Assessment Task 1

Prepare budgets
Submission details

Candidate’s name Phone no.

Assessor’s name Phone no.

Assessment site

Assessment date/s Time/s

The assessment task is due on the date specified by your assessor. Any variations to this
arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for
details.

Performance objective

For this task you are required to respond to a range of questions that examine your
understanding of key legislative and financial management requirements for a case study
organisation. This assessment also requires you to review available financial information
and establish a budget for the organisation.

Assessment description

This assessment requires you to determine the requirements to undertake budgeting,

financial forecasting and reporting requirements for an organisation. You will also need to
review the case study provided and prepare a budget (in electronic spreadsheet format)
and budget notes for distribution and implementation in the organisation.

Procedure

Part 1
1. Read and analyse the case study information (including business plan summary and
previous financial data) and complete the following.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 1 of 18
 Assessment Task 1
a. Develop a sales budget, profit budget, cash flow budget and debtor ageing
summary using electronic spreadsheets (as separate worksheets) making
sure each budget is divided into quarterly periods and that you use previous
financial data to determine allocations for resources.

i. Ensure each budget you prepare complies with the organisational and
policies and procedures as provided.

b. Develop budget notes that include:

i. identification of reasons for previous profits and losses

ii. your comment on the effectiveness of existing financial management

approaches

iii. all assumptions and bases that have been made or used to form
budgets

iv. any relevant notes regarding implementation and monitoring of budget

expenditure.

Part 2
1. Communicate information regarding the budget and answer a series of eight
questions (see end of this task) in written or oral form as agreed with your assessor.

Specifications

You must submit:

● a completed annual budget in a single spread sheet with a separate sheet for each
budget component

● budget notes and question answers in a written format.

Your assessor will be looking for:

● evidence you have reviewed the case study information provided by submitting an
appropriate budget with budget notes

● evidence that you understand, and can explain, the required legislative
requirements of financial management (and outline statutory requirements of ATO,
GST, company tax, PAYG)

● evidence that you can outline compliance requirements for the Corporations Act
2001

● evidence that you can identify and recommend use of suitable software for financial
management
BSBFIN601 Manage Organisational finances 1st edition version: 1
Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 2 of 18
 Assessment Task 1
● evidence that you have clearly communicated information regarding the budget and
correctly responded to a series of questions (e.g. describe the principles of
accounting and financial systems)

● evidence that you can describe implications of financial probity

● evidence that you can outline the critical dates/initiatives that will require or
generate resources

● evidence that you have provided for additional items (as necessary and
appropriate) in the budget

● evidence that you have recommended new or modified internal controls that could
improve risk management and maintenance of audit trails

● evidence that you have developed an annual budget, as appropriate

● evidence that you have developed appropriate budget notes

● evidence that you have responded appropriately to the questions presented by ‘Jim
Schnieder’, the CEO in the case study in this assessment task.

Adjustment for distance-based learners

This test can be adjusted for distance learners. Options include:

Option 1: Submit test as a report Procedure:

● no variation of the task is required

● follow-up interview may be required (at the discretion of the assessor) ●

documentation can be submitted electronically or paper-based.

Option 2: Conduct test as an interview

This option involves holding an interview with the candidate on Skype or by telephone.
Procedure:

● the assessor will schedule a date for the interview

● the assessor will make contact with the learner and commence the interview

● supplementary information or a follow-up interview may be required (at the

discretion of the assessor).

Case study: Houzit Pty Ltd

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 3 of 18
 Assessment Task 1
You have recently been appointed as the business manager of Houzit Pty Ltd having been
a store manager for the past three years. Houzit Pty Ltd is a 15 store retail chain located
in Brisbane. Houzit is the leading homewares retailer, catering to the growing need for
furnishing new and renovated dwellings in the greater Brisbane area.
The assortment on offer of bathroom fittings, bedroom fittings, mirrors and decorative
items together with the recently added lighting fixtures has positioned Houzit as a leader
in homewares retailing in Australia. Houzit has grown over the past five years from a
single store to the current chain. Houzit prides itself on superior after sales service which
has been a key reason for the continued growth in sales and corresponding profit
increases. Today Houzit employs over 150 staff.
Houzit Pty Ltd is a proprietary limited company (ACN 34 765 234 02) registered with the
Australian Securities and Investment Commission. The registered address is with Houzit’s
solicitors (Langs Lawyers, 535 Queen Street, Brisbane, QLD 4000) and the principle place
of business is 505 Boundary Street Spring Hill Brisbane QLD 4000.

Computer software requirement

The current accounting information system has not adequately provided sufficient
analysis of revenue and expenditure and has made it difficult to make informed
estimates of future profits. Estimates have relied on the ‘gut feel’ of the experienced
traders on the board and of the senior managers. The board sees the need to apply more
analysis to past results that they believe could be done with the introduction of state-of-
the-art computer software.
Houzit Pty Ltd wants to upgrade their existing accounting system which will manage the
company accounts more efficiently in the long run. They request that the new system you
recommend to them to be compliant with all legislative and statutory requirements for
small to medium businesses.
None of Houzit’s products are GST free however the accounting information system
records the GST collected as well as the input tax credits earned on the purchases of
stock and assets. These amounts are reported and paid in accordance with the business
activity statement (BAS) schedule determined by the Australian Tax Office.
They have 100 fulltime and 50 part-time staff, but only 10 of the staff will have or need
access to the financial system. Some staff are paid on a salary sacrifice arrangement that
attracts fringe benefits tax. The staff with access to the financial system want software
that is a single purchase with no ongoing license fees, and a plan to keep using if for the
next 3–5 years, while the organisation continues to grow. They are anticipating that within
five years they will have over 250 full-time staff, and at least 20 staff will require access
to the financial system by then.

The payroll system deducts withholding tax from the employees and remits this along with
the firm’s pay as you go (PAYG) instalment each quarter as reported on the firm’s
business activity statement. Income tax return for the company and its annual statement
is completed by the firm’s accountant. Taxes and fees due are paid by the due dates.
Financial records are kept at Houzit’s principle place of business.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 4 of 18
 Assessment Task 1
Houzit have just upgraded their computers and have five new desktop PCs which will be
used by the finance staff. They are current (for 2011) specification machines with i5 CPUs
and 4Gb RAM each, and all have Windows 7 Professional and Norton’s 360 installed with
the professional version of Microsoft Office Small Business as well. Other staff will use
their machines at various times, so it is important that the software requires a login to
access data and that data stored by the software cannot be accessed in any other way.

Corporate details
Board
members

CEO

Stores Business
Accountant
manager manager

Accounts
receivable

Accounts
payable

Jim Schneider, the CEO, has asked you to prepare some financial budgets for the
2011/12 financial year as a preliminary overview of the financial year ahead. He asked
you to first prepare a 12 months budget and then break it up over the four quarters. The
areas he is particularly interested in seeing is:

1. Sales budget for 2011/12 by department by quarter.

2. Profit budget (including detailed expenses) for 2011/12 by quarter.

3. The cash flow result per quarter of the GST after adjusting the GST collected by
the allowable GST tax credits.

4. The anticipated aged debtors summary at the end of each quarter.

The CEO wants to be given all the budgets except for the aged debtors budget which the
accountant and accounts receivable clerk can monitor. The CEO produced a summary of
the current business plan that covered the budget year to highlight some of the key goals,
objectives and strategies he would like incorporated into the budget.

Business plan summary

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 5 of 18
 Assessment Task 1
1. The anticipation that the coming financial year would maintain the same sales
growth as the growth that took place between 2007/08 to 2010/11.

2. To budget for an increase in inflation to 4% per annum and that all costs
subject to inflation should incorporate this particular increase.

3. A new car costing $97,466 including GST has been planned for in the coming
period to replace the five year old vehicle currently used by the chairman. This
fuel inefficient car will attract a luxury car tax.

4. Sales breakup over the departments is anticipated to be bathroom fittings

30%, bedroom fittings 25%, mirrors 15% and decorative items 10% together
with the recently added lighting fixtures 20%.

5. Profits are to be built on securing a growing customer base which will generate
loyalty sales and become the refer other customers to the organisation. The
superior after-sales service is the key strategy to achieve this.

6. Reduction on the principle of the loan by a payment of $100,000 on the 31

December 2011 from the profits generated by the business.

7. One objective in this plan is to manage the debtors more efficiently in the
current period. This will involve an analysis of the debtors to identify ways to
reduce the amount of cash tied up in outstanding debtors.

8. The expectation that 2011/12 would be a difficult trading year but that the
budget net profit should target the same result as achieved in the 2010/11.
The strategy to achieve this in the business plan included three key elements:

a. To reduce the expected gross profit rate by 1% on the 2010/11 result in

the hope that lower prices on the products would help maintain the
sales growth even in difficult trading conditions.

b. To increase the advertising budget by $70,000 over the 2010/11

results in the hope that Houzit can secure a greater market share in a
constricting market. $200,000 is planned for the first quarter with the
balance apportioned equally over the following three quarters.

c. To increase wages and salaries by $172,500 over the 2010/11

amounts in the hope that allowing the existing high number of casual
staff to earn commissions on sales that should help to maintain Houzit’s
sales growth.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 6 of 18
 Assessment Task 1
After going through the business plan summary, the CEO gave you the previous year’s
financial reports and asked you to speak with the accountant Celina Patel to get some of
the figures and detailed expectations for the coming year.
You arrange a meeting with Celina Patel, Houzit’s accountant, and she gives you the
following insight into the historical expense relationships and the current statutory
compliance liabilities.

Sales and profit budget information

Celina explained that the only budget she monitors on a day-to-day basis is the cash flow
budget and the store manager is primarily responsible for the sales budget.
These are the notes you take at the meeting:

● The overall sales for 2011/12 target set by the business plan should be
apportioned across the quarters in the same % as was achieved in 2010/11. This
was:
Qtr 1 Qtr 2 Qtr 3 Qtr 4 2010/11

3,142,822 3,771,386 4,085,668 4,714,232 15,714,108

● Cost of goods sold is the inverse of the gross profit rate determined by the
business plan and is determined by the quarterly sales budget.

● Accounting fees have been negotiated for the year at a fixed amount of $10,000 to
be paid in equal amounts each quarter.

● The interest charges on the bank loan are anticipated at a reduced amount of
$84,508 due to an agreed repayment of some of the loan principal. This is to be
paid in equal amounts each quarter.

● Bank charges are expected to be the same as 2011 and paid in equal amounts
each quarter.

● Celina has requested that a new expense (store supplies) be recognised in the new
budget that was previously included in with the cleaning expense amounts. Store
supplies in the 2009/10 results was $3,500 of the cleaning expense and $3,605
of the 2010/11 result. Cleaning expense will then be lower but identify the real
labour costs involved in the cleaning expense.

● Depreciation is expected to be the same as 2011 and allocated in equal amounts

each quarter.

● Advertising is to be apportioned to each quarter based on the business plan.

● The following expenses are expected to increase by the determined inflation rate in
the business plan summary:

○ Insurance – apportioned in equal amounts each quarter.

○ Store supplies – is calculated for to each quarter using the same % as

determined by the sales for each quarter.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 7 of 18
 Assessment Task 1
○ Cleaning – is calculated for each quarter using the same % as determined by
the sales for each quarter.

○ Repairs and maintenance – apportioned in equal amounts each quarter.

○ Rent – apportioned in equal amounts each quarter.

○ Telephone – is calculated for to each quarter using the same % as determined

by the sales for each quarter.

○ Electricity – is calculated for to each quarter using the same % as determined

by the sales for each quarter.

● Fringe benefits tax is expected to be the same as 2011 and paid in equal amounts
each quarter.

● Wages and salaries are calculated for each quarter using the same % as
determined by the sales for each quarter.

● The statutory requirements are:

○ superannuation is 9% of wages and salaries for each quarter

○ payroll tax is 4.75% of wages and salaries for each quarter

○ workers compensation is 2% of wages and salaries for each quarter

○ company tax is 30% of net profit before tax for each quarter.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 8 of 18
 Assessment Task 1
Houzit Pty Ltd

For 12 months ended

Profit & Loss Actuals 2007/08 2008/09 2009/10 2010/11

Revenue

Sales 12,474,336 13,472,315 14,550,100 15,714,108

– Cost Of Goods Sold 6,860,901 7,409,773 8,002,555 8,799,900

Gross Profit 5,613,465 6,062,542 6,547,545 6,914,208

Expenses

– Accounting Fees 5,500 6,500 8,500 9,000

– Interest Expense 45,000 65,000 96,508 90,508

– Bank Charges 1,200 1,300 1,580 1,600

– Depreciation 170,000 170,000 170,000 170,000

– Insurance 12,500 12,500 12,500 12,875

– Store Supplies - - - -

– Advertising 50,000 100,000 280,000 280,000

– Cleaning 12,560 15,652 18,700 19,261

– Repairs & Maintenance 40,250 52,600 60,000 61,800

– Rent 2,465,000 2,465,000 2,465,000 2,538,950

– Telephone 9,862 12,523 14,000 14,420

– Electricity Expense 22,500 23,658 25,000 25,750

– Luxury Car Tax - - 12,400 -

– Fringe Benefits Tax 26,000 26,000 26,000 28,000

– Superannuation 148,500 160,737 166,500 171,495

– Wages & Salaries 1,649,998 1,785,965 1,850,000 1,905,500

– Payroll Tax 78,375 84,833 87,875 90,511

– Workers’ Compensation 33,000 35,719 37,000 38,110

Total Expenses 4,770,245 5,017,987 5,331,563 5,457,780

Net Profit (Before Tax) 843,220 1,044,554 1,215,982 1,456,428

Income Tax 252,966 313,366 364,795 436,928

Net Profit 590,254 731,188 851,188 1,019,499

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 9 of 18
 Assessment Task 1

Houzit Pty Ltd

Statement of Financial Position

As at 30 June 2009/10 2010/11

Assets

Current Assets

– Cash On Hand 50,000 55,000

– Cheque Account 144,842 160,314

– Deposits Paid 950,000 950,000

– Trade Debtors 850,000 975,000

– Merchandise Inventory 1,530,000 1,430,000

Total Current Assets

Fixed Assets

– Motor Vehicles At Cost 500,000 500,000

– Motor Vehicles Accum Dep ( 100,000 ) ( 125,000 )

– Furniture & Fixtures At Cost 1,950,000 2,250,000

– Furniture & Fixtures Accum Dep ( 650,000 ) ( 770,000 )

– Office Equip At Cost 400,000 400,000

– Office Equip Accum Dep ( 90,000 ) ( 115,000 )

Total Fixed Assets 2,010,000 2,140,000

Total Assets 5,534,842 5,710,314

Liabilities

Current Liabilities

– MasterCard 17,800 14,860

– Trade Creditors 780,000 679,000

– GST Collected 1,455,010 1,571,411

– GST Paid ( 943,125 ) ( 987,626 )

– Superannuation Payable 100,000 120,000

– Luxury Car Tax Payable 20,920 -

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 10 of 18
 Assessment Task 1
– income Tax Payable 364,795 436,928

– PAYG Withholding Payable 65,000 44,872

Total Current Liabilities 1,860,400 1,879,445

Long-Term Liabilities - -

– Bank Loans 1,608,459 1,508,459

Total Liabilities 3,468,859 3,387,904

Equity

– Owner/Shareholder’s Equity 500,000 500,000

– Retained Earnings 850,000 1,565,982

– Dividends Paid ( 500,000 ) ( 1,200,000 )

– Current Year Earnings 1,215,982 1,456,428

Total Equity 2,065,982 2,322,410

Internal auditor
Carl Kerns is one of the directors of the board. Carl said that as a board member they are
given the profit and cash flow budgets. He was appointed by the board to conduct an
internal audit of operations to look for weaknesses in the internal control system. His
report uncovered the following processes that he believed needed to be strengthened.

● While the overall customer base is increasing from year to year, there may be
internal control issues relating to how these new customers are secured.

● Some discounts that were being given to customers were recorded as a net amount
on the invoices and gave no indication of the discount from standard prices.

● Some cash registers in the stores were not reconciling the cash in drawer with the
register printout.

● Not all timesheet overtime amounts were being authorised by the line manager.

● Service invoices for some items of equipment were not signed or linked to a
purchase order. There was no check that the work had actually been carried out. ●
Not all assets in the stores had unique codes fixed to the asset.
● There was minimal feedback lines of communication from the shop floor to head
office, particularly when an error in the budgeting report process was recognised. ●
Debtor reconciliations were not done monthly and sometimes not at all.
● In busy times the cashiers that operated the registers were also asked to do their
own reconciliations and banking. Sometimes the cash was held in the store for a
day or two.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 11 of 18
 Assessment Task 1

● Job roles were not clearly defined so that responsibilities and liability can be
identified.

● There was little rostering of duties and cash receipts were not pre-numbered.

Of particular concern to Carl was the directive given by the board to ensure that audit
trails were created and maintained. These included:

● Signing the timesheets for employees under the authority of a department

manager.

● Maintenance of a numbered cash receipts book.

● Using sequenced cheques as a systematic way of evidencing all monies paid out.

● Ensuring proper coding of evidenced transactions against appropriate general

ledger account and cost centre.

● Ensuring reconciliations between company books and third party bank statements
are performed.

GST cash flow budget

Statutory requirements for GST is 10% of the recorded amounts in sales. The only capital
purchase planned for the year is the luxury car for the chairman. Those expense
payments on which 10% GST was paid include the following:

● Cost of goods sold:

○ accounting fees

○ insurance

○ store supplies

○ advertising

○ cleaning

○ repairs and maintenance

○ rent

○ telephone

○ electricity expense.

The GST amount payable each quarter is the difference between the GST collected from
sales and the GST paid – format as per policy and procedures.
CASH FLOW ANALYSIS – GST 2011/12 Qtr 1 Qtr 2 Qtr 3 Qtr 4

GST Collected x,xxx x,xxx x,xxx x,xxx x,xxx

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 12 of 18
 Assessment Task 1
Less GST Paid x,xxx x,xxx x,xxx x,xxx x,xxx

GST Payable Calculation Calculation Calculation Calculation Calculation

Debtors ageing budget

The historical records show that the debtors balance at the end of each quarter is usually
about 20% of the quarter’s sales. At any time in the debtors balances 1% of the total
debtors is overdue 90 days and over, 5% is 60 days overdue, 10% is 30 days overdue
and the balance of the total debtors is current. The aged debtors’ budgets are only
distributed to the accountant and the accounts receivable clerk.

Houzit Budgeting Policy and Procedures

Budget development process

The standard process for developing budgets will follow the following steps:

1. Establish the budget objective.

2. Gather prior period data.

3. Discuss prior period information and anticipated changes in the budget period with
stakeholders.

4. Research relevant external information.

5. Incorporate identified trends to determine assumptions and parameters.

6. Prepare budgets in standard formats.

7. Submit budgets for approval.

Budget objectives
Houzit prepares budgets to meet various company objectives. Budgets are prepared:

● for a specific expansion of the business activities:

○ business case to be prepared covering a cost-benefit analysis, market

research report and summary profit and investment expectations

● to outline a specific debt reduction initiative:

○ company-wide summary of profit expectations, planned debt and equity

funding arrangements, CAPEX plans summarised

● annually to cover the next financial year:

○ for the 12 month period from the beginning to the end of the financial year

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 13 of 18
 Assessment Task 1

○ budget to include four quarter milestones in line with seasonal trends

identified from prior year data

○ initial preparation includes a preliminary overview of the financial year ahead

○ sales budget for next year to be prepared by department by quarter

○ profit budget (including detailed expenses) for the next year to be prepared by
quarter

○ cash flow effect of the GST payable per quarter to be prepared (scheduled
compliance payment date is the 21st day after the end of the quarter)

● To satisfy the statutory requirements relating to the current and short-term solvency
of the company:

○ three monthly rolling forecast of cash flows to be prepared ● To qualify the

strategic plans for the next 3–5 years planning cycle:

○ profit and CAPEX budget to be prepared.

Budget variances and schedules

● Key performance indicators that should be closely monitored and reported on
include variances to:

○ total sales

○ gross profit (GP) %

○ wages and salaries as a % of total sales

○ total expenses as a % of total sales

○ net profit in dollars

○ net profit as a percentage.

● Budget variances will be reported using the standard format provided in this policy
and procedures document.

● Budget variances must be completed within five working days of quarter end.

● Actual results for the month will be provided by the accounting information system.

● An analysis of the variance between the actual and the budget must include $ and
% variance.

● Report with explanations and recommendations to be complete within seven

working days of quarter end and be given to the CEO.

● Analysis and investigation of variances will include the following priority:

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 14 of 18
 Assessment Task 1
1. Establish the primary causes for variances to key performance indicators of
total sales, gross profit % and net profit $.

2. Establish reasons for those individual items in the variance report that
represent the greatest $ variance.

3. Establish reasons for those individual items in the variance report that
represent the greatest % variance.

● Schedules relating to compliance due dates must be prepared and monitored by

the accountant. Managers supplying information to the accountant regarding the
compliance schedule must submit it at least five working days prior to the due date
deadline.

Standard formats
The following formats will be used when preparing Houzit budgets and variance reports.

Sales and profit budgets

PROFIT BUDGET 2011/12 Qtr 1 Qtr 2 Qtr 3 Qtr 4

Revenue - % % % %

Sales x,xxx x,xxx x,xxx x,xxx x,xxx

– Cost of Goods Sold x,xxx x,xxx x,xxx x,xxx x,xxx

Gross Profit Calculation Calculation Calculation Calculation Calculation

Gross Profit % Calculation Calculation Calculation Calculation Calculation

Expenses

– Accounting Fees x,xxx x,xxx x,xxx x,xxx x,xxx

– Interest Expense x,xxx x,xxx x,xxx x,xxx x,xxx

– Bank Charges x,xxx x,xxx x,xxx x,xxx x,xxx

– Depreciation x,xxx x,xxx x,xxx x,xxx x,xxx

– Insurance x,xxx x,xxx x,xxx x,xxx x,xxx

– Store Supplies x,xxx x,xxx x,xxx x,xxx x,xxx

– Advertising x,xxx x,xxx x,xxx x,xxx x,xxx

– Cleaning x,xxx x,xxx x,xxx x,xxx x,xxx

– Repairs & Maintenance x,xxx x,xxx x,xxx x,xxx x,xxx

– Rent x,xxx x,xxx x,xxx x,xxx x,xxx

– Telephone x,xxx x,xxx x,xxx x,xxx x,xxx

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 15 of 18
 Assessment Task 1

– Electricity Expense x,xxx x,xxx x,xxx x,xxx x,xxx

– Luxury Car Tax x,xxx x,xxx x,xxx x,xxx x,xxx

– Fringe Benefits Tax x,xxx x,xxx x,xxx x,xxx x,xxx

– Superannuation x,xxx x,xxx x,xxx x,xxx x,xxx

– Wages & Salaries x,xxx x,xxx x,xxx x,xxx x,xxx

– Payroll Tax x,xxx x,xxx x,xxx x,xxx x,xxx

– Workers’ Compensation x,xxx x,xxx x,xxx x,xxx x,xxx

Total Expenses Calculation Calculation Calculation Calculation Calculation

Net Profit (Before Tax) Calculation Calculation Calculation Calculation Calculation

Income Tax Calculation Calculation Calculation Calculation Calculation

Net Profit Calculation Calculation Calculation Calculation Calculation

GST Cash flow budget

CASH FLOW ANALYSIS – GST 2011/12 Qtr 1 Qtr 2 Qtr 3 Qtr 4

GST Collected x,xxx x,xxx x,xxx x,xxx x,xxx

Less GST Paid x,xxx x,xxx x,xxx x,xxx x,xxx

GST Payable Calculation Calculation Calculation Calculation Calculation

Aged debtors
AGED DEBTORS BUDGET TOTAL Qtr 1 Qtr 2 Qtr 3 Qtr 4

Sales x,xxx x,xxx x,xxx x,xxx x,xxx

% Debtors Sales % % % %

Total Debtors % Calculation Calculation Calculation Calculation

Current % Calculation Calculation Calculation Calculation

30 Days % Calculation Calculation Calculation Calculation

60 Days % Calculation Calculation Calculation Calculation

90 Days % Calculation Calculation Calculation Calculation

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 16 of 18
 Assessment Task 1
Scenario

The CEO of Houzit Pty Ltd, Jim Schnieder explained that he prefers to discuss the budgets
with all senior managers prior to their distribution in order to ensure a corporate view of
the strategic plans. He then meets with each group separately to answer questions and
concerns about their particular area. Eventually the budgets will be printed in hard copy
and bound as well distributed as an electronic spreadsheet.
Upon completion of the budgets you meet with Jim to provide an overview of the
information contained within the budgets, the budget notes and recommendations
regarding the internal controls to prepare him for the meetings with the senior managers.
To clarify his understanding of the information, Jim asks you a series of questions (listed
below, which you will complete written or orally as agreed with your assessor).

Prompt questions

Based on the information provided in the case study answer the following questions in
the space provided below:

1. Identify the current statutory requirements for tax compliance and list and calculate
the tax liabilities for Houzit Pty Ltd under taxation legislation.

2. Identify the current compliance requirements and liabilities for this organisation
under the Corporations Act 2001.

3. Review commercially available financial management software to select the most

suitable software for Houzit Pty Ltd.
Ensure you diagnose software options by comparing two commercially available
software titles against the capabilities of the existing technology for the
organisation and against the prioritised requirements, and outline the reasons that
lead you to this recommendation.

4. Explain how you can apply the following principles of accounting in developing the
budgets required for this task:

a. matching principle

b. account groups

c. time periods.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 17 of 18
 Assessment Task 1

5. Explain and discuss the implications of probity when preparing and revising
budgets.

6. List the critical dates and initiatives that will require or generate resources for
Houzit Pty Ltd in the next financial cycle.

7. List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd.

8. List the new or modified internal controls that could improve risk management for
Houzit Pty Ltd including the maintenance of audit trails.

BSBFIN601 Manage Organisational finances 1st edition version: 1

Duke College (DC)
CRICOS ID: 02564C
RTO ID: 90681
Elizabeth Bence Pty Ltd t/a Duke College, Level 1, 20 Macquarie St, Parramatta NSW 2150; Call +61 2 9687 3200
Page 18 of 18