ASSESSMENT 2 COVER SHEET Details of Assessment Term and Year Term 2 2016 Time allowed 2 weeks Assessment No 1 Assessment Weighting 40% Assessment Type Monitor and Review Budget (Project, Report) Due Date Class Room Student Name: Student ID No: Date: Qualification : BSB60215 Advanced Diploma of Business Unit Code: BSBFIM601 Unit Title: Manage Finances Assessor's Name Assessment Outcome Results Satisfactory Not Satisfactory Marks Student Feedback: _____________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Student Declaration: I declare that this work has been completed by me honestly and with integrity and that I have been assessed in a fair and flexible manner. I understand that the Institute's Student Assessment, Reassessment and Repeating Units of Competency Guidelines apply to these assessment tasks. Name: ____________________________________________ Signature: _________________________________________ Date: ____/_____/_____ Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback. Name: _________________________________ Signature: ______________________________ Date: ____/_____/_____ Student did not attend the feedback session. . Assessment/evidence gathering conditions Each assessment component is recorded as either Satisfactory (S) or Not Satisfactory (NS). A student can only achieve competence when all assessment components listed under Purpose of the assessment section are Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NS (Not Satisfactory) is eligible for re-assessment. Resources required for this Assessment • All documents must be created using Microsoft Office suites i.e., MS Word, Excel, PowerPoint • Upon completion, submit the assessment printed copy to your trainer along with assessment coversheet. • Refer the notes on eLearning to answer the tasks • Any additional material will be provided by Trainer Instructions for Students Please read the following instructions carefully • This assessment is to be completed according to the instructions given by your assessor. • Students are allowed to take this assessment home. • Feedback on each task will be provided to enable you to determine how your work could be improved. You will be provided with feedback on your work within 2 weeks of the assessment due date. • Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency. • If you are not sure about any aspect of this assessment, please ask for clarification from your assessor. • Please refer to the College re-assessment and re-enrolment policy for more information. This form is to be completed by the assessor and used a final record of student competency. All student submissions including any associated checklists (outlined below) are to be attached to this cover sheet before placing on the students file. Student results are not to be entered onto the Student Database unless all relevant paperwork is completed and attached to this form. Administrative use only Entered onto Student Management Database  ________________ Date Initials   Assessment 2 (Monitor and review budget) Submission details Students Name Student ID Group Assessor's Name Assessment Date/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 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 1. Analyse the case study information and develop a variance report based on the format and template provided by Houzit. 2. Examine the sales and profit budget, cash flow budget and debtor ageing summary to identify the following: 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. 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 1–4). 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 identified. Include in this section any recommendations you have for modifying management processes. Specifications You must provide: ● 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. Candidate: I declare that this work has been completed by me honestly and with integrity and that I have been assessed in a fair and flexible manner. I understand that the Institute's Student Assessment, Reassessment and Repeating Units of Competency Guidelines apply to these assessment tasks. Signature: ___________________ Date: ____/_____/_____ Case study 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. 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 Cash flow analysis – GST Qtr 1 GST Collected 337,120 Less GST Paid 279,988 GST Payable 57,132 Aged debtors – Actual AGED DEBTORS BUDGET Qtr 1 Sales 3,371,200 % Debtors Sales 22% Total Debtors 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 Actual Results Budget-Qx Actual-Qx $ Variance % 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 – 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.