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BSBFIM601 Manage Finances

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SIT60316 Advanced Diploma of Hospitality Management

BSBFIM601 Manage finances

ASSESSMENT 1: Assignment

Part 1.

Task 1

The personnel I have to contact before commencing your reports:

  1. Suppliers
  2. Accountant
  3. Creditors
  4. 4.Manger / supervisors
  5. Shareholders
  6. Partners

Management requirements:

  1. WHS
  2. Relate to Laws and Regulations
  3. Monitoring requirements
  4. Company policy and procedures
  5. Financial Management
  6. Record keeping requirements

Ed’s Whitegoods Ltd Assumptions for 2015 financial year:

  1. Purchase cost of goods is set to rise by 5%
  2. Decreased consumer confidence means that sales are expected to decrease by 12%
  3. Ed believes he can increase his sale prices by 8% which should have minimal impact on overall sales, perhaps reducing total sales by a further 3%
  4. Ed plans on reducing his expenses by laying off one of his part time staff members who has a yearly salary of $47,000. This is hoped to have only minimal impact on productivity, however a decrease

Jan-Sep

Oct

Now

Dec

Budget 2015

Sales

$1,080,000

$111,837

$103,136

$133,860

$1,257,373.04

Purchase

$477,000

$40,605

$26,910

$55,335

$629,842.50

Expenses

$501,025

$41,752

$41,752.08

$41,752.08

$456,256

Profit

$101,975

$29,480

$34,474

$36,773

$171,274

Monthly staff wages – 38750x12= 465000

Staff cut: 465000-47000=418,000

Asset Projections:


Asset

Sep-14

 Dec14

Projections 2015

Cash

$245,000

$308,923

$400,000

Computer equipment

$16,400

$16,400

$20,000

Van

$26,000

$26,000

$24,000

Phones

$2,300

$2,300

$2,300

Office Equipment

$4,500

$4,000

$4,500

Debtors

$13,580

$13,000

$10,000

Stock

$117,303

$117,303

$117,303

Total

$425,083

$487,926

$580,103

Assumptions:

  1. Planning to increase cash assets by 29.48 %
  2. Van value will decrease for year 2015
  3. Phone values will remain the same for year 2015
  4. Computer equipments will increase in value, as new softwares are going to be installed.

Expenses projection:

Expenses

Sep-14

Dec-14

Projections 2015

Phone Service / Calls

$780

$975

$975

Electricity

$1,590

$1,987.50

$2,200

Gas

$600

$750.00

$820

Water

$550

$687.49

$720

Insurance

$1,300

$1,624.99

$1,500

Payroll

$465,000

$581,250

$534,250

Cleaning

$850

$1,062.49

$1,062

Finance Costs

$1,650

$2,062.50

$2,200

Advertising

$560

$700.01

$600

Rent

$25,000

$31,249.99

$31,249.99

Petrol

$560

$900.01

$1,000

Accountants Fees

$370

$462.49

$462.49

Maintenance

$1,405

$1,756.24

$1,800

Bank Fees

$210

$262.50

$262.50

Office Supplies

$600

$750.00

$700

Total

$501,025

$626,481

$579,802

Assumptions:

  1. Expenses for phone service will be the same as we have ongoing contract with phone service supplier;
  2. Petrol prices will increase due to global predictions for year 2015;
  3. Office supplies will decrease by $ 50 as we will implement 5S Method for supplies ordering;
  4. Accountants fees will remain the same as per contract for year 2015.

Creditors:

Sep-14

Dec-14

Projections 2015

JRL Holdings

$22,626

$30,126

$30,126

Innovating Technology Ltd

$3,653

$16,003

$17,303

LMS Marketing

$1,200

$0

$2,400

Rowlings& Sons

$35,622

$20,322

$20,322

Total

$63,101

$66,451

$70,151

Assumptions:

  1. JRL Holdings credit remain the same, as we do not plan to buy any equipment for year 2015;
  2. For year 2015 business will purchase 10 more vacuums for the price of 2014;
  3. LMS Marketing credit increase double, as per new marketing project planning for year 2015;
  4. Rowling&Sons credit remain the same for year 2015.

Debtors:

Sep-14

Dec-14

Projections 2015

P.L Farthings

$1,323

$2,788

$3,200

J Smyth & Co

$800

$1,300

$1,300

L.L Incorporated

$356

$1,512

$1,812

National Appliances Direct

$4,233

$6,018

$6,000

TNT

$0

$336

$336

Total

$6,712

$11,954

$9,436

Assumptions:

  1. P.L Farthings debt projection is 14.8% higher than year 2014;
  2. Smyth & Co debt projection remains the same for year 2015;
  3. L.L Incorporateddebt projection is $ 300 higher than year 2014;
  4. Valuable customer TNT remains for amount of $336 as per agreement for year 2015.

Task 2

Budget delegation and accountabilities

Specific Guidance on Budget Management Responsibilities in Ed’s Whitegoods

1. Budget Monitoring and Reporting Responsibilities

Role of the Ed’s Whitegoods CEO

  • Be responsible and accountable for allocated financial and capital resources in line with agreed financial and other policies
  • Work with CEO of Ed’s Whitegoods to achieve agreed income and other targets across a portfolio of activities
  • Work with the Ed’s Whitegoods Management team to determine the local model for resource allocation, oversee its operation, approve and monitor the budgets.

Role of the Ed’s Whitegoods Management team

  • Manage appropriate budgets and people as agreed

Role of Ed’s Whitegoods accountant

  • Gain an overall view of finance for the shop and for all non research activities
  • Provide regular (monthly / quarterly or otherwise as required), accurate, transparent financial reporting, monitoring, budgeting and forecasting information to CEO

2. Principles of Budget Monitoring and Reporting

  • Management team is responsible for the economic, efficient and effective use of budgets
  • Budget holders must ensure that the actual financial results are compared to the budget on a regular basis. This is essential not just to verify income and expenditure against planned levels, but also to identify changing patterns or circumstances that may give rise to the need for management action or changes in policy
  • Regular monitoring of both income and expenditure should take place and the results of such monitoring should be appropriately documented
  • The monitoring of expenditure against budget should be regularly undertaken at an overall level by the CEO of Ed’s Whitegoodsand, where appropriate, at a more detailed level by the individual budget holders
  • Meetings between the CEO of Ed’s Whitegoodsand the individual budget holders should be held at regular intervals (ideally monthly) and any actions identified should be formally documented and agreed
  • Budget monitoring data should be used in the process of out-turn forecasts to ensure that corrective action can be taken to address budget variances in a timely manner

3. The responsibilities for financial delegates

  • Responsibility for budget management may be delegated by the CEO of  Ed’s Whitegoods to individuals within the shop. An individual with delegated budget responsibility then becomes the budget holder and will be totally responsible and accountable for that budget
  • Where budget responsibility is delegated to an individual the management and financial responsibilities should be aligned such that the budget holder is accountable for the financial implications of their management decisions

Following is a list of financial delegation levels which are considered appropriate for various staff roles.

Level

$ Limit

Suggested Roles

1

$500

Admin Officers, Admin Assistants, Retail officers

2

$20,000

Shop managers

3

$100,000

Manager of Financial Department

4

$200,000

CEO of Ed’s Whitegoods

Recording and documentation process

  1. Electronic Format. All documentation that is used or introduced to the Ed’s Whitegoods website forms part of the shop's safety management system. This documentation is maintained in a controlled electronic format and only current versions of documentation are made available on the website.
  2. Document Review. Any controlled system documentation requires regular review (at least every 3 years) to ensure currency with internal/external requirements and continuous improvement in the provision of an effective system to meet the business needs. The review process includes consideration of the following:
    • suitability and relevance to the workplace and business;
    • identified areas requiring improvement
    • effectiveness in achieving desired outcomes, in particular where non-conformance or
    • corrective action is required compliance with legislative requirements.
  3. Document Approval Process. New or revised final draft documents are approved by the Manager of Ed’s Whitegoods. The Manager will determine the need for referring draft documents to the Senior Management Group where there is potential for significant impact to business. Once approved, the final controlled document is released by publishing on the website and communicating requirements to relevant personnel to allow implementation.
    • Where documents are created locally, input shall be sought from the local working group, Divisional Senior Health and Safety Consultants or Coordinators (where applicable). Final documents shall be approved by the Director or other senior authority for which the document and process relates, to ensure the requirements of this procedure are met.
  4. Document Control Register. A master WHS & IM document control register shall be maintained by the Ed’s Whitegoods Team for all system documentation created or modified. The Master Register will include the following:
    • Document BSBFIM601 Manage Finance
    • Version Number
    • Date Created
    • Date Reviewed
    • Reasons/Comments for creation/review
    • Links to Consultation/feedback received
  5. Record Management. The purpose of record management is to ensure that business activity records of evidential quality are created, managed and disposed of in accordance with legal requirements. Records can include, but are not limited to, the following:
    • Health and safety local action plans
    • Internal evaluation reports
    • Hazard and other registers
    • Corrective actions registers
    • Workplace inspections
    • Risk assessments
    • Incident / Hazard reports
    • Licensing and certification
    • Registrations
    • Health and Safety working group meeting agendas and minutes
    • Performance management plans

Records must be stored in an orderly manner, be easily identifiable to facilitate their efficient and effective retrieval/replacement by any authorised person for purposes such as:

  • internal/external evaluation
  • evidence of legal compliance
  • evaluation and review
  • training needs.

The medium used for storing records needs to be useable, reliable and allow preservation for as long as required in accordance with legislative requirements and administrative efficiency. Some of these retention periods are lengthy or permanent. Archives are records relocated to long term storage for preservation beyond their immediate business function, including permanent records.

Risk Management and Contingency plan

Identified risks

Likelihood

Consequences

Risk management

Increase in cost price

Medium

Profit will reduce

Price agreement with suppliers

Injury caused by fork lift in loading area

Medium

Can Cause death

Update WHS procedure

Not meeting the need of staff with different levels of skill

High

Non-attendance

Introduce flexibility, mentoring approach

Operating program break down

Low

Shut down of operations

IS availability 24/7

Risk Management policy and procedure

Purpose

To provide information and guidance on Risk Management

Scope

This Policy applies to all Ed’s Whitegoods employees and visitors and contractors to facilities controlled by the Ed’s Whitegoods. The policy extends to all current and future activities, and new opportunities.

Where necessary, more detailed risk management policies and procedures should be developed to cover specific areas of theEd’s Whitegoods operations, such as financial management and business management. Where this occurs, such policies and regulations should comply with the broad directions described in the Risk Management Policy.

3 Policy Statement

3.1 Recognition of the need for risk management:

Ed’s Whitegoods recognises the need for risk management to feature as a consideration in strategic and operational planning, day-to-day management and decision making at all levels in the organisation.

3.2 A commitment to implement risk management effectively:

Ed’s Whitegoods is committed to managing and minimising risk by identifying, analysing, evaluating and treating exposures that may impact on the company achieving its objectives and/or the continued efficiency and effectiveness of its operations. Ed’s Whitegoods will incorporate risk management into its institutional planning and decision-making processes. Risk management must also be included as a consideration in sectional and operational planning as a delegated line management responsibility. Ed’s Whitegoods staff must implement risk management according to relevant legislative requirements and appropriate risk management standards.

3.3 A commitment to training and knowledge development in the area of risk management:

Ed’s Whitegoods is committed to ensuring that all staff, particularly those with management, advisory and decision making responsibilities, obtain a sound understanding of the principles of risk management and the requisite skills to implement risk management effectively.

3.4 A commitment to monitor performance and review progress in risk management:

Ed’s Whitegoods will regularly monitor and review the progress being made in developing an appropriate culture of risk management and the effective implementation of risk management strategies throughout the organisation as a basis for continuous improvement.

4 Principles

4.1 Responsibility for Risk Management

Risk must first and foremost be managed at the corporate level as part of the company’s good governance and corporate management processes. Risk management is considered an integral part of all management and decision-making functions within Ed’s Whitegoods. The responsibility for the identification of risk and the implementation of control strategies and follow up remains a delegated line management responsibility. All stakeholders have a significant role in the management of risk. This role may range from initially identifying and reporting risks associated with their own jobs to participation in the risk management process.

5 Procedures

5.1 Whole of Ed’s Whitegoods Risk Management Process

Risk must first and foremost be managed at the corporate level as part of Ed’s Whitegoods good governance and corporate management processes. This process, coordinated and facilitated by the CEO of Ed’s Whitegoods, will involve the following key steps:

  1. an annual risk identification exercise undertaken by management facilitated by the CEO of Ed’s Whitegoods, which involves assessment of the consequence and likelihood of risk, the development and/or review of individual risk management plans for the risks identified which exceed the company’s defined acceptable risks;
  2. wherever practicable the inclusion of a Risk Management Assessment for all business activities;
  3. the incorporation of risk management into institutional strategic planning, and operational and resource management planning processes;
  4. annual review of the risk management activities by the Audit and Risk Committee;
  5. ensure risk management processes are incorporated into the quality assurance and improvement systems of the Ed’s Whitegoods’ community;
  6. clearly define and document escalation procedures for risk management;
  7. document all risks with a potentially high impact, as assessed on the basis of their likely occurrence or impact; and
  8. test documented risk management procedures at appropriate intervals.

5.2 Review

On the advice of the Director (Internal Audit and Risk), the CEO of Ed’s Whitegoods will regularly monitor and review the progress being made in developing an appropriate culture of risk management and the effective implementation of risk management strategies throughout the organisation.

5.3 Guidance on Acceptable Risk

Through its monitoring, review and reporting functions, the CEO of Ed’s Whitegoods will ensure that the Company maintains a consistent approach to its assessment of acceptable risk.

5.4 Documentation

Each stage of the risk management process shall be appropriately documented. The extent of documentation required is dependent on the nature of the risk. Documentation will be controlled so as to inform part of an auditable quality management process.

5.5 Compliance

A representation and compliance statement should be provided by each head/manager as formal acknowledgement of their responsibility to comply with risk management policies and procedures. Each employee should have included in his/her Position Description a responsibility for risk management, and Annual Performance Appraisals should include an appropriate assessment thereof.

5.6 Staff Development

Management shall ensure that staff have available to them appropriate information and training opportunities in risk management as appropriate to their position and role within company.

6 References

Nil.

Record keeping Policy & Procedure

1. Policy Statement

Ed’s Whitegoods is committed to the principle of maintaining accurate, comprehensive, clear and complete records of services provided to all members. The records will be kept for the appropriate periods as laid down in legal and national requirements and safeguarded against damage, loss or improper usage.

To ensure transparency, member’s rights and confidentiality, there should be no alternative system of restricted files. Members should be made aware of all information kept about them and be able to endorse this by reading and signing any information received or kept about them. If there is any information from third parties, for which there is no permission to share, this should be kept in a restricted access section of the member’s records.

2. Staff Responsibilities

2.1 Manager

The Manager is responsible for ensuring that all members’ records are maintained and stored as per the policy and procedure in place and ensuring the destruction of records in accordance with policy and procedure.

2.2 Staff

All staff are responsible for compliance with the policy and procedure.

3. Staff Responsibilities

3.1 Manager

To ensure that all staff, volunteers and members have access to and are aware of this policy.

3.2 All staff

To be aware of, read and adhere to this policy and procedure.

4. Audit Plan

The Manager/ senior person will monitor adherence of the policy and report findings to the Trustees.

5. Scope

This policy applies to all staff, volunteers and  Board of Directors.

The procedure aims to set out the steps by which records are created, the requirements of staff to complete the records appropriately and the requirements for the management, handling, storage and destruction of records.

6. Staff / volunteer training

All staff and volunteers are to be made aware of this policy.

All staff must have induction and training on member confidentiality and on the security of records, particularly electronic records.

All staff working with personal records need to be reminded that it is a disciplinary offence to disclose confidential information to unauthorised individuals.

7. Procedure

Care should be taken to ensure that information is recorded precisely for the purposes for which it serves and no others. The objectives include:

  • To assist accountability i.e. to demonstrate the achievement of required standards of practice
  • To help decision making i.e. to provide accurate, up to date, unprejudiced information, which helps to make informed decisions
  • To convey, interpret and understand behavior and events i.e. to record as accurately as possible impressions and observations of events
  • To manage effectively and to review and evaluate service provision i.e. there is always a need for good accurate and reliable management information

Computer held records

  • Personal information held on computer must be password protected to avoid the risk of breaching confidentiality
  • There must be access controls to restrict users of the system to specific functions as defined by the system manager
  • Screens should not be left unattended when the system is active
  • Steps must be taken to make regular back-ups of computer held records on disc, tape or other similar mediums
  • Backups should be stored in a secure place, if possible in a separate location

Storage of care records

  • All records held in theEd’s Whitegoods office must be safeguarded against loss, damage, or use by unauthorised persons by keeping care plans in secure controlled locations at all times; locked rooms, locked cabinets or security protected computer systems.
  • Authorised personnel must have access to the stored records at all reasonable times.
  • All records must be kept for a minimum period of seven years after death or discharge

Destruction of service user records

  • Records must be destroyed once they have been retained beyond the *statutory retention period after either a] leaving the service or b] death of the member. [*7 years as agreed with the Data Protection Information Commissioner]
  • Records must be destroyed in such a way as to ensure that confidentiality is not breached (this will usually be by shredding the entire content of the record if paper held or by deleting the content of records held on electronic media. Discs and tapes must be destroyed)

Where records are incinerated by an external contractor, the process is monitored and the company is required to give a written guarantee with regard to confidentiality.

Part 2

Task 1

1. Variance analysis

2015 Budgeted

2015 Actual

$ Variance

% Variance

Favourable/Unfavorable

Sales

$1,257,373

$1,623,000

$365,626.96

29.08

Favourable

Purchase

$629,843

$701,400

$71,557.50

11.36

Unfavourable

Expenses

$579,281

$402,000

-$177,281.24

-30.60

Favourable

Profit

$48,249

No Info

N/A

N/A

N/A

Discrepancy:

As per table above, we see discrepancy in the areas of:

  1. Sales – Variance of $365,626.96, which is 29.08 % Positive
  2. Purchase – Variance of $71,557.50, which is 11.36% Negative
  3. Expenses - (-)$177,281.24 which is -30.60% Positive

Reasons for discrepancy:

  1. Expenses reduced as planned due to wages cut
  2. Agreements with office service suppliers were not changed for year 2015, therefore it lead to favourable discrepancy.
  3. Actual expenses were lower than expected due to stable price in energy sector (gas, electricity and ect.)
  4. Purchase expenses raised by 11 % due to increased need of new computers and office equipments in year 2015.
  5. Sales were higher than expected due to new business partner with urgent buys of goods from us.

Budgeting techniques used to prepare 2015 budget:

  1. Business Plan – we used business plan as a guide for business that outlines goals and details how to achieve that goals.
  2. Historical data – used as a key factor to determine budget for year 2015 as most of the agreements with service suppliers were still ongoing for year 2015.

Recommendations for corrective measures:

  1. Include force majeure clausal in contracts with suppliers to predict and anticipate unexpected conditions.
  2. Use Expense Classification - one way to improve budgeting process is to classify business expenses into overhead and production categories. This will help to set the prices and make decisions when there is a need to cut costs.
  3. Provide accurate estimation for mobile equipment plan and placement schedule.

Part 3

Task 1

Financial Management softwares

Name

Price*

Usability

Features and functions

Compatibility with other programs

Compatibility with other specialists

SAP Business All-in-One

Affordable

The solution offers construction accounting, customer management, and service management modules on a stand-alone basis.

The integrated suite offers features such as estimating, bid management, project scheduling, and construction project management.

The solution is capable of integrating with other applications like excel, office, and Lotus notes. The solution is Mac and iPad compatible.

Reports are extremely detailed with the ability to drill down to many levels of each transaction

ERPAG Software

Expensive

ERPAG allows users to manage business processes including selling, ordering, receiving and delivery.

ERPAG allows users to manage business processes including selling, ordering, receiving and delivery. Other features include payroll, service management, shipping management, user-access management, point of sale and barcode scanning.

ERPAG offers integration with Google Mail, Google Calendar, Google Drive, Microsoft, Magento, WooCommerce, Shopify, QuickBooks, Square, Stripe and more. It supports 40+ shippers globally including UPS, FedEx and USPS.

It is suitable for small and midsize businesses in various industries, including automobile, retail, education, information technology and more.

aACE Software

Affordable

Modules include accounting, customer relationship management (CRM), enterprise resource planning (ERP), inventory management, order management and production management

The accounting module provides general ledger, lead tracking and balance sheet capabilities. The CRM module allows users to manage relationships with vendors and partners, as well as monitor sales, quotes and overall business performance.

Can be used with android system

Shipping and receiving management, calendar management and scheduling.

*

Inexpensive - Price range $1000-10,000

Affordable – Price range $10,000-30,000

Expensive - Price range $30,000-100,000

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