BSBFIM 601 Manage Finances - Student Assessment Tasks

Assessment Task 1


a) Analyzing the past performance of a company is one of the most important criteria to check whether the health of the business is good or bad. To review and analyze past performance we must check sales reports, profitability, cash flow, market valuation, and financial and operational statements (Li, Sougiannis and Wang, 2017).

b) Its imperative for any business to find out its loss-making units and its profit-making units by thorough research. We can investigate the reasons for previous profit or loss with the help of thorough research about market competition (monopoly or perfect competition), cash flow management, inadequate financing, etc.

c) It is important to go through the business plan very thoroughly. The business plan should consist of the advantages as well as the challenges that the company might face in implementing the business plan (Lam, 2018). The report should also contain a financial overview or a roadmap on how to achieve the breakeven and make profits.

d) One of the most important aspects to track the health of a business is to analyze its cash flows. We should calculate some ratios such as receivables, payables, and inventory ratio. This would tell us the cash cycle of the business and would help us in improving the cash cycle. Cash flow mainly consists of cash outflows and inflows. We should aim to have a negative cash flow which means that the customers are paying us earlier than we are paying our creditors.

e) As it is a proprietary company it is a separate legal entity and has its income tax liability. Generally, the income tax rate is 30% and there is no tax-free threshold for companies.

f) The software used for financial management should always be up to date. There is various software that can be used but the most common software is MYOB (mind your own business), Xerox(software as a service), QuickBooks (bookkeeping software). The accountant should be consulted before installing any of the software and he needs to give training as well.


a) Previous budgets are used for allocating and making an assumption for future income and expenses. The projects should be realistic and have reasonable indicators. The budget or allocation of resources should be decided with the help of historical information, taking into consideration the current activities or the economic environment, and having an estimation (Gehring and Schneider, 2018).

b) A business proposal should always be presented to the management in a very persuasive and clear way. It should also keep in mind the cost-benefit analysis. If rejected the flaws of the proposal should be monitored and make sure that it doesn’t stay the next time we present it. If the proposal is accepted we must make sure that the projected sales should be achieved.

c) Budgets can be prepared in 2 ways: It can be prepared with the help of previous data or another method is Zero-based budgeting. The most common method is making a budget with the help of previous data and justifies the additional requirements. Zero-based budgeting as the name suggests the budget is being prepared to assume of year 0. This will help us make an informed decision of the existing inefficiencies in the budget.


a) The staff needs to be included while preparing the budget, this provides a sense of ownership and the staff will remain motivated in attaining the numbers. We often get misguided that the budgeted number is from the finance department but in reality, the numbers are from stakeholders. The lack of understanding leads to the failure of controlling costs.

b) The budgets need to be monitored whether the concerned department was able to achieve the budgeted projection and if not the variance between the actual and the budget along with the reasons (Deshpande, 2018). The budgets should also be audited and should be checked whether the estimation was done correctly with the help of past references.

c) The budgets should be monitored, analyzed, and compared with the actual and budgets. Large variations should have underlying reasons which need to found out. After comparing the budgeted and the actual results the variation should be analyzed and should be rectified to improve the efficiency of the process.

d) The budgets should be revised to deal with the contingencies. The significant issues should be identified and should be prioritized in the statements. The financial statements should have a comparative performance for review and decision making. The budgets should be modified and the inefficiencies within the management practices and inappropriate budgeting should be mitigated.

e) Businesses should necessarily have a good financial record-keeping system which can be helpful in decision making. It monitors business performance, helps in budgeting, assists in preventing fraud and error, and helps to determine the need for excess funds. It also provides important information for others, aids tax, and account preparation, it helps meet tax requirements as well.

f) The structure and format of reports should be clear and should meet statutory requirements. We can conform to the statutory requirement by making the balance sheet, cash flow statements by the formats given in the standards. This helps in keeping the records up to date and provides information needed to track the health of the business.

g) Discrepancies may arise by incorrect data entry receiving. Discrepancies can also happen in case of misplaced stocks and the mixing of stocks (Khan, 2018). The inventory system should be kept updated to mitigate human error and an incorrect measure of stocks.


a) The reports such as balance sheet, cash flow statement, sales, and purchase statement, income and expenditure statement, cost report, purchase order, invoice, and petty cash should all conform to formats as per the statutory requirements. Preparing the reports as per formats would bring consistency and will also conform to statutory requirements.

b) The identification of the variances can only be done by comparing the budgeted and actual results. We should prioritize the variances or significant issues in terms of importance for the organization. The variances will help us make a comparative financial analysis and would help us for reviewing and decision making.

c) Managers are responsible for preparing, presenting, and negotiating budgets. The budgets should be in line with the achievable estimates. Various factors may help to get the budgets approved. The factors are credibility, presentation, justification, business conditions, and communication skills.

d) The effectiveness of the financial management system can be evaluated with the help of the results the management can achieve. As mentioned previously the budgets should agree with the staff to ensure that they remain motivated as they are the ones that are going to implement the recommendations made by the management.

Assessment Task 2

1. The concept of financial probity identifies the situation of a strict console obedient method for having honesty as the primary objective. Financial probity means the following of the rules and regulations stated by legal authority on financial terms no matter what is the situation (Bosire, 2016).

Requirements for financial property from the point of view of an employee working for an organisation would be the ethical working in accordance with the APS values. The values identified in section 3 of the public service act of 1999. The code of conduct in accordance with Section 13 of the public service Act 1999 must also be followed.

Providing fair treatment to tender participants and enabling equality is another financial property requirement.

Maintaining confidentiality as well as keeping the information which may be sensitive to Commercial ground including intellectual property also falls under the requirement of financial probity.

Active participation in the mitigating conflict where there can be a potential threat to the authentic workability of an organisation is also considered to be an important requirement for financial probity.

2. Companies in Australia should conform to the statutory requirements of that country. They should follow the Australian accounting standards board. The AASB has established GAAP which needs to be followed the Australian companies. GAAP standardize and regulate accountancy practices by giving a framework to organize and companies to ensure honesty and transparency in their financial reporting. The principles of financial accounting are objectivity, revenue recognition, matching, and consistency (Israel, Onyeka and Barisua, 2018). There are more accounting principles to name a few are conservatism, consistency principle, going concern principle, cost principle, economic entity principle, and materiality principle. It’s imperative for any successful business organization to follow these principles while making financial statements. The accounting standards or principles are implemented to have a better quality financial statements that are to be reported by the companies. This helps investors take caution and helps them to make an informed decision about whether to invest in the company or not.

3. Companies in Australia will follow the statutory requirements:

The Corporations Act 2011 (supervised by ASIC): The Corporations Act 2011 deals with business entities in Australia at interstate and federal levels. The primary focus of the act is on the partnerships and investment schemes that are being managed.

Australian Securities and Investment Commission: It is an independent government body of Australia and acts as the corporate regulator of Australia. It regulates and enforces financial and company services law and protects the investors, creditors, and consumers of Australia (Tania and Yates, 2018).

Australian Taxation Office: It acts as the principal revenue collector for the government of Australia. It is also responsible for the federal tax system and legislation of superannuation.

Australian Securities Exchange: It acts as a primary securities exchange

Financial Reporting Council: It helps in maintaining the effectiveness of the financial reporting framework in Australia and is responsible for setting auditing and accounting standards

Australian Accounting Standards Board: it oversees the investments and securities exchange of Australia.

International Accounting Standards Board: it aims to develop understandable, globally accepted, enforceable standards without compromising the quality of the standards.

4. GST (goods and services tax) is levied upon all goods or items consumed or sold in Australia at the rate of 10%. It is levied upon consumers at the time of sale. There are many rules and regulations regarding the credits of GST as well. Therefore it is imperative to have a GST department control and make sure that it has been controlled and managed properly. GST is one of the most important sources of revenue for the government. Another most important source of income for the government is the income tax (Pantamee and Mansor, 2017). Therefore the Australian tax office is of much importance for the collection of the income tax, informing the due dates to the recipients and make sure that they are making and adhering to the rules of income tax. As individuals need to pay income tax, similarly companies have company tax at the rate of 30% and the tax amount varies as per the profits of the company.

PAYG (pay as you go) means that the taxable persons have a choice of paying the tax on an instalment basis as they earn. ATO credit the installments that have been received against the income tax assessment after the lodging of the return of income tax file. Or they can choose to keep aside some money for future payments or they can also avail of voluntary payments.

Assessment Task 3

(Refer to Excel)

Assessment Task 4

1. The balance sheet helps us detect the financial capabilities and strengths of the business. It compares the level of liabilities, assets, working capital, and debt of the company. It also helps us to deduct the liquidity of the business. It also helps us to know the retained earnings, equity, and debt financing.

2. Poor cash flow may arise due to the non-payment of the debtors (bad debt). The increase of stocks or inventory will also have an impact on the cash flow as there will less inflow of cash and the stocks will pile up and may even become obsolete. The increase of debtor days may put a strain in the cash cycle of the business as businessmen will not be able to have an equilibrium between the payables and receivable. This all might happen due to an ineffective credit control policy. The forecasting of management will also have an impact on the cash flow.

3. The expenditure of the business should be monitored regularly. The management should compare the actual expenditure with the budgeted expenditure and calculate whether there is any variance or not. If the variance is present then the management should go through the process and mitigate the variance for the effective and efficient running of the business.

4. Any business must have a good financial record-keeping system. A good financial record-keeping system helps in assisting decision making. It also mentors the business performance to mitigate the inefficiencies of the business. It helps in preparing budgets for future activities and periods and helps in determining the need of extra funds. It also helps in preventing fraud and error.

5. The 3 most common software for financial inputs are

a) MYOB (mind your own business): It inputs financial data and creates a report and helps in interacting with the financial advisor or the accountant for tax purposes

b) Xero: it is a software as a service software used for time-based billing. It provides free reporting and can be accessed with the help of an internet cloud with the help of a browser.

c) QuickBooks: This is a bookkeeping software and is used for accounting. It is user friendly and helps make spreadsheets and tables.

6. A) Gross profit: it is calculated with the help of the following formula (gross profit/ sales *100). It can be interpreted as the % of gross profit in terms of sales. It can also be explained as the exceeding amount at which a product is sold compared to its cost price.

b) Net profit is calculated as (net profit/sales *100). It is the final profit figure and is calculated by deducting all the administration and production costs.

c) Stock turnover: it states the frequency of the stock the business can sell at a stipulated period. High stock turnover for a business is a good indication as it means that the business can sell its goods at ease.

7. A) financial data is converted into ratios and percentages to help us understand a company better. Converting the financial data to ratios and percentages helps us comparing with the other business and helps us to conclude a better understanding

b) Ratios should have a benchmark as it helps us to keep motivated and drives us in achieving that benchmark.

c) There are countless benefits of financial analysis but the most important according to me is that it helps us in comparing the data with the other business and helps us understand the financial health of our company.

8. Tax liability means the amount of tax the entity is obliged to pay legally to the ATO (Australian tax office). It is calculated with the help of tax slabs decided by the government officials.

9. Auditing of budgets is necessary and is very important. Any business must check or detect any variation as per the actual results with the help of the budgeted reports. Therefore the budgets need to be audited with the help of past performances.

10. Variations mean the deviation from the actual and budgeted results. Variance can be favourable or unfavourable. Unfavourable means that it is having a negative impact on the business. Unfavourable variances can be classified into cost variance (the costing of the product is higher). The inventory days are higher than estimated. Lower sales can also be determined as an unfavourable variance.

11. The financial documentation which is necessary for the verification of expenditure is purchase order: the goods that are ordered formally from a supplier at an agreed price. The purchase order contains all the details, the no of goods and purchase price, address, etc.

Invoices: these are received from the suppliers. It should have the purchase order number.

Petty cash: the minor expenses incurred by the company.

12. Firstly we should be thorough with the budget. The budget should have achievable estimates. The budget should also have advantages as well as as the disadvantages to estimate the loss if the project goes wrong. Secondly, the presentation should be good so that the management has confidence. Last but not least the budget should be made concerning the past data.


Bosire, K.K., 2016. The impact of integrated financial management information system (IFMIS) on financial probity in the public sector in Kenya. University of Nairobi.

Deshpande, R., 2018. Budget monitoring and oversight system in Myanmar: Discussion paper.

Gehring, K. and Schneider, S.A., 2018. Towards the Greater Good? EU Commissioners' Nationality and Budget Allocation in the European Union. American Economic Journal: Economic Policy, 10(1), pp.214-39.


Khan, S., 2018. Efficient management of accounts receivable at CoreStaff, Darwin, Australia.

Lam, K., 2018. Behavioral Integration LLC a Business Plan. California State University, Long Beach.

Li, S., Sougiannis, T. and Wang, S., 2017. Mandatory IFRS adoption and the usefulness of accounting information in predicting future earnings and cash flows. Available at SSRN 2948775.

Pantamee, A.A. and Mansor, M., 2017. Correlating with tax administration environment to improve tax authority’s revenue generation. International Journal of Business and Management, 1(2), pp.117-124.

Tania, S. and Yates, R., 2018. Australian Securities and Investments Commission v Kobelt: Evaluating statutory unconscionability in the cultural context of an indigenous community. Sydney L. Rev., 40, p.557.

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