Assessment

Manage Finances
BSBFIM601
DEVAL PATEL (ICM0785)
BSBFIM601 Manage Finances

Assessment Task 1 .................................................................................................................................. 2

Project Prepare budgets (Case Study) .................................................................................................... 2
Part A....................................................................................................................................................... 2
Introduction ............................................................................................................................................ 2
Sales Budget ............................................................................................................................................ 2
Profit Budget ........................................................................................................................................... 2
Cash flow Budget .................................................................................................................................... 3
Debtor Ageing Budget ............................................................................................................................. 4
Budget notes: .......................................................................................................................................... 4
Reason for profit and loses: .................................................................................................................... 4
Comment on effectiveness of existing financial management approaches: ..................................... 4
Part B....................................................................................................................................................... 5
1. Identify the current statutory requirements for tax compliance and list and calculate the tax
liabilities for Houzit Pty Ltd under taxation legislation. .......................................................................... 5
2. Current compliance requirement and liabilities for this organization under the corporation Act
2001. ....................................................................................................................................................... 5
3. Most suitable software for the Houzit Pty Ltd ................................................................................ 6
4. Explain how you can apply the following principles of accounting in developing the budgets
required for this task: ............................................................................................................................. 6
5. Explain and discuss the implications of probity when preparing and revising budgets. ................ 8
Assessment Task 2 .................................................................................................................................. 1
Report Monitor and review budget ........................................................................................................ 1
Variance Report ...................................................................................................................................... 1
Cash Flow Analysis .................................................................................................................................. 2
Manage Finance Report .......................................................................................................................... 2
Introduction ............................................................................................................................................ 2
Main Contents......................................................................................................................................... 2
Issues:...................................................................................................................................................... 2
References .............................................................................................................................................. 3

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BSBFIM601 Manage Finances

Assessment Task 1
Project Prepare budgets (Case Study)

Part A

Introduction
I am making a budget plan and am going to recommend financial managing application for the
business as a business manager. The company is named Houzit Pty Ltd, it is a retailer for home wares.
It is a growing business. It has 15 stores in Brisbane area. It has 150 staff members. It is registered with
ASIC. As per the review of financial structure of this company the report below has been made.

Sales Budget
Sales 2019\20 Qtr1 Qtr2 Qtr3 Qtr4
Budget Total Budget 20% 24% 26% 30%

Total Sales 15714108 3142822 3771386 4085668 4714232

Bathroom Fitting 30% 4714232 942846.4 1131416 1225700 1414270
Bedroom Fitting 25% 3928527 785705.4 942846.5 1021417 1178558
Mirrors 15% 2357116 471423.2 565707.8 612850.2 707134.8
Decorative Items 10% 1571410 314282 377138.4 408566.6 471423
Lighting Fixtures 20% 3142821 628564.2 754277 817133.5 942846.3

Profit Budget
Profit Budget 2019\20 Qtr1 Qtr2 Qtr3 Qtr4
Revenue 20% 24% 26% 30%
Sales 15714108 3142822 3771386 4085668 4714232
Cost Of Goods Sold 8799900 1759980 2111976 2287974 2639970
Gross Profit 6914208 1382842 1659410 1797694 2074262
44.0000
Gross Profit % 44.00000305 1 44 44 44

Expenses
accounting Fees 9000 1800 2160 2340 2700

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21721.9 23532.0
Interest Expenses 90508 18101.6 2 8 27152.4
Bank Charges 1600 320 384 416 480
Depreciation 170000 34000 40800 44200 51000
Insurance 12875 2575 3090 3347.5 3862.5
Store Supplies 0 0 0 0 0
Advertising 280000 56000 67200 72800 84000
Cleaning 19261 3852.2 4622.64 5007.86 5778.3
Repairs & Maintenance 61800 12360 14832 16068 18540
Rent 2538950 507790 609348 660127 761685
Telephone 14420 2884 3460.8 3749.2 4326
Electricity Expense 25750 5150 6180 6695 7725
23391.8 25341.1
Luxury Car Tax 97466 19493.2 4 6 29239.8
Fringe Benefits Tax 28000 5600 6720 7280 8400
Superannuation 171495 34299 41158.8 44588.7 51448.5
Wages & Salaries 1905500 381100 457320 495430 571650
21722.6 23532.8
Payroll Tax 90511 18102.2 4 6 27153.3
Workers' Compensation 38110 7622 9146.4 9908.6 11433

Total Expenses 5457780 1091556 1309867 1419023 1637334

291285. 349542. 378671. 436928.
Net Profit (Before Tax) 1456428 6 7 3 4
104862. 113601. 131078.
Income Tax 436928 87385.6 7 3 4
203899. 244679. 265069. 305849.
Net Profit 1019499 8 8 7 7

Cash flow Budget

Cash Flow Analysis GST 2019/20 Qtr1 Qtr2 Qtr3 Qtr4
314282. 377138. 408566. 471423.
GST Collected 1571411 2 6 9 3
197525. 237030. 256782. 296287.
Less GST Paid 987626 2 2 8 8
104862. 113601. 131078.
GST Payable 436928 87385.6 7 3 4

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Debtor Ageing Budget

Aged Debtors Budget Total Qtr1 Qtr2 Qtr3 Qtr4
314282. 377138. 408566. 471423.
Sales 1571411 2 6 9 3
% Debtors Sales 20% 20% 20% 20% 20%
62856.4 75427.7 81713.3 94284.6
Total Debtors 314282.2 4 3 7 6
Current
6285.64 7542.77 8171.33 9428.46
30 Days 10% 31428.22 4 3 7 6
3142.82 3771.38 4085.66 4714.23
60 Days 5% 15714.11 2 6 9 3
628.564 754.277 817.133 942.846
90 Days 1% 3142.822 4 3 7 6

Budget notes:

Reason for profit and loses:

 Profits prior year are $851,188 in 2008 and $1,019,499 in 2009.

 Reasons are that there is an increasing customer base and the business is built on superior
after sales service.
 Effectiveness of existing financial management approaches
 Inadequate analysis of revenue/expense to produce an informed estimate.
 Lack of computer software to produce timely and detailed reports.
 Too much reliance on qualitative input rather than balancing it with quantitative data and
analysis.

Comment on effectiveness of existing financial

management approaches:
According to my assumptions future sales same sales growth 2010/11 as 2009/10. Inflation will be 4%
per annual. Gross profit rate expected to reduce by 1%

All assumption basis form budget

 Sales breakup – bathroom fittings 30%, bedroom fittings 25%, mirrors 15% and decorative
items 10%, lighting fixtures 20%.
 Increase the advertising budget by $70,000 over the 2009/10 – $200,000 is planned for
the first quarter with the balance apportioned equally over the following three quarters.
 Increase wages and salaries by $172,500 over the 2009/10 amounts.
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BSBFIM601 Manage Finances

 2010/11 target apportioned across the quarters in the same % as was achieved in
2009/10.
 Accounting fees fixed amount of $10,000.
 Interest charges $84,508.
 Bank charges same as 2009.
 New expense such as store supplies –2008/09 results was $3,500 of the cleaning expense
and $3,605 of the 2009/10 result.

Part B

1. Identify the current statutory requirements for tax compliance

and list and calculate the tax liabilities for Houzit Pty Ltd under
taxation legislation.

 9% of wages and salaries is to be calculated as superannuation for every quarter

 4.75% is payroll tax of wages and salaries for every quarter
 Worker compensation is 2% of salaries and wages for every quarter
 For every quarter the company tax is 30% of net profit before taxes

2. Current compliance requirement and liabilities for this

organization under the corporation Act 2001.

 An annual return with information about the company and its activities must be submitted
to the Australian Securities and Investment Commission.
 Keep enough financial records to explain reports and records must be kept for seven
years.
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o Company to abide by the rules set by ASIC for the internal management of the
company.
o Directors are to act within the prescribed limits.
o Directors must keep written records of minutes and resolutions.
o Notify ASIC of the registered office and principle place of business.
 Use company name and ACN on all public documents, business premises, cheques and
ASIC lodged documents.
o Large companies must submit financial statements.
o Public companies must have their financial statements audited.

3. Most suitable software for the Houzit Pty Ltd

For statutory needs of Houzit Pty Ltd especially in when need to assist in
generation of monthly BAS statements and managing superannuation.

 Employees or user needs the software for login access, multi-user, and secure
data. • Houzit need software for security purposes such as to provide a backup
solution.
o MYOB
o Quick books

Both software is impressive at what they do. But both have similar strengths and
weaknesses. But after being sophisticated in the accounts of business there can be
few criticisms made in one of these products as for houzit. Quick books are not
supported in Apple Macs, MYOB allows multiplication inventory where as quick
books fades in this character. MYOB also allows multiple entities at a time, but
quick book does not. Hence, after looking at all this advantages and disadvantages.

Suitable software for Houzit :

My recommendation for Houzit Pvt Ltd to choose MYOB software for accounting
because it works with the current technology capabilities as indicated in case study
such as it will manage the company accounts more efficient in long run with all
legislative and statuary requirements for business.

4. Explain how you can apply the following principles of accounting

in developing the budgets required for this task:

Matching Principle:

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BSBFIM601 Manage Finances

Sound financial decision-making can only be achieved if a business is able to measure

and report accurately on its profitability. Profitability for a business directly
determines the financial strength, sustainability and growth capacity of the business.
Therefore, it is important that for each accounting period, all the revenues earned are
identified and they are offset by all the associated expenses incurred in earning that
revenue, This business need has led to the development of the matching principle and
this principle states that expenses should be matched against the revenues that they
generated and should be recorded in the same period in which the revenue is earned.
It ensures that the financial reports for these short accounting periods accurately
measures the net income. Businesses that adopt these principles can more accurately
evaluate their actual profitability.

Account groups:
There are 5 groups following:
 Assets – items of value to the organisation e.g. cash or items that can be turned into
cash.
 Liabilities – Money owed to other organisations.
 Equity – The owner’s rights to the business. It is what would be left over if a business
sold all the assets and paid off all the Liabilities.
 Revenue – all form of income.
 Expenses – Costs incurred. For example, Assets is required of investment, no matter
how much equity we are holding and no matter that we have liabilities or not, if we
cannot turn our goods into cash/assets our business will stuck and die.

Time periods:
 A daily report
 A weekly report
 A Monthly report
 Quarterly report
 Annually report

So, while a company is interested in long-period report to compare actual and

budgeted, stakeholders in the business needs the reports in shorter time periods to
identify market trends and develop their plans.

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BSBFIM601 Manage Finances

5. Explain and discuss the implications of probity when preparing

and revising budgets.
Financial probity involves ensuring there is full accountability with the management
of funds regardless of whether it is transaction related or in the form of advice. It is
also important that the relevant legislative and statutory requirements are met.

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BSBFIM601 Manage Finances

Assessment Task 2
Report Monitor and review budget

Variance Report

Actual Results Budget Actual Variance Variance (%) F or U

Sales 3142822 3371200 228378 0.07266654 F
Cost Of Goods Sold 1759980 1955296 195316 0.110976261 F
Gross Profit 1382842 1415904 33062 0.023908733 F
- -
44.00001
Gross Profit % 42 2.00001 0.045454762 U

Expenses
accounting Fees 1800 2500 700 0.388888889 F
Interest Expenses 18101.6 28150 10048.4 0.55511115 F
Bank Charges 320 380 60 0.1875 F
Depreciation 34000 42500 8500 0.25 F
Insurance 2575 3348 773 0.300194175 F
Store Supplies 0 790 790 0 F
Advertising 56000 150000 94000 1.678571429 U
-
3852.2
Cleaning 3325 -527.2 0.136856861 U
Repairs & Maintenance 12360 16150 3790 0.306634304 F
Rent 507790 660127 152337 0.3
Telephone 2884 3100 216 0.074895978 F
Electricity Expense 5150 5242 92 0.017864078 F
- -
19493.2
Luxury Car Tax 1200 18293.2 0.938440071 U
Fringe Benefits Tax 5600 7000 1400 0.25 F
Superannuation 34299 37404 3105 0.090527421 F
Wages & Salaries 381100 410500 29400 0.077145106 F
Payroll Tax 18102.2 19741 1638.8 0.090530433 F
Workers' Compensation 7622 8312 690 0.090527421 F

Total Expenses 1091556 1410572 319016 0.292258024 U

-
291285.6
Net Profit (Before Tax) 5333 -285953 0.981691508 U
- -
87385.6
Income Tax 1600 85785.6 0.981690347 U

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-
203899.8
Net Profit 3733 -200167 0.981691988 U

Cash Flow Analysis

A cash flow budget helps to identify any shortcoming or excesses in cash forecast able future. Cash
flow budget can be set for weekly, monthly or quarterly with the format usually determine by the
organisation’s policies and procedures. Following budget cash flow analysis for Houzit Pty Ltd is
made for quarterly.

Cash Flow Analysis budget Q1 Actual Q1

GST collected 314282.2 337120
Less GST Paid 197525.2 279988
GST Payable 87385.6 57132

Manage Finance Report

Introduction

In this report, I had to review the provided current company information and compare it to the
budget established. After evaluating this information, I developed this report to list significant issues,
variances from budget, comparative performances, recommendations for ongoing financial viability
and evaluation of financial management processes

Main Contents
After examining the sales budget, profit budget, cash flow budget and debtor ageing summary I
identified the following:

Issues:
Existing financial management approaches are not effective due to the following reasons:

 Information regarding new customers not being secured

 Non-effective recording of customer discounts
 Inefficient cash and debtors reconciliation procedures implemented
 Unauthorised overtime amounts in timesheets
 Invoices not effectively being linked with purchase orders
 Cash receipts not being numbered properly.

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References
 Australian Government 2018, Business, Australian Government, retrieved 10
November 2019, <https://www.business.gov.au/products-and-services/fair-
trading/australian-standards>
 ADMA 2018, ADMA Code of Practice 2018 release, Association for Data-Driven
Marketing and Advertisement, retrieved 11 November 2019,
<https://www.adma.com.au/compliance/adma-code-of-practice-2018-released>
 https://www.investopedia.com/terms/o/organizational-structure.asp
 https://www.infoentrepreneurs.org/en/guides/strategic-planning/

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