BSBFIN601 Task 2 Woobin JUN

Assessment Task 2 BSBFIN601 Manage organisational finances
Assessment Task 2
Prepare budgets
Learner instructions
This assessment task requires you to monitor the implementation of a budget,
report on the variances, trends, and performance of the established budget for
a fictional business, and provide recommendations for ongoing financial
viability.
Complete all parts of the assessment with supporting documentation as
required. Submit the assessment task in the required format and within the
timeframe agreed with your assessor.
Assessment conditions
Skills in this unit must be demonstrated in a workplace or simulated
environment where the conditions are typical of those in a working environment
in this industry.
This includes access to:
● financial data
● relevant legislation and Australian Tax Office requirements
● examples of business plans, profit and loss statements, cash flows and
ageing summaries
● organisational financial policies and procedures
● financial management software.
Required resources
For this assessment, learners will need access to:
● a computer with internet access, spreadsheet and word-processing
software
● appendices to this task:
○ Appendix 2.1: Australian Hardware case study

○ Appendix 2.2: Australian Hardware budgeting policy and procedures
○ Appendix 2.3: Scenario
○ Appendix 2.4: Prompt questions
○ Appendix 2.5: Email template.
© Australian Training Products Pty Ltd 1st edition version: 1

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Procedure
This assessment requires you to determine the requirements for an organisation
to undertake budgeting, financial forecasting and reporting. You will also need
to review the case study provided and prepare a budget (in electronic
spreadsheet format) and budget notes for distribution and implementation in
the organisation.
Part A: Prepare the budget and notes

1. Read and analyse the case study information (including business plan
summary and previous financial data) in Appendices 2.1 and 2.2.
2. Develop a sales budget, profit budget, cash flow budget and debtor ageing
summary using electronic spreadsheets (each budget as a separate
worksheet) and the correct formulae.
Make sure each budget:
a. divided into quarterly periods
b. aligned to the business plan and previous financial data for allocation
of resources
c. complies with the statutory requirements, including current rates of
taxation
d. complies with the organisational policies, procedures and formats as
provided.
3. Develop budget notes that address each of the following:
a. identification of reasons for previous profits and losses
b. your comment on the effectiveness of existing financial management
approaches and any possible solutions you recommend
c. all assumptions and bases that have been made or used to form
budgets
d. any relevant notes regarding implementation and monitoring of
budget expenditure
e. a review of two types of digital technology used for financial
management, making recommendations in the budget notes on
which one you suggest using for the case study.

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Part B: Convey the budget to stakeholders

You have met with Jim Schneider, the CEO of Australia Hardware, to discuss the
budget. An outline of this meeting is provided in Appendix 2.3.
He has asked that you provide more information about aspects of the decision-
making to assist other stakeholders in implementing the budget.
1. Answer the prompt questions in Appendix 2.4 about the budget and its
implementation using word-processing software.
Make sure:
a. your answers are set out under relevant question headings, and each
is clear and easy to understand
b. to include links to information sources you used to inform your
responses.
c. it would help if you used a range of sources, including the internet, to
access, filter and compile information relevant to the answer.
d. use a range of formal analytical thinking techniques to identify the
issues raised in each prompt question, investigate the underlying
causes (if relevant) and generate possible responses and solutions.
2. Circulate the prepared information and budget to your manager and other
relevant stakeholders using the email template in Appendix 2.5.
Make sure you:
a. use the subject line ‘Draft Budget’
b. use professional language and appropriate communication
conventions in the body of the email to outline the implementation
requirements
c. include advice on how to implement the budget in the stakeholder’s
area of responsibility
d. include financial delegations (the individual’s role in regards to
compliance with the budget)
e. include reporting requirements (what to report, how often, how-to and
other helpful information
f. attach a copy of the prompt questions and budget notes, referring the
stakeholder’s to the correct attachment for further information
g. provide options for the stakeholder’s to contact you should they have
any further questions or inputs.
Submission checklist
For this assessment task, you must submit:
● a spreadsheet inclusive of all draft budgets
● budget notes

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● answers to the prompt questions (Appendix 2.4)
● an email to stakeholders (Appendix 2.5).
Comments, declaration and signature

Assessor
comments
Assessor name
Assessor I declare that all requirements in Assessment Task 2 have been

declaration satisfactorily completed and verbally authenticated if required.
Assessor Date
signature
Learner name Woobin JUN
Learner I declare that I have been informed of and accept the results of
declaration this part of my assessment.
Learner signature Date

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Appendix 2.1: Australian Hardware case

study
You have been appointed as the business manager for Australian Hardware, a
15-store retail chain located in Brisbane.
The business offers bathroom fittings, bedroom fittings, mirrors and decorative
items, and recently added lighting fixtures, positioning Australian Hardware as a
leader in homewares retailing in Australia.
Growth has been experienced over the past five years from a single store to the
current chain. The business prides itself on superior after-sales service, a key
reason for the continued growth in sales and corresponding profit increases.
Today, Australian Hardware employs over 150 staff.
Australian Hardware is a proprietary limited company (ACN 34 765 234 02)
registered with the Australian Securities and Investment Commission. The
registered address is with Australian Hardware’s solicitors (Langs Lawyers, 535
Queen Street, Brisbane, QLD 4000). The principal place of business is 505
Boundary Street Spring Hill Brisbane QLD 4000.
Computer software requirement

The current accounting information system has not adequately provided
sufficient revenue and expenditure analysis. It has made it difficult to make
informed estimates of future profits. Estimates have relied on the ‘gut feel’ of
the experienced traders on the board and the senior managers. The board sees
the need to apply more analysis to past results that they believe could be done
by introducing state-of-the-art computer software.
Australian Hardware wants to upgrade its existing accounting system to
manage the company accounts more efficiently in the long run. They request
that the new system you recommend comply with all legislative and statutory
requirements for small to medium businesses.
None of the Australian Hardware’s products is goods and services tax (GST)
free; however, the accounting information system records the GST collected
and the input tax credits earned on the purchases of stock and assets. These
amounts are reported and paid under the business activity statement (BAS)
schedule determined by the Australian Tax Office (ATO).
They have 100 full-time and 50 part-time staff, but only ten employees will
need access to the financial system. Some staff are paid on a salary sacrifice
arrangement that attracts fringe benefits tax (FBT). The staff with access to the
financial system want software that is a single purchase with no ongoing license
fees and a plan to keep using it for the next 3–5 years while the organisation
continues to grow.
They anticipate having over 250 full-time staff within five years, and at least 20
staff will require access to the financial system.

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The payroll system deducts withholding tax from the employees. It remits this
along with the business’s Pay As You Go (PAYG) instalments for each quarter as
reported on the Business Activity Statement (BAS).
An accountant completes an income tax return for the company and its annual
statement, are all taxes and fees due are paid by the due dates. Financial
records are kept at Australian Hardware’s principal place of business.
Australian Hardware has upgraded its computers and has five new desktop PCs
that the finance staff will use. They are current (2020) specification machines
with i5 CPUs and 4Gb RAM. All have Windows 7 Professional and Norton 360
installed with the professional version of Microsoft Office Small Business.
Other staff will use their machines at various times, so the software must
require a login to access data stored by software that cannot be accessed in
any other way.
Corporate details
Board
members
CEO
Stores Business
Accountant
manager manager
Accounts
receivable
Accounts
payable
Jim Schneider, the CEO, has asked you to prepare some financial budgets for
the 2020-21 financial year as a preliminary overview of the financial year
ahead. He asked you first to prepare a 12-month budget and then break it up
over the four quarters. The areas he is particularly interested in seeing is:
1. sales budget for 2020-21 for each department by quarter
2. profit budget (including detailed expenses) for 2020-21 by quarter
3. the cash flow result per quarter of the GST after adjusting the GST
collected by the allowable tax credits
4. the anticipated aged debtors summary at the end of each quarter.
The CEO wants to be given all the budgets except for the aged debtors budget,
which the accountant and accounts receivable clerk can monitor. The CEO
produced a summary of the current business plan covering the budget year to

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highlight the key goals, objectives, and strategies he would incorporate into the
budget.
Business plan summary

1. The anticipation that the coming financial year would maintain the
same sales growth as the growth that took place between 2016-17 to
2019-20
2. To budget for an increase in inflation to 4% per annum and that all costs
subject to inflation should incorporate this particular increase
3. A new car costing $97,466 including GST has been planned for in the
coming period to replace the five-year-old vehicle currently used by the
chairman. This fuel inefficient car will attract a luxury car tax
4. Sales breakup over the departments is anticipated to be bathroom
fittings 30%, bedroom fittings 25%, mirrors 15% and decorative items
10% together with the recently added lighting fixtures 20%
5. Profits are to be built on securing a growing customer base which will
generate loyalty sales and become the refer other customers to the
organisation. The superior after-sales service is the key strategy to
achieve this
6. Reduction on the principle of the loan by a payment of $100,000 on the
31 December 2020 from the profits generated by the business
7. One objective in this plan is to manage the debtors more efficiently in
the current period. This will involve an analysis of the debtors to identify
ways to reduce the amount of cash tied up in outstanding debtors
8. The expectation that 2020-21 would be a difficult trading year but that
the budget net profit should target the same result as achieved in the
2019-20. The strategy to achieve this in the business plan included
three key elements:
a. to reduce the expected gross profit rate by 1% on the 2019-20
result in the hope that lower prices on the products would help
maintain the sales growth even in difficult trading conditions
b. to increase the advertising budget by $70,000 over the 2019-20
results in the hope that Australian Hardware can secure a greater
market share in a constricting market. $200,000 is planned for the
first quarter with the balance apportioned equally over the
following three quarters

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After going through the business plan summary, the CEO gave you the previous
year’s financial reports and asked you to speak with the accountant Celina Patel
to get some of the figures and detailed expectations for the coming year.
You arrange a meeting with Celina Patel, Australian Hardware’s accountant. She
gives you insight into the historical expense relationships and the current
statutory compliance liabilities.
Sales and profit budget information

Celina explained that the only budget she monitors daily is the cash flow
budget. The store manager is primarily responsible for the sales budget.
These are the notes you take at the meeting:
● the business plan's overall sales for the 2020-21 target should be
apportioned across the quarters in the same % as was achieved in 2019-
20
This was:
Qtr 1 Qtr 2 Qtr 3 Qtr 4 2019-20

3,142,822 3,771,386 4,085,668 4,714,232 15,714,10
8
● the cost of goods sold is the inverse of the gross profit rate determined by
the business plan and the quarterly sales budget
● accounting fees have been negotiated for the year at a fixed amount of
$10,000 to be paid in equal amounts each quarter
● the interest charges on the bank loan are anticipated at a reduced amount
of $84,508 due to an agreed repayment of some of the loan principal and
are to be paid in equal amounts each quarter
● bank charges are expected to be the same as 2020 and paid in equal
amounts each quarter
● Celina has requested that a new expense (store supplies) be recognised in
the new budget previously included in the cleaning expense amounts
● store supplies in the 2018-19 results were $3,500 of the cleaning expense
and $3,605 of the 2019-20 result.
● cleaning expense will then be lower but identify the actual labour costs
involved in the cleaning expense
● depreciation is expected to be the same as 2020 and allocated in equal
amounts each quarter
● advertising is to be apportioned to each quarter based on the business
plan
● the following expenses are expected to increase by the determined
inflation rate in the business plan summary:

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○ insurance – apportioned in equal amounts each quarter

○ store supplies – is calculated for each quarter using the same % as
determined by the sales for each quarter
○ cleaning – is calculated for each quarter using the same % as
○ repairs and maintenance – apportioned in equal amounts each
quarter.
○ rent – apportioned in equal amounts each quarter
○ telephone – is calculated for to each quarter using the same % as
○ electricity – is calculated for each quarter using the same % as
determined by the sales for each quarter.
● fringe benefits tax (FBT) is expected to be the same as 2020 and paid
equally each quarter
● wages and salaries are calculated for each quarter using the same % as
● the statutory requirements are:
○ superannuation is 9% of wages and salaries for each quarter

○ payroll tax is 4.75% of wages and salaries for each quarter
○ workers compensation is 2% of wages and salaries for each quarter
○ company tax is 30% of net profit before tax for each quarter.

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Australian Hardware
For 12 months ended
Profit and Loss actuals 2016-17 2017-18 2018-19 2019-20
Revenue
Sales 12,474,336 13,472,315 14,550,100 15,714,108
– Cost of goods sold 6,860,901 7,409,773 8,002,555 8,799,900
Gross profit 5,613,465 6,062,542 6,547,545 6,914,208
Expenses
– Accounting fees 5,500 6,500 8,500 9,000
– Interest expense 45,000 65,000 96,508 90,508
– Bank charges 1,200 1,300 1,580 1,600
– Depreciation 170,000 170,000 170,000 170,000
– Insurance 12,500 12,500 12,500 12,875
– Store supplies - - - -
– Advertising 50,000 100,000 280,000 280,000
– Cleaning 12,560 15,652 18,700 19,261
– Repairs and maintenance 40,250 52,600 60,000 61,800
– Rent 2,465,000 2,465,000 2,465,000 2,538,950
– Telephone 9,862 12,523 14,000 14,420
– Electricity expense 22,500 23,658 25,000 25,750
– Luxury car tax - - 12,400 -
– Fringe benefits tax (FBT) 26,000 26,000 26,000 28,000
– Superannuation 148,500 160,737 166,500 171,495
– Wages and salaries 1,649,998 1,785,965 1,850,000 1,905,500
– Payroll tax 78,375 84,833 87,875 90,511
– Workers’ compensation 33,000 35,719 37,000 38,110
Total expenses 4,770,245 5,017,987 5,331,563 5,457,780
Net profit (before tax) 843,220 1,044,554 1,215,982 1,456,428
Income tax 252,966 313,366 364,795 436,928
Net profit 590,254 731,188 851,188 1,019,499

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Australian Hardware
Statement of financial position
As at 30 June 2018-19 2019-20
Assets
Current assets
– Cash on hand 50,000 55,000
– Cheque account 144,842 160,314
– Deposits paid 950,000 950,000
– Trade debtors 850,000 975,000
– Merchandise inventory 1,530,000 1,430,000
Total current assets
Fixed assets
– Motor vehicles at cost 500,000 500,000
– Motor vehicles accum dep (100,000 ) (125,000)
– Furniture and fixtures at cost 1,950,000 2,250,000
– Furniture and fixtures accum dep (650,000) (770,000)
– Office equipment at cost 400,000 400,000
– Office equipment accum dep (90,000) (115,000)
Total fixed assets 2,010,000 2,140,000
Total assets 5,534,842 5,710,314
Liabilities
Current liabilities
– Mastercard 17,800 14,860
– Trade creditors 780,000 679,000
– GST collected 1,455,010 1,571,411
– GST paid (943,125) (987,626)
– Superannuation payable 100,000 120,000
– Luxury car tax payable 20,920 -
– income tax payable 364,795 436,928
– PAYG withholding payable 65,000 44,872
Total current liabilities 1,860,400 1,879,445
Long-term liabilities - -
– Bank loans 1,608,459 1,508,459
Total liabilities 3,468,859 3,387,904
Equity
– Owner/shareholder’s equity 500,000 500,000
– Retained earnings 850,000 1,565,982
– Dividends paid (500,000) (1,200,000)
– Current year earnings 1,215,982 1,456,428

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Total equity 2,065,982 2,322,410
Internal Auditor
Carl Kerns is one of the directors of the board. Carl said they are given the profit
and cash flow budgets as a board member. The board appointed him to conduct
an internal Audit of operations to look for weaknesses in the internal control
system. His report uncovered the following processes that he believed needed
to be strengthened.
● while the overall customer base is increasing every year, there may be
internal control issues relating to how these new customers are secured
● some discounts that were being given to customers were recorded as a net
amount on the invoices and did not indicate the discount from standard
prices
● some cash registers in the stores were not reconciling the cash with the
register printout
● the line manager was authorising not all timesheet overtime amounts
● service invoices for some equipment items were not signed or linked to a
purchase order. There was no check that the work had been carried out
● not all assets in the stores had unique codes fixed to the asset
● there were minimal feedback lines of communication from the shop floor to
head office, notably when an error in the budgeting report process was
recognised
● debtor reconciliations were not done monthly and sometimes not at all
● in busy times the cashiers that operated the registers were also asked to
do their reconciliations and banking, and sometimes, the cash was held in
store for a day or two
● job roles were not clearly defined so that responsibilities and liability could
be identified
● there was little rostering of duties, and cash receipts were not pre-
numbered.
Of particular concern to Carl was the directive given by the board to ensure that
Audit trails were created and maintained. These included:
● signing the timesheets for employees under the authority of a department
manager
● maintenance of a numbered cash receipts book
● using sequenced cheques as a systematic way of evidencing all monies

paid out
● ensuring proper coding of evidenced transactions against appropriate
general ledger account and cost centre

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● ensuring reconciliations between company books and third-party bank

statements are performed
● establishing procedures including pre-authorisation and checking
mechanisms for work-related meal expenses.
GST cash flow budget

Statutory requirements for goods and services tax (GST) is 10% of the recorded
amounts in sales. The only capital purchase planned for the year is the luxury
car for the chairman. Those expense payments on which 10% GST was paid
include the following:
● cost of goods sold:
○ accounting fees
○ insurance
○ store supplies
○ advertising
○ cleaning
○ repairs and maintenance
○ rent
○ telephone
○ electricity expense.
The GST amount payable each quarter is the difference between the GST
collected from sales and the GST paid – format as per policy and procedures.
Cash flow analysis

- GST 2020-21 Qtr 1 Qtr 2 Qtr 3 Qtr 4
GST collected x,xxx x,xxx x,xxx x,xxx x,xxx
Less GST paid x,xxx x,xxx x,xxx x,xxx x,xxx
GST payable Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
Debtors ageing budget

The historical records show that the debtor's balance at the end of each quarter
is usually about 20% of the quarter’s sales. At any time in the debtor’s
balances, 1% of the total debtor is overdue for 90 days. Over 5% is 60 days
overdue, 10% is 30 days overdue, and the total debtors’ balance is current. The
aged debtors’ budgets are only distributed to the accountant and the accounts
receivable clerk.

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Appendix 2.2: Australian Hardware

budgeting policy and procedures
Budget development process

The standard process for developing budgets will follow the following steps:
1. establish the budget objective
2. gather prior period data
3. discuss prior period information and anticipated changes in the budget
period with stakeholders
4. research relevant external information
5. incorporate identified trends to determine assumptions and parameters
6. prepare budgets in standard formats
7. submit budgets for approval.
Budget objectives
Australian Hardware prepares budgets to meet various company objectives.
Budgets are prepared:
● for a specific expansion of the business activities:
○ the business case to be prepared covering a cost-benefit analysis,

market research report and summary profit and investment
expectations.
● to outline a specific debt reduction initiative:
○ company-wide summary of profit expectations, planned debt and

equity funding arrangements, and CAPEX plans summarised.
● annually to cover the next financial year:
○ for the 12 months from the beginning to the end of the financial year
○ budget to include four-quarter milestones in line with seasonal trends
identified from prior year data
○ initial preparation includes a preliminary overview of the financial
year ahead
○ sales budget for next year to be prepared by each department by
quarter
○ profit budget (including detailed expenses) for the next year to be
prepared by quarter
○ cash flow effect of the GST payable per quarter to be prepared
(scheduled compliance payment date is the 21st day after the
quarter).

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● to satisfy the statutory requirements relating to the current and short-term

solvency of the company:
○ three monthly rolling forecasts of cash flow to be prepared.
● to qualify the strategic plans for the next 3–5 years planning cycle:
○ profit and CAPEX budget to be prepared.
Budget variances and schedules

● key performance indicators that should be closely monitored and reported
on include variances to:
○ total sales
○ gross profit (GP) %
○ wages and salaries as a % of total sales
○ total expenses as a % of total sales
○ net profit in dollars
○ net profit as a percentage.
● budget variances will be reported using the standard format provided in
this policy and procedures document
● budget variances must be completed within five working days of quarter
end
● the accounting information system will provide actual results for the month
● an analysis of the variance between the actual and the budget must
include $ and % variance
● report with explanations and recommendations to be complete within
seven working days of quarter end and be given to the CEO
● analysis and investigation of variances will include the following priority:
1. establish the primary causes for variances to key performance

indicators of total sales, gross profit % and net profit $
2. establish reasons for those individual items in the variance report
that represent the most significant $ variance
3. establish reasons for those individual items in the variance report
that represent the most significant % variance.
● schedules relating to compliance due dates must be prepared and
monitored by the accountant. Managers supplying the accountant with the
compliance schedule must submit it at least five working days before the
deadline.

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Standard formats
The following formats will prepare Australian Hardware budgets and variance
reports.
Sales and profit budgets

Profit budget 2020-21 Qtr 1 Qtr 2 Qtr 3 Qtr 4
Revenue - % % % %
Sales x,xxx x,xxx x,xxx x,xxx x,xxx
– Cost of goods sold x,xxx x,xxx x,xxx x,xxx x,xxx
Gross profit Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
Gross profit % Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
Expenses
– Accounting fees x,xxx x,xxx x,xxx x,xxx x,xxx
– Interest expense x,xxx x,xxx x,xxx x,xxx x,xxx
– Bank charges x,xxx x,xxx x,xxx x,xxx x,xxx
– Depreciation x,xxx x,xxx x,xxx x,xxx x,xxx
– Insurance x,xxx x,xxx x,xxx x,xxx x,xxx
– Store supplies x,xxx x,xxx x,xxx x,xxx x,xxx
– Advertising x,xxx x,xxx x,xxx x,xxx x,xxx
– Cleaning x,xxx x,xxx x,xxx x,xxx x,xxx
– Repairs and x,xxx x,xxx x,xxx x,xxx x,xxx

maintenance
– Rent x,xxx x,xxx x,xxx x,xxx x,xxx
– Telephone x,xxx x,xxx x,xxx x,xxx x,xxx
– Electricity expense x,xxx x,xxx x,xxx x,xxx x,xxx
– Luxury car tax x,xxx x,xxx x,xxx x,xxx x,xxx
– Fringe benefits tax x,xxx x,xxx x,xxx x,xxx x,xxx

(FBT)
– Superannuation x,xxx x,xxx x,xxx x,xxx x,xxx
– Wages and salaries x,xxx x,xxx x,xxx x,xxx x,xxx
– Payroll tax x,xxx x,xxx x,xxx x,xxx x,xxx
– Workers’ x,xxx x,xxx x,xxx x,xxx x,xxx

compensation
Total expenses Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
Net profit (before tax) Calculation Calculatio Calculatio Calculatio Calculatio

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n n n n
Income tax Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
Net profit Calculation Calculatio Calculatio Calculatio Calculatio

n n n n
GST Cash-flow budget

Cash flow analysis -
GST 2020-21 Qtr 1 Qtr 2 Qtr 3 Qtr 4
GST collected x,xxx x,xxx x,xxx x,xxx x,xxx
Less GST paid x,xxx x,xxx x,xxx x,xxx x,xxx
GST payable Calculatio Calculatio Calculatio Calculatio Calculatio

n n n n n
Aged debtors
Aged debtors TOTAL Qtr 1 Qtr 2 Qtr 3 Qtr 4
budget
Sales x,xxx x,xxx x,xxx x,xxx x,xxx
% Debtors sales % % % %
Total debtors % Calculation Calculation Calculation Calculation
Current % Calculation Calculation Calculation Calculation
30 Days % Calculation Calculation Calculation Calculation

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Appendix 2.3: Scenario

The CEO of Australian Hardware, Jim Schneider, explained that he prefers to
discuss the budgets with all senior managers before their distribution to ensure
a corporate view of the strategic plans.
He then meets with each group separately and the relevant senior manager to
answer questions and concerns about their particular area. Eventually, the
budgets will be printed in hard copy and bound and distributed as an electronic
spreadsheet.
Upon completing the budgets, you will meet with Jim and another senior
manager to provide an overview of the information contained within the
budgets, the budget notes, and recommendations regarding the internal
controls.
To clarify his understanding of the information, Jim provides you with a list of
questions he would like you to research and respond to when circulating the
budget. You can find the list of questions in Appendix 2.4.

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Appendix 2.4: Prompt questions

Based on the scenario, answer the following questions in the spaces provided.
1. As Australian Hardware is pre-empting a challenging trading year, is the
budgeted net profit in line with the previous reporting period?
Yes, since the previous fiscal year, the net profit has increased (2019-
2020). Here's an example of how it's done.
 Price cuts for products while attempting to maintain sales growth.
 Increase advertising spending by AUD 70,000 over 2019-2020 results
to maintain and increase market share.
 In 2019-2020, wages and salaries will be increased by AUD 172,500
to allow a large number of current casual employees to earn sales
commissions, allowing Australian Hardware to maintain its sales
growth.
2. Advertising will be a pivotal factor in maintaining sales, so why was the

first quarter prioritising the budgeted funds?
The total advertising budget is AUD 350,000, with AUD 200,000

allocated in the first quarter and the remaining AUD 350,000 distributed
evenly over the following three quarters. Given the company's current
resource scarcity, a review of the company's strategy and other facts
aided in the widespread distribution.
3. How can the business ensure that overtime records are monitored
adequately and controlled?
When some overtime work by employees is unavoidable, the company

must effectively manage and control it. The following internal controls
and reporting systems can help the company achieve this goal.
 Timesheet reporting as directed.
 Any cost-bearing practices, such as overtime, require pre-approval.
 Ensure that timesheet records, as well as pre-approval, are accurate.

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4. Identify the current statutory requirements for tax compliance and list and
calculate the tax liabilities for Australian Hardware under taxation
legislation.
The statutory requirements for tax compliance are as follows.

 PAYG withholding payable refers to the sum owed to the ATO from
taxes withheld from employees' salaries and earnings.
 Annual income taxation is required. Every year, a tax form must be
completed and submitted by October 31st. The current corporate tax
rate on assessable income is 30%.
 Once a wage and salary threshold is reached, member states must
pay a payroll tax.
 Goods and Services Tax (GST) – The GST collected on all sales is 10%
of the transaction price. Use the company activity statement to send
this money to the Australian Tax Office on a quarterly basis.
 FBT instalment paid as part of quarterly activity statements but
lodged as a return on March 30th of each year.
 Current liabilities for Australian Hardware are:
 PAYG Withholding payable AUD 44,872
 Income tax AUD 436, 928.
 Goods and services tax liability
(AUD 1,571,411 Collected – 987,626 Paid = AUD 583,785)
5. Identify the business’s current compliance requirements and liabilities

under the Corporations Act 2001.
 Large corporations are required to submit financial statements.

 The Australian Securities and Investment Commission should be
informed of the authorized office and principal place of business
(ASIC)
 Minutes and resolutions must be recorded in writing by directors.
 On all public documents, business premises, cheques, and ASIC-filed
documents, include the company name and Australian Company
Number (ACN).
 Audited financial statements are required for publicly traded
companies.
 An annual return detailing the company's operations must be
submitted to the Australian Securities and Investment Commission
(ASIC).
 Directors must act within the parameters that have been established.

Page 20 of 23
 Keep enough financial records to explain reports and keep records for
seven years.
 ASIC rules for internal corporate management must be followed by
the company

Page 21 of 23
6. Review commercially available financial management software to select

the most suitable software for Australian Hardware. Ensure you diagnose
software options by comparing two commercially available software
against the capabilities of the existing technology, the prioritised
requirements, and outline the reasons that led you to this
recommendation.

Page 22 of 23
Australian Hardware is looking for new software requirements.

 These two types of software should be able to:
 higher level of capabilities with currently used different software.
 compare the identified names to the requirements list.
 Prioritised List of Requirements Fulfilling.
 security durability
 user friendly and update friendly frontends.
 statutory needs including the generation of monthly Business
Activity Statements (BAS) and managing superannuation.
 user access related needs
 It is supported by evidence of research and decision-making. answer,
such as links, references, or software information source excerpts.
 Financial Management Software in Australia
https://sourceforge.net/software/financial-management/australia/
Most Popular Finance Management Software 2022
https://kissflow.com/finance/finance-management-software/
 What is the best accounting software for Australian small
businesses?
https://valueadders.com.au/2022/03/what-is-the-best-accounting-
software-for-australian-small-businesses/
 Comparison of Two Recommended Software
 QuickBooks is highly recommended as features below.
QuickBooks AccountsIQ
https://quickbooks.intuit.co https://www.accountsiq.c
m/au/ om/
Painless payroll Payroll
Reports and insights Reports
Simple invoices Invoicing
GST & BAS tracking Mileage Tracking
Automated expenses Bookkeeping
Cash Flow Confidence Expenses & Receipts

Page 23 of 23
7. List the critical dates and initiatives that will require or generate resources
for Australian Hardware in the next financial cycle.
 It must try to repay $100,000 of the loan principal by December 31.

 To get rid of cash stashed in unpaid obligations, it must complete a
debtor analysis.
 When buying a new car for the chairman, luxury car tax is
anticipated.
 It would rather increase the annual advertising budget by $70,000.
 It must reduce the gross profit margin by 1%.
 A $172,500 wage and salary increase is unavoidable.
8. Contribute to the financial bids and estimates of Australian Hardware by

listing the items you would recommend for inclusion in the budgets.
Explain for each item what information informed your estimates.
 Maintain supplies (previously included with cleaning expenses)

 For more accurate accounting and financial guidelines, discussions
with department managers, verifying supplier price lists, and
classifying certain products as "storage items" or "cleaning charges"
are permitted.
 The administration was concerned that inappropriate costs were
being "hidden" in the cleaning budget.
9. Australian Hardware requires improved financial risk management systems

to address the misappropriation of funds. You have been tasked with the
following:
a. develop a list of new or modified internal controls that could improve
risk management for Australian Hardware, including ensuring
systems are in place to record all transactions and outlining the
process for maintaining Audit trails.
b. one particular area of concern at Australian Hardware has been
claiming meal expenses when employees travel. Outline a brief
procedure for employees to substantiate these claims. Create a
checklist of methods that you would apply to verify the authenticity of
the expenses and demonstrate due diligence.
 Risk management includes the addition and modification of internal

controls:
 reconcile cash registers daily.
 proper pre-approval and recording of work-related meal expenses.

Page 24 of 23
 roster duties to minimise fraud possibility.

 job descriptions
 maintain currency of asset register
 discounts to be recorded.
 open lines of communication
 proper pre-approval on timesheets and supplier invoices
 need for separation of duties.
 Audit trail includes:
 Secondary Control - For cash receipt, a secondary monitoring
system, such as a cash register or a second person, will be used.
Consult a trustworthy source. Validate GST evidence with the
vendor/provider before implementing random auditing of pre-
authorized work-related meal expenses.
 Directives - All money is recorded on pre-numbered receipt forms;
fees are paid by check with filled stubs; a voucher system is used
for properly approved payments; data entry is used to identify the
source; and cross-coded sources are automatically entered.
 Appropriate Regulator - The person in charge of the department or
cost center must approve each payout. Any work-related meal
expenses must be approved in advance by the immediate
supervisor or a higher-level management.
 Paperwork Filing- As evidence of any cash receipt or payment,
paperwork with complete details, including signed or emailed pre-
approval and GST approved record of purchase for work-related
meal expenses, must be provided.

Page 25 of 23
Appendix 2.5: Email Template
To: manager_group@australianhardware.com.au,
supervisor_group@australianhardware.com.au
Cc:
From: Woobin JUN
Date:
Subject: Draft Budget
Message:
Dear Members,
As excited as I am to present the Draft Budget to you, I would appreciate it if

you could pay special attention to your areas of responsibility to ensure
proper implementation. After receiving your constructive feedback for next
year's implementation, we will complete and finalize this draft budget.
We are entering another challenging advertising year this year, as you are all
aware, but we will continue to work hard to maintain overall growth in the
same manner that we have in the previous five years. To accomplish this, we
will ensure our preparation and make the extra efforts listed below.
 Increase advertising spending by $70,000 between 2020 and 2021.
 In 2020-21, aim for the same sales growth as in 2019-2020.
 Bathroom fittings make up 30% of sales, while bedroom fittings make up
25%, mirrors make up 15%, decorative items make up 10%, and lighting
fixtures make up 20%.
 Wages and salaries will be increased by $172,500 over the 2019-20
budget.
 New expenditure (store supplies) - the 2018-19 results were $3,500 for
cleaning and $3,605 for 2019-20.
 And this is financial delegations and reporting
 sales manager responsible for monitoring/implementing the sales
budget, reporting against sales income/cost of sales.
 accounts receivable responsible for monitoring the aged debtors’
budget and reporting aged debtors
 responsible for providing relevant reports, monitoring aged debtors
budget.

Page 26 of 23
 accounts payable responsible for duties as assigned by Woobin JUN

such as collecting, collating and inputting information into relevant
software or generating relevant reports.
 the CEO is responsible for overseeing/monitoring, implementing, and
compliance with all budgets except aged debtors, reviewing reports
and approving certain transactions.
For more information on the Draft Budget, please see the files. Please do not
hesitate to contact me if you have any questions about your responsibilities.
We value all of your suggestions and feedback.
I look forward to hearing from you as soon as possible.
Yours faithfully,
,
Attachments:
1. The Budget
2. The Budget Notes.
3. The Prompt Questions.

Page 27 of 23

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Assessment Task 2 BSBFIN601 Manage organisational finances

● relevant legislation and Australian Tax Office requirements

● financial management software.

○ Appendix 2.1: Australian Hardware case study

© Australian Training Products Pty Ltd 1st edition version: 1

Part A: Prepare the budget and notes

© Australian Training Products Pty Ltd 1st edition version: 1

Part B: Convey the budget to stakeholders

© Australian Training Products Pty Ltd 1st edition version: 1

● answers to the prompt questions (Appendix 2.4)

● an email to stakeholders (Appendix 2.5).

Comments, declaration and signature

Assessor I declare that all requirements in Assessment Task 2 have been

Learner name Woobin JUN

Learner signature Date

© Australian Training Products Pty Ltd 1st edition version: 1

Appendix 2.1: Australian Hardware case

Computer software requirement

© Australian Training Products Pty Ltd 1st edition version: 1

© Australian Training Products Pty Ltd 1st edition version: 1

Business plan summary

© Australian Training Products Pty Ltd 1st edition version: 1

Sales and profit budget information

Qtr 1 Qtr 2 Qtr 3 Qtr 4 2019-20

© Australian Training Products Pty Ltd 1st edition version: 1

○ insurance – apportioned in equal amounts each quarter

○ superannuation is 9% of wages and salaries for each quarter

© Australian Training Products Pty Ltd 1st edition version: 1

For 12 months ended

Profit and Loss actuals 2016-17 2017-18 2018-19 2019-20

Sales 12,474,336 13,472,315 14,550,100 15,714,108

– Cost of goods sold 6,860,901 7,409,773 8,002,555 8,799,900

Gross profit 5,613,465 6,062,542 6,547,545 6,914,208

– Accounting fees 5,500 6,500 8,500 9,000

– Interest expense 45,000 65,000 96,508 90,508

– Bank charges 1,200 1,300 1,580 1,600

– Depreciation 170,000 170,000 170,000 170,000

– Insurance 12,500 12,500 12,500 12,875

– Advertising 50,000 100,000 280,000 280,000

– Cleaning 12,560 15,652 18,700 19,261

– Repairs and maintenance 40,250 52,600 60,000 61,800

– Rent 2,465,000 2,465,000 2,465,000 2,538,950

– Telephone 9,862 12,523 14,000 14,420

– Electricity expense 22,500 23,658 25,000 25,750

– Luxury car tax - - 12,400 -

– Fringe benefits tax (FBT) 26,000 26,000 26,000 28,000

– Superannuation 148,500 160,737 166,500 171,495

– Wages and salaries 1,649,998 1,785,965 1,850,000 1,905,500

– Payroll tax 78,375 84,833 87,875 90,511

– Workers’ compensation 33,000 35,719 37,000 38,110

Total expenses 4,770,245 5,017,987 5,331,563 5,457,780

Net profit (before tax) 843,220 1,044,554 1,215,982 1,456,428

Income tax 252,966 313,366 364,795 436,928

Net profit 590,254 731,188 851,188 1,019,499

© Australian Training Products Pty Ltd 1st edition version: 1

© Australian Training Products Pty Ltd 1st edition version: 1

Total equity 2,065,982 2,322,410

● using sequenced cheques as a systematic way of evidencing all monies