Content

Busines Scenario
Section 1: Knowledge Questions
Section 2: Financial management review
Section 3: Establish budgets and allocate funds
Section 4: Financial management monitoring and evaluation

 
Business Scenario

Student name:

Assessor:

Date:

Business this assessment

is based on:
Section 1: Knowledge Questions

1. List three processes that can be used to identify and review profits and losses from a profit
and loss statement.

Only the revenue or expenses related to the current year are debited or credited to profit and loss
account. The profit and loss account starts with gross profit at the credit side and if there is a
gross loss, it is shown on the debit side.

1. Step 1: Calculate revenue. ...

2. Step 2: Calculate cost of goods sold. ...
3. Step 3: Subtract cost of goods sold from revenue to determine gross profit. ...
4. Step 4: Calculate operating expenses. ...
5. Step 5: Subtract operating expenses from gross profit to obtain operating profit.

2. Explain the concept of financial probity and its importance to a business.

A financial probity check investigates the financial background of a candidate to assess whether they
meet the regulatory requirements of working in certain industries, e.g. financial services, banking
and insurance.

Probity is a tool to be used to independently vet and validate decisions, while also supporting
successful outcomes and improve bid competitiveness. Importantly, private business benefits from
probity because it ensures procurement processes are targeted at delivering the best value for
money outcome.

3. List four examples of what would be considered fraudulent behaviour in regard to

company finances i.e. not meeting financial probity requirements.

 Creating “ghost” employees or not deleting ex-employee records and having the salary of
these “ghost” employees paid into the fraudster’s bank account
 Creating bogus suppliers, with payment being made to the fraudster’s bank account
 Creating bogus purchase orders of a bona fide supplier and substituting the
supplier’s bank account details with fraudster’s bank account details
 Obtaining kickbacks or bribes from suppliers or contractors
 Associates of the staff providing services to the business at inflated prices
 Personal use of business resources
 Inflated/bogus reimbursement claims
 Manipulation of financial data to receive performance-based bonuses
 Faking time sheets
 Private purchases through business accounts/business credit cards
 Providing discounted (or free) goods or services to friends and associates

4. List five functions of accounting software used to manage finances.

1. Quick Access

A cloud-based advanced accounting software allows you to access and manage your account anytime
and anywhere. It saves you time and makes your job easier.

2. Enhanced Security

Definitely, Cloud adoption brings advanced security to your business and keeps sensitive
information/data completely safe which is tough to maintain in the manual accounting system.
Moreover, it protects your data/information even if the Hard disk gets crashed.

3. Minimal Paperwork

An advanced accounting software minimizes the paperwork and seems to be an environment-

friendly approach. Manual accounting tactics need a large space to store bundles of financial
statements and other documents. Accounting software eliminates the requirement of paper by
making every single thing fully digital.

4. Efficient Storage

An advanced accounting software allows businesses to keep their data safe in the latest technique,
i.e. Cloud which eradicates the need for additional investments in local storage. It lets you enjoy the
enormous data storage benefits.

6. List three key components of a budget.

 Income. The most basic element of all budgets is income. You should keep
track of how much you make and from which sources. Make a note of both pre-
and post-tax income.
 Fixed expenses. Fixed expenses are those expenses over which you have
little control or are unchangeable. For example, your mortgage is a fixed
expense; your Netflix account is not. Once you subtract the value of your fixed
expenses from your income, you’ll have a better understanding of the third basic
element: flexible expenses.
 Flexible expenses. Flexible expenses refer to things that you want to
spend money on but don’t necessarily need. Entertainment is an example of a
flexible expense, as is going out to dinner, buying new clothes, or buying concert
tickets.
 Unplanned expenses and savings. Your budget should also consider two
other critical pieces: unplanned expenses or emergency expenses (like your car
breaking down or having to replace a part in your stove) and savings. These
should be two separate accounts. Savings shouldn’t be dipped into if you can help
it, even for emergencies.

6. the four main taxation and superannuation obligations for a business. Briefly discuss each
obligation.
 1. Goods and Services Tax (GST)
Goods and Services Tax (GST) is applied to most goods and services. In Australia, GST is taxed at 10
percent of the price of goods and services.

You must register your business for GST with the Australian Taxation Office (ATO) if:

 Your annual business income is, or is expected to be, $75,000 or more a year (or $150,000 or
more for non-profit organisations)
 You provide taxi travel as part of your business, meaning you charge passengers for transport
passengers by taxi or limousine
 You want to claim fuel tax credits
You can choose to pay your GST obligations monthly, quarterly or annually, depending on the BAS
reporting structure of your business.

You can read more about GST for business here.

2. Pay As You Go (PAYG)

As a small business owner, you need to help employees take care of their tax obligations with PAYG
withholding.

PAYG withholding means that employers collect income tax payments from their employees, which
they then pass onto the ATO.

PAYG payments are generally made quarterly, with an additional payment made at the end of
financial year.

You can read more about your PAYG obligations here.

3. Payroll tax
Payroll tax is a state tax on wages and other benefits paid by employers.

It’s calculated on the amount of wages you pay per month and the number of staff you employ. You
pay payroll tax to the State Government of each state or territory that your employees are located in.

Payroll tax thresholds vary from state to state, so your payroll tax obligations may change across
borders. You can find information about your state’s payroll tax obligations here. We’ve also put
together tips for managing payroll tax to help you save time and money here.

Payroll tax is closely related to fringe benefits tax, which you might also have to pay. You can find
more information about fringe benefits tax here.

4. Company tax
Company tax, which is sometimes referred to as corporate tax, is a tax on the profit your business
makes.

In Australia, the company tax rate is 28.5 percent for businesses that make less than $10 million per
annum in aggregated turnover.

For businesses that make more than this, the company tax rate rises to 30 percent of annual profit.
Australian businesses pay company tax through a Pay as you go (PAYG) system, which usually occurs
quarterly.

7. 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.

This section contains information about the financial reporting and auditing requirements under the
Corporations Act 2001 (Corporations Act)

8. Outline the reporting requirements that apply to goods and services tax (GST).

Your GST reporting and payment cycle will be one of the following:
 Monthly – if your GST turnover is $20 million or more.
 Quarterly – if your GST turnover is less than $20 million – and we have not told you that you
must report monthly.

9. Explain PAYG withholding and PAYG instalments.

PAYG Withholding (or PAYG-W) which is a pre-payment on behalf of your employees for their
personal income tax obligations. PAYG Instalment (or PAYG-I) which is a pre-payment for the business
for its own corporate income tax obligation.
Pay as you go (PAYG) instalments is a system for making regular payments towards your expected income
tax liability.
Section 2: Financial Management Review
Business plan review
Describe the overall
objectives for the business,
including financial
objectives.
List the key initiatives in the
business plan that will need
to be factored into budget
development. Outline the
timelines associated with
these initiatives.
Highlight the relevant
information in your business
plan.
Attach your business plan as
proof to this section of your
Project portfolio.
Legislative requirements
Discuss each of the following
as relevant to the business:
 statutory requirements
for financial compliance
 tax liabilities
 legislative financial
reporting requirements.
Policy and procedure
summary
Summarise your
organisation’s financial
management and reporting
policies and procedures
including:
 a description of the
processes that must be
followed to ensure that
funds are not
misappropriated.
 the reporting
This year the budget you have been allocated is $80,000. The
marketing plan for the year includes the activities below. The
amounts in brackets are the cost projections for each activity: 
Redesign web site to improve branding ($4,000 in December,
another $4,000 in April and $2,000 in May)  Design and implement
an incentive scheme for referrals by students ($500 per month) 
Conduct a radio advertising campaign from the start of February until
the end of June, costing $4,000 per month  Online communications:
newsletters, websites. Blogs, Twitter (zero cost: staff time only) 
Google ads ($500 per month)  Graphic design ($5,500)  Stand at
the Education Expo in December (Package deal $10,000)  Develop
and publish Promotional Brochure in November ($2,500)  Sponsor a
community organisation to improve local community profile ($20,000
in March) There is a desire to conduct a TV advertising campaign
and a quote of $30,000 has been received to run the campaign over
a week. This is obviously well over the budget limit. However, it is
considered that this type of advertising will be beneficial. This year
due to the high marketing expenses the usual contingency amount of
$10,000 has not been factored in.
The business model is focused on helping people sell things, plain and
simple, and there are three key factors contributing to the business’s
success. Firstly carsales.com is committed to continued innovation,
especially in its use of online technology architecture to deliver the best
possible quality solutions for all customers. Secondly the business is a
youthful, fast-paced business environment reflected in the ongoing
development of new digital and advertising channels such as mobile and
social media. Thirdly carsales.com is driven by a customer-focused
strategy, the belief that if you win the customer, everything else will
follow. These three factors will be the focus of the material that follows.
Marketing researchers and authors of Blue Ocean Strategy, W Chan Kim
and Renee Mauborgne, contend that in order for a business to be
successful they must create ‘blue oceans’ of uncontested market space
ripe for growth. Such strategic moves, termed
I think it would be smart to turn down that 30,000 thousand Tv
advertising campaign because it is way over our budget. Also because of
the big marketing expenses that are planned we should cancel Sponsor
a community organisation to improve local community profile for
20,000 because that money would be really useful if something goes not
as planned.
 requirements and
financial delegations
that apply to financial
management.

Highlight any applicable

sections of the policies and
procedures and attach them
to this section of your
portfolio.

Policy and procedure review
Analyse the effectiveness of:
 the systems to record all
transactions
 how audit trails are
maintained
 due diligence
compliance.
Use the information you’ve
summarised on the
legislative requirements and
existing policies and
procedures to help you
answer.
 King Edward VII College Budget Policy and Procedures
 King Edward VII College Finance Authorisation Policy and
Procedures Managers are expected to inform their team of the
budget and to provide them with the required resources and systems
so as to fulfill their roles. Generally, this will include regular meetings
to monitor the budget. Team members are expected to report all
expenses to managers by providing receipts and so on.
Budgets should be monitored by each Manager every month using
our accounting system, Xero, to make sure expenses are on track.
Where changes are required, the finance team may be contacted to
discuss this. This should also include where contingency amounts
need to be varied

Financial review

Access financial reports for

the business for at least one
reporting period – ideally
over one year.

Identify the profit or loss

made by the business for
that reporting period.

Discuss the reasons for the

profit or loss.

Assess and report on the

cash flow trends.

Identify at least one risk in

the existing financial
information.

Attach proof of your financial

information to this section of
your portfolio.

Financial research

Summarise research on the

key initiatives in the
business plan that will need
to be factored into budget
development.

Research and report on at

least one other financial
management software (other
than the software currently
being used) that you believe
could also be suitable.

Attach proof of at least two

digital sources of information
to this section of your
portfolio (e.g. screen shot of
internet searches or a voice
recording of a Siri interaction
etc.).

Financial software
comparison

Indicate the name of the

software that is currently
utilised for financial
management in your
organisation.

Provide an assessment of the

extent to which you believe
this financial software is
suitable for the business.

Compare the current

software to the software you
researched indicating which
you believe would be better.

Attach: Business plan ☐

Policies and procedures ☐

Financial information ☐

Proof of information sources ☐

Section 3: Establish budgets and allocate funds

Complete this section prior to the meeting.

Budget Finance process improvement is the changes in efficiency that you make to
preparation standard tasks carried out by financial workflows. Implementing process
You are to improvements in the finance function often involves using technology to add
prepare a automation, improving accuracy and consistency, and helping your business
budget for the achieve its organizational goals. Finance process improvement can serve a host of
upcoming benefits across your organization. Things that could be improved:
reporting period
(one year).  Reduce error rate

Explain here how

your Budget
aligns with the
business plan.

Also explain how

you addressed
at least one risk
(as identified in
Section 1) in the
budget.

Confirm that
there is no
misappropriation
of funds.

Attach your
budget to your
Portfolio.

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Meeting
preparation

Prepare a
presentation in
order to
communicate
the financial
management
plans to your
team.

Your
presentation can
be in a form of
your choice such
as a PowerPoint
presentation.

Your
presentation is
to include:

 Details of
the budget.

 Information
on the
processes
that will be
used to
ensure
funds are
not
misappropri
ated.

 Information
on reporting
requirement
s and
financial
delegations.

Attach the
presentation to
your Portfolio.

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3
Circulate budget

Prepare a draft
email using
appropriate
conventions and
protocols (e.g.
professional
greeting and
sign-off) to
circulate the
budget to at
least one
manager or
superior who is
associated with
the budget prior
to meeting with
them to present
the budget
information.

Attach your draft

email to the
portfolio.

Attach: Forecasted budget ☐

Presentation ☐

Draft email to circulate the budget ☐

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Section 4: Financial management monitoring and
evaluation

Presentation

If not already
viewed in
person by
your assessor,
attach your
recorded
presentation
to your
Portfolio.

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Budget and
financial
performance
reporting

You are
required to
report on
overall
financial
performance
for the
business, as
well as any
variances
between the
actual and
budgeted
amount for
the budget.
Include:

 review of
overall
performa
nce and
total
income,
expenses
and profit
margins.

 calculatio
n of
variation
in actual
versus
budgeted
amounts
for each
income
source.

 calculatio
n of
variation
in actual
versus
budgeted
costs.

 the
discrepan
cies
between
agreed
budget

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 allocation
s and the
actual
data (for
the
conferenc
e if you
are using
the case
study).

Attach proof
of your
audit trail
to this
section of
the
portfolio
(e.g. you
may
make
assumpti
ons and
record
details of
possible
invoices
that were
paid).

Show your
calculations.

Revise Trade debtors are financial year 2011/12 keep the same growth as that was taken place
financial between financial years 2009/10 and 2011/12. Debtor days are also increasing as it can
reports to be seen in below figures. Trade debtors amount has increase from FY 2009/10 amounting
manage
$850,000 to FY 2010/11 amounting $1,121,250 which means the debtor are slowing
inconstancies
down their payment process.
If relevant,
revise the
current
financial year
financial
records (e.g.
profit/loss
statement,
ageing
summary
and/or budget)
to rectify any
issues.

Attach your
rectified
financial
report to this

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section of the
portfolio.

Financial Although company has prepared a realistic budget but due to some reasons few areas are
management unfavourable and in these areas either budgeted target was not achieved in first quarter of
processes financial year or actual expense has increased the budgeted expense amount. Let’s analyze
Reflect on the these variances in detail to find out the reasons. If we look on the sales part of the variance
financial report, we find that overall sales part is unfavourable including cost of goods sold and
management gross profit. Due to the school holidays and public holidays in the first quarter, sales got
processes you decline. Furthermore, there was not sufficient advertisement to helps in increasing sales.
have followed.
In the expense area, the interest expense is a major contributor and have unfavourable
What do you variance of $11,248 and reason behind this variance is company has taken huge loan
believe could funds and banks have increased interest rates due to the upwards international pressure.
be improved? The other big contributor in unfavourable expense area is insurance which has also been
Recommend affected by the increased interest rate of banks. There are also some expenses like store
revisions to supplies, cleaning, telephone, repair and maintenance which have unfavourable variances
the budget in first quarter. Proper controls are required to keep these expenses within budgetary
you prepared limits so that at the end of financial year these expenses reflect favourable variance.
in order to
Report on Sales/Profit/Cash Flow Budget and Debt Ageing Summary: As per the task
deal with
requirements, sales budget, profit budget, cash flow budget and debtor ageing summary
contingencies
(consider were examined, and report is prepared by analyzing following factors a. Issues b.
revisions to Performance c. Recommendations d. Evaluation We will discuss the issues, performance,
the recommendations and evaluations as following
conference if
you are using
the case
study).

Propose at
least one
future cost for
the next
reporting
period (if you
are using the
case study,
estimate the
conference fee
for 2021/2022
conference
assuming
attendance of
70 people and
to make a
profit of at
least 20%).

Communicate The performance of the organization is subject to a few components and factors. These all
recommendati elements and factors should be genuinely considered amid the budgetary control
ons investigation. This will help to preparation of budget in fairly and an achievable way or
Draft an email approach since formulation of budget includes thought of different components and
to numbness of a solitary factor may render the financial plan unachievable or speculative.
communicate Houzit has worked admirably so far of anchoring a developing client base, which creates
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the unwaveringness deals, which appears in the predominant after deals benefit. By and large,
recommendati Houzit's benefits has dependably been higher than their aggregate costs of the business.
ons you have This is a positive sign that the business has persistently been making benefits consistently.
identified in
Houzit's pattern in deals additionally demonstrates to us an expansion consistently, or, in
this Section of
other words sign of the organization improving the situation every year. We could likewise
the Portfolio to
relevant observe that Sales are still substantially higher than generally costs and cost of goods sold,
superior thusly the benefit for Houzit is higher than its misfortunes
and/or
manager(s).

Attach your
email to this
section of your
portfolio.

Attach: Recorded presentation (if relevant) ☐

Proof of audit trail ☐

Rectified financial report ☐

Draft email with recommendations ☐

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