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Trainers Assessment Resource FNSACC513 Version 2 April 2018 Page 1 of 16 ASSESSMENT 1: PROJECT STUDENT INFORMATION This information is to be handed to each student to outline the assessment requirements For this assessment, you are required to prepare an annual budget for a business of your choice. Students may liaise with their supervisor when choosing a business or may utilise the example of Patrick’s Cod Fishing Ltd in Appendix 1-6. Task: Taking into account previous years figures, available current year figures and any additional information, you are to create an annual budget for your chosen business. Undertake discussions with stakeholders (Your instructor will role play these parts) to determine budget objectives and set milestones and / or performance indicators Discuss and review assumptions and budget parameters – review these during the budget process as needed. (Some assumptions are included in Appendix 6 for Patrick’s Cod Fishing Ltd). Clearly details any Cash, expenditure and revenue items Ensure your budget objectives are clear & conform with the business’ expectations Include milestones and performance indicators to monitor financial performance Include a detailed break down of your annual budget into seasonal periods as required by the business Identify any financial risks and incorporate protection strategies according to business Details: Students should keep the following points in mind when creating the budget Set profit targets/goals to reflect the business’ (or Patrick’s) returns Identify the non-current asset requirements and consider alternative asset management strategies Prepare cash flow projections to enable business operation in accordance with business plan and legal requirements Select budget targets to enable ongoing monitoring of financial performance Relevant taxes such as GST and BAS should also be included. Students must ensure that estimates of future cash flow, costs and revenues are realistic in context of the available information at the time of creating the budget. Changes in circumstances should be anticipated as best as possible with particular emphasis on financial risks and creating protection strategies in accordance with organisational procedures. Any liaison with the proprietor of the business to determine milestones, policies, goals etc. should be carried out with your instructor, who will role play the relevant parts. Assessment Summary You are to submit the following evidence / perform the following tasks Develop and submit your annual budget as outlined above This assessment is due on: __________________________________ FNSACC513 Version 2 April 2018 Page 2 of 16 ASSESSMENT 2: PROJECT STUDENT INFORMATION This information is to be handed to each student to outline the assessment requirements For assessment you are given the following information: (Please note, this information is relevant to Patrick’s Cod Fishing Ltd. If the instructor has decided to give students a different business model to work with, the instructor will provide different data). At the beginning of February 2014, the following up to date figures are now ready for your review for Patrick’s Cod Fishing Ltd: In the past 3 months since asking you to prepare his budget forecast, Patrick’s business has performed as follows: His catch for the 3 months has totalled 9,450kg His Revenue has totalled $384,377 His business expenses have come to $332,362 Part 1: Prepare an 800 word written report discussing the following: How has your budget matched up with actual figures? What figures have been overestimated / underestimated? What business milestones have been met or have fell short? Part 2: You must now adapt your original budget to incorporate and respond to the information given to you by Patrick. Undertake the following tasks: Give a detailed comparison of budgeted forecasts and actual figures for the 3 month period – include comparison trends and other graphs as required to demonstrate the information clearly and demonstrate validity of analysis. Prepare and analyse the budget variances Prepare a recommendation to Patrick regarding his business’ performances and Complete a reviewed budget taking into account the latest figures. Patrick’s goals are skill the same – is he on track? If not, what needs to be dome for Patrick’s business to get back on track? Are his goals too unrealistic? Complete a feasibility report answering these questions. Prepare a report to give to Patrick (instructor) with your recommendations. This assessment is due on: __________________________________ FNSACC513 Version 2 April 2018 Page 3 of 16 ASSESSMENT 3 – Research & Questioning Submission details Students will use their online study time to prepare for answers to the following questions and submit softcopies of the answers. You must submit soft copy of your answers in a word document. Upload the softcopy on the link provided in the eLearning site. See instructions below for details. Instructions: · To be prepared on an individual basis. · Assessment will only be accepted if they have an assignment cover sheet on them signed by the student. · Students must provide detailed answer for every question along with relevant examples. · There is no word limit, but answer for every question should be reasonable in size, preferably ½ a page. · The Trainer/Assessor may further prompt and question in order to receive answers of appropriate quality and to verify the authenticity You are required to do research and type answers for following questions in a word document: Assessment Questions 1 Define the term ‘Corporate Governance’ 2 List 4 key elements of good corporate governance FNSACC513 Version 2 April 2018 Page 4 of 16 3 List and describe 4 principles of corporate governance 4 Give 3 examples of perceived disadvantages to budgeting 5 Define ‘Budgetary Control’ 6 What is the difference between single and double entry accounting? 7 Pedro's Pasta purchases a car for $8,800 using a loan from the bank suppler. Referring to double entry accounting, what are the two effects of action? Show how you would record the transaction in the ledger. DR CR 8 What is regression analysis? What benefits are there to this technique? FNSACC513 Version 2 April 2018 Page 5 of 16 9 List and describe the four different ratio types that make up a Financial Ration Analysis Classifying Ratio Description 10 Outline the calculation method used to determine the following profitability returns ratios. Operating return on assets Return on assets Return on total capital 11 What is meant by measures of variance? Explain how it is calculated FNSACC513 Version 2 April 2018 Page 6 of 16 12 List and explain 5 different measures of variance to be considered when developing an annual Variance Type Variance Explanation 13 Provide 5 different reasons (each) for an favourable market price variance, and adverse material price variance. 14 Give an example of a situation that would result in an accrued expense. What happens if the expense isn’t accrued? 15 What is a prepaid expense? When can this be used? Give an example FNSACC513 Version 2 April 2018 Page 7 of 16 16 What is cost underestimation? What does it result in? What usually causes this? 17 What is strategic misrepresentation? 18 How can strategic misrepresentation be minimised? 19 What are the key purposes / objectives of creating and using an annual budget? 20 What are the key purposes / objectives of forecasts? FNSACC513 Version 2 April 2018 Page 8 of 16 21 What is the importance of milestones and KPI's when budgeting / forecasting? 22 What information is needed in order to create an accurate financial forecast for a business? 23 Outline 9 different expenditure and revenue items that are relevant to budgeting and forecasting 24 Describe and compare the following forecasting techniques Time series forecast The Delphi Method Executive Opinions Forecasting FNSACC513 Version 2 April 2018 Page 9 of 16 25 List 3 common features and assumptions that are inherent in forecasting, regardless of the method used? 26 Describe the steps that are in most company budgeting procedures FNSACC513 Version 2 April 2018 Page 10 of 16 Appendix 1 – Patrick’s Cod Fishing Ltd Patrick is the proprietor of a Murray Cod fishing business called “Patrick’s Cod Fishing Ltd” which is located at Post Office Box 123, Newtown 2042. Patrick possesses the necessary licence from the State Fisheries Board at $20,000.00 per Cod Net. Patrick grows the Cod and sells them to export wholesalers. This means that for GST purposes, Patrick’s Cod Fishing Ltd is EXP and NCF. (That is all of his sales are GST free and he does not have to pay any GST on expenditure items.) Patrick is still entitled to claim the GST that he has to pay on his payments. Therefore you use the tax code NCG, NCF and FRE where appropriate. INFORMATION Patrick has decided he wants you to prepare an annual budget for his operation. He states that business was very good last year, and enabled him to repay a number of outstanding personal debts. He provides you with the following figures: He caught 42,300kg of Murray Cod His yearly income totalled: $1,438,232 His yearly expenses totalled: $183,488 This gave him a yearly profit of: $1,254,744 He used the majority of this profit