Manage budgets and financial plans
Assessment Task 1 -Plan financial management approaches
The candidate will demonstrate the ability to plan financial management approaches.
In response to the scenario provided, you will clarify budget plans with your manager and negotiate changes to the budget. You will then identify and analyse a risk to the budget and prepare a contingency plan to prevent or minimise the risk.
- meet with your assessor to clarify budget and negotiate changes
- provide a contingency plan
- submit your notes.
Your assessor will be looking for:
- numeracy skills to read and understand a budget and negotiate budget re-allocations
- knowledge of basic accounting principlesto identify and use account balances
- knowledge organisational requirements related to financial management such as contained in organisational policies and procedures
- knowledge of principles and techniques involved in budgeting.
The Sales General Manager, Sam Gellar, has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the budget projections are achievable, accurate, understandable and fair.
She would like you to look closely at the budget for your cost centre, note any changes you think are necessary, develop an argument for the changes and negotiate those changes with her.
Information you are aware of includes:
- Sales inthe first quarter (Q1),third quarter (Q3), and thefourth quarter (Q4) are generally 30% less than the second quarter (Q2).
- Sales in Q2 depend on completion of 90% of repair and maintenance.
- Sales for Q2 have been estimated to be $1,000,000.
- Commission negotiated with members of the sales team is now at 2.5%.
It has come to the attention of the Managing Director, Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company's ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid Q2, when sales data for the company's product are in.
As a special project, the Managing Director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%.
As per organisational policy you should use the contingency plan template provided.