Monitor and control finances
The candidate will demonstrate the ability to monitor and control finances.
In response to the scenario provided, you will create a simple spreadsheet budget to capture monitoring information. Using information provided to you by your assessor, you will then use the budget spreadsheet to produce a report on expenditure in accordance with organisational policies and procedures. You will also modify a contingency plan.
1. Read through the scenario provided in Appendix 1 to this assessment task and tasks A and B.
2. Design and develop a spreadsheet to capture budgeted and actual figures to produce a variance report.
3. Access actual budget figures from relevant managers and accounting systems (assessor).
4. Monitor and record actual figures.
5. Consider feedback from team members.
6. Produce a variance report as per organisational requirements.
7. Consider the scenario information and contingency plan provided and analyse the variance report.
8. Modify the contingencyand implementation plans provided in the scenario to improve effectiveness.
9. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
You must provide:
- a budget variance report
- a modified contingency plan andmodified implementation plan
- your notes on procedures.
Your assessor will be looking for:
- numeracy skills to read and understand a budget and to produce a variance report
- technology skills to use software associated with financial recordkeeping
- knowledge of basic accounting principles to identify and use account balances
- knowledge of organisational requirements related to financial management
- knowledge of organisational requirements for records and reports
- knowledge of principles and techniques involved in budgeting, profit and loss statements, electronic spreadsheets.
You are the Senior Accountant at Big Red Bicycle. A major component of your role is setting budgets and monitoring budgetary performance for the organisation.
The Managing Director, Tom Copeland, has asked you to implement a process to monitor expenditure and income. He has asked you to prepare a spreadsheet to capture and compare actual income and expenditure to budgeted figures. Your spreadsheet must contain columns for each of the four quarters of the financial year. You are required to gather data from the relevant managers (your assessor) to complete a budget variance report.
The report should conform to organisationalrequirements in policies and procedures
- columns to show actual account values
- absolute variance
- percentage variance.
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 midway through the second quarter (Q2), when sales data for the company's product are in.
Consider the contingency plan and the implementation plan for the contingency below. You have already implemented a portion of the contingency plan, namely the monitoring of budget performance in the variance report you have prepared. You should now analyse the report to determine the effectiveness of the contingency plan and its implementation.
You have received the following feedback from team members:
- Full-time workers and sales peopleare resentful of time wasting and distracting contract employees.
- Overtime not used but employees resentful of suggestion it might not be approved if needed.
- Training suited the needs of many sales team members but was not relevant to about half the team members.
- Sales team members were happy with the incentives program and tried hard to make sales in the third quarter (Q3); however, they were also resentful at the threatening tone of emails and soon lost enthusiasm.
- Effect of one-day training wearing off.
- Fifty percent of direct wages costs are attributable to short-term contract employees whose contracts have expired and who are no longer needed.
- Employees concerned about lack of attention paid to wastage: water; electricity: paper; raw materials.
- Employees feel left out of budgetary decision-making in general.
The Managing Director would like you to submit a revised contingency plan and contingency implementation plan to bring income and expenses under more effective control.