Technical assignment

29 Jun Technical assignment

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.
Student Name:
Student ID No:
Final Completion Date:
Unit Code:	BSBFIM601
Unit Title:	Manage Finances
Please attach the following documentation to this form	Result
Assessment 1	Prepare budgets, monitor and review budgets	S / NYS / DNS
Final Assessment Result for this unit	C / NYC
Feedback is given to the student on each Assessment task	Yes / No
Feedback is given to the student on final outcome of the unit	Yes / No
Student Declaration 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.	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:		Name:
Signature:		Signature:
Date:		Date:

ASSESSMENT 1 COVER SHEET

Details of Assessment
Term and Year	Term 1 2017
Assessment Type	Prepare Budgets , monitor and review budgets
Due Date		Class Room	Hall 2
Student Name:
Student ID No:
Date:
Qualification :	BSB60215 Advanced Diploma of Business
Unit Code:	BSBFIM601
Unit Title:	Manage Finances
Assessor’s Name
Assessment Outcome	Satisfactory	Not Satisfactory
Student Feedback
Student Declaration: I declare that this work has been completed by me honestly and with integrity. I understand that the Sydney Metro College’s (SMC) Student Assessment, Reassessment and Repeating Units of Competency Guidelines apply to these assessment tasks.	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:		Name:
Signature:		Signature:
Date:		Date:
		Student was absent from the feedback session.

Assessment/evidence gathering conditions

Each assessment component is recorded as either Satisfactory (S) or Not Yet Satisfactory (NYS). A student can only achieve competence when all assessment components listed under procedures and specifications of the assessment section are Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NYS is eligible for re-assessment. Should the student fail to submit the assessment, a result outcome of Did Not Submit (DNS) will be recorded.

Resources required for this Assessment

1. All documents must be created using Microsoft Office suites i.e., MS Word, Excel, PowerPoint 1. Upon completion, submit the assessment printed copy to your trainer along with assessment coversheet. 1. Refer the notes on SMC eLearning (Moodle) to answer the tasks 1. 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.

Procedures and Specifications of the Assessment

This assessment requires you to review available financial information and establish a budget for the organization. For this task you are required to study a case study of an organization to understand financial condition and legislative & financial management requirements for the company. In addition, 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. There are 4 main questions for this assessment which covers the following: · Analyze the case study information and write summary of the current status of the company. · Analyze the case study information (including business plan summary and previous financial data). · Analyze the case study information and develop a variance report based on the format and template provided by Houzit. · Examine the sales and profit budget, cash flow budget and debtor ageing summary This assessment requires you to determine the requirements to undertake budgeting, financial forecasting and reporting requirements for an organization. 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 organization. You must provide: · A completed annual budget in a single spread sheet with a separate sheet for each budget component · Budget notes and question answers in a written format. · 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 understand the required legislative requirements · Evidence that you can identify suitable software for financial management · Evidence you have reviewed the case study information provided by submitting an appropriate budget with budget notes · Evidence that you have clearly communicated information regarding the budget and correctly responded to a series of questions · Evidence that you reviewed the provided case study information to develop an evaluative report concerning the progress of the budget.

Assessment 1

Houzit Pte Ltd

You have recently been appointed as the business manager of Houzit Pty Ltd having been a store manager for the past three years. Houzit Pty Ltd is a 15 store retail chain located in Brisbane. Houzit is the leading homewares retailer, catering to the growing need for furnishing new and renovated dwellings in the greater Brisbane area.

The assortment on offer of bathroom fittings, bedroom fittings, mirrors and decorative items together with the recently added lighting fixtures has positioned Houzit as a leader in homewares retailing in Australia. Houzit has grown over the past five years from a single store to the current chain. Houzit prides itself on superior after sales service which has been a key reason for the continued growth in sales and corresponding profit increases. Today Houzit employs over 150 staff.

Houzit Pty Ltd is a proprietary limited company (ACN 34 765 234 02) registered with the Australian Securities and Investment Commission. The registered address is with Houzit’s solicitors (Langs Lawyers, 535 Queen Street, Brisbane, QLD 4000) and the principle 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 analysis of revenue and expenditure and 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 of the senior managers. The board sees the need to apply more analysis to past results that they believe could be done with the introduction of state-of-the-art computer software.

Houzit Pty Ltd wants to upgrade their existing accounting system which will manage the company accounts more efficiently in the long run. They request that the new system you recommend to them to be compliant with all legislative and statutory requirements for small to medium businesses.

None of Houzit’s products are GST free however the accounting information system records the GST collected as well as the input tax credits earned on the purchases of stock and assets. These amounts are reported and paid in accordance with the business activity statement (BAS) schedule determined by the Australian Tax Office.

They have 100 fulltime and 50 part-time staff, but only 10 of the staff will have or need access to the financial system. Some staff are paid on a salary sacrifice arrangement that attracts fringe benefits tax. 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 if for the next 3–5 years, while the organization continues to grow. They are anticipating that within five years they will have over 250 full-time staff, and at least 20 staff will require access to the financial system by then.

The payroll system deducts withholding tax from the employees and remits this along with the firm’s pay as you go (PAYG) instalment each quarter as reported on the firm’s business activity statement. Income tax return for the company and its annual statement is completed by the firm’s accountant. Taxes and fees due are paid by the due dates. Financial records are kept at Houzit’s principle place of business.

Houzit have just upgraded their computers and have five new desktop PCs which will be used by the finance staff. They are current (for 2016) specification machines with i7 CPUs and 8Gb RAM each, and all have Windows 10 Professional and Norton’s 360 installed with the professional version of Microsoft Office Small Business as well. Other staff will use their machines at various times, so it is important that the software requires a login to access data and that data stored by the software cannot be accessed in any other way.

Houzit Corporate

Business plan summary

1. The anticipation that the coming financial year would maintain the same sales growth as the growth that took place between 2014/15 to 2015/16.

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 organization. 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 2015 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 2015/16 would be a difficult trading year but that the budget net profit should target the same result as achieved in the 2014/15. 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 2014/15 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 2014/15 results in the hope that Houzit 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.

c. To increase wages and salaries by $172,500 over the 2014/15 amounts in the hope that allowing the existing high number of casual staff to earn commissions on sales that should help to maintain Houzit’s sales growth.

Sales and profit budget information

Celina explained that the only budget she monitors on a day-to-day basis is the cash flow budget and the store manager is primarily responsible for the sales budget.

These are the notes you take at the meeting:

· The overall sales for 2015/16 target set by the business plan should be apportioned across the quarters in the same % as was achieved in 2014/15. This was:

Qtr. 1 ($)	Qtr. 2 ($)	Qtr. 3 ($)	Qtr. 4 ($)	2014/15 ($)
3,142,822	3,771,386	4,085,668	4,714,232	15,714,108

· Cost of goods sold is the inverse of the gross profit rate determined by the business plan and is determined by 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. This is to be paid in equal amounts each quarter.

· Bank charges are expected to be the same as 2015 and paid in equal amounts each quarter.

· Celina has requested that a new expense (store supplies) be recognised in the new budget that was previously included in with the cleaning expense amounts. Store supplies in the 2013/14 results was $3,500 of the cleaning expense and $3,605 of the 2014/15 result. Cleaning expense will then be lower but identify the real labour costs involved in the cleaning expense.

· Depreciation is expected to be the same as 2015 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:

· Insurance – apportioned in equal amounts each quarter.

· Store supplies – is calculated for to each quarter using the same % as determined by the sales for each quarter.

· Cleaning – is calculated for each quarter using the same % as determined by the sales for each quarter.

· 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 determined by the sales for each quarter.

· Electricity – is calculated for to each quarter using the same % as determined by the sales for each quarter.

· Fringe benefits tax is expected to be the same as 2015 and paid in equal amounts each quarter.

· Wages and salaries are calculated for each quarter using the same % as determined by the sales for each quarter.

· 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.

Houzit Pty Ltd
For 12 months ended
Profit & Loss Actuals	2011/12 ($)	2012/13 ($)	2013/14 ($)	2014/15 ($)
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 & 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	26,000	26,000	26,000	28,000
– Superannuation	148,500	160,737	166,500	171,495
– Wages & 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

Houzit Pty Ltd
Statement of Financial Position
As at 30 June	2013/14 ($)	2014/15 ($)
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 & Fixtures At Cost	1,950,000	2,250,000
– Furniture & Fixtures Accum Dep	( 650,000 )	( 770,000 )
– Office Equip At Cost	400,000	400,000
– Office Equip 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
Total Equity	2,065,982	2,322,410

Internal auditor

Carl Kerns is one of the directors of the board. Carl said that as a board member they are given the profit and cash flow budgets. He was appointed by the board 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 from year to 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 gave no indication of the discount from standard prices.

· Some cash registers in the stores were not reconciling the cash in drawer with the register printout.

· Not all timesheet overtime amounts were being authorised by the line manager.

· Service invoices for some items of equipment were not signed or linked to a purchase order. There was no check that the work had actually 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, particularly 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 own reconciliations and banking. Sometimes the cash was held in the store for a day or two.

· Job roles were not clearly defined so that responsibilities and liability can 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.

· Ensuring reconciliations between company books and third party bank statements are performed.

GST cash flow budget

Statutory requirements for 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.

Debtors ageing budget

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

Houzit Budgeting Policy and Procedures

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

Houzit prepares budgets to meet various company objectives. Budgets are prepared:

· for a specific expansion of the business activities:

· 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, CAPEX plans summarised

· annually to cover the next financial year:

· for the 12-month period 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 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 end of the quarter)

· To satisfy the statutory requirements relating to the current and short-term solvency of the company:

· three monthly rolling forecast of cash flows 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.

· Actual results for the month will be provided by the accounting information system.

· 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 greatest $ variance.

3. Establish reasons for those individual items in the variance report that represent the greatest % variance.

· Schedules relating to compliance due dates must be prepared and monitored by the accountant. Managers supplying information to the accountant regarding the compliance schedule must submit it at least five working days prior to the due date deadline.

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 have on the cash flow of the business from 2014/15.’

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 2015.

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

Assessment 1

1. Analyze the case study information and complete the budget table found in Appendix 1 based on the following:

a. Establish the budget objective for the year 2015/16 by gathering prior period data

b. Review and establish critical dates and initiatives that would be implemented for the upcoming budget forecast

c. Ensure that statutory requirements for tax compliance and liabilities are adhered to

d. Make provisions of new items for inclusion in the budget

e. Tabulate calculations for profit and loss, cash flows and ageing summaries

f. Provide adjustments to the budgets as deemed necessary to reflect changes or contingencies based on the organization’s requirements

g. Ensure structure and format of reports are clear and conform to organization and statutory requirements

2. Provide answers for the following questions:

a. Identify the current statutory requirements for tax compliance for Houzit Pte Ltd.

b. Explain the current compliance requirements and liabilities for Houzit Pte Ltd under the Corporations Act 2001

c. Provide a review on what is commercially available, a financial management software that you think would be most suitable software for Houzit Pte. Ltd. Justify your choice.

d. List the new or modified internal controls that could improve risk management for Houzit Pte Ltd including the maintenance of audit trails.

e. Provide a budget note summary of Houzit Pte Ltd’s financial viability and what recommendations you would like to propose and implement.

f. Deliberate the consideration of the practice due diligence in financial management and the importance to stress the adherence of financial probity to the accounting department.

3. Analyze the case study information and complete the budget table found in Appendix 2 based on the following:

a. Complete an actual-to-budget variance report by using the template provided in the Appendix 2.

b. Examine the sales, profit budget, cash flow budget and debtor ageing (Appendix 2) summary to identify the following:

i. Identify variances by comparing actual results with the established budget

ii. Provide reasons why these variances may have occurred.

iii. Determine a trend of the average debtor days

iv. Analyse the impact to the cash flow of Houzit Pte Ltd

4. Provide a brief report of the financial management processes in place for the organisation to Jim Schneider the CEO of Houzit Pte. Ltd., in light of your assessment of the issues, reasons for variances and organisational performance you have identified as follows:

a. Budget analysis

b. Reporting requirements

c. Financial delegation

Appendix 1 – 2015/16 Sales and Profit Budget

SALES & PROFIT BUDGET	2015/16 ($)	Qtr. 1 ($)	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	Calculation	Calculation	Calculation	Calculation
Gross Profit %	Calculation	Calculation	Calculation	Calculation	Calculation
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 & Maintenance	x,xxx	x,xxx	x,xxx	x,xxx	x,xxx
– 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
– Superannuation	x,xxx	x,xxx	x,xxx	x,xxx	x,xxx
– Wages & Salaries	x,xxx	x,xxx	x,xxx	x,xxx	x,xxx
– Payroll Tax	x,xxx	x,xxx	x,xxx	x,xxx	x,xxx
– Workers’ Compensation	x,xxx	x,xxx	x,xxx	x,xxx	x,xxx
Total Expenses	Calculation	Calculation	Calculation	Calculation	Calculation
Net Profit (Before Tax)	Calculation	Calculation	Calculation	Calculation	Calculation
Income Tax	Calculation	Calculation	Calculation	Calculation	Calculation
Net Profit	Calculation	Calculation	Calculation	Calculation	Calculation

Appendix 1 (cont.)

GST Cash flow budget template

CASH FLOW ANALYSIS – GST	2015/16 ($)	Qtr. 1 ($)	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	Calculation	Calculation	Calculation	Calculation

Aged debtors’ template

AGED DEBTORS BUDGET	TOTAL ($)	Qtr. 1 ($)	Qtr. 2 ($)	Qtr. 3 ($)	Qtr. 4 ($)
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
60 Days	%	Calculation	Calculation	Calculation	Calculation
90 Days	%	Calculation	Calculation	Calculation	Calculation

Appendix 2 – 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

Appendix 2 (cont.)

Debtor ageing ratio template

	2013/14	2014/15	2015/16
Trade Debtors
Sales
Debtor Days

Anticipate that the trade debtors for the 2015/16 financial period maintain the same growth as that which took place between 2013/14 to 2014/15.

Board members

CEO

Accountant

Stores manager

Accounts payable

Accounts receivable

Business manager

BSBFIM601 Assessment 1

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