.
The travel allowance to be provided would be for the most economic and direct mode of travel available and would be up to $1,000.
Indirect routes and personal stopovers are not going to be reimbursed while travelling, and the employee could be fined up to $500 i.e. half of the maximum travel allowance. If repeated i.e. up to 3 times, the employee might be fined up to $2,000 which would be deducted from the salary of the employee.
Claims can be made for the accommodation expenses and:
The reimbursement would be covered by the company for covering moderate accommodation expenses for a maximum of seven days. The cost to be reimbursed would be provided by the employee and then confirmed by the company itself before reimbursing. Maximum limit would be $1,500.
Items consumed by the employee which are charged by the hotel will not be reimbursed by the company.
The employees on a business trip for the company would be reimbursed for the expenses for the meal being appropriate and reasonable. Maximum amount to be reimbursed would be about $500.
Every original and relevant document must be attached with the Expense Reimbursement Form. For the documents not provided, the employee would have to submit a statutory declaration.
Appropriate payments in advance must be authorized.
Employees must have the authority for approving the expenses up to the amount which is detailed in the individual job description. Any of the expenditures which are claimed to be above this prescribed level shall be forwarded to the respective supervisors for approval.
Employee incurring the authorized expenditure should be submitted through the reimbursement requests on the Expense Reimbursement Form which must be signed.
The source documents which include ticketing, receipts, invoices and vouchers must be submitted for every purchase and expense claims.
The CFO would use the discretion for reimbursing the reasonable but unauthorized expenses.
The claims which have not been prepared adequately, have not been authorised duly, or lack in the original documentation, would be returned to the employee with the reasons which outline the claims which have not been processed.
Task B
Petty cash
Purpose of the policy
For providing the detailed procedure, which is to be followed for tracking the petty cash expenditure.
The policy
Petty cash system is maintained by the Big Red Bicycle Company for allowing the authorised personnel for paying the small expenditures in relation with the business activity.
Procedure
Each team member is authorized for disbursing the petty cash with any alternate in case of emergency or sickness.
Petty cash must be kept safe and secure.
The receipt for the cash should be issued.
The receipts should be reconciled and checked at each closing day of the business.
The amounts over $800 are to be credited in the company’s bank account.
Petty cash expenses are to be considered as the miscellaneous expenses.
Team Training
Objective
The objective of the training team members is to make sure they are up to date with the modern software technologies. This would help the employees in making sure they get more work done in lesser time.
The Policy
The team training would include conducting training sessions for the employees to be up to date with the software which are essential for the improved performance of the employees and company, improving the profits for the company.
Procedure
The training sessions would include training the teams with the software such as Microsoft Excel and other finance related software.
The training sessions would take about 7 days in every month after each quarter time of the year.
All of the employees would have to pay 1% of the training fees.
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