Assessment Task 1

This is a classroom based task and involves two parts.
Part A needs to be completed as an individual task.
Part B is a team task. Your trainer/assessor can assist you with forming the teams.

Part A:

A budget is a formal written statement of future plans presented in financial terms. It is used to project income and expenses in a defined period. A budget is a list of all planned expenses and revenues. When used for personal purposes, a budget can be a plan for saving, borrowing and spending.

In this task, you will apply your skills in preparing a personal monthly budget for yourself. You may use a personal budgeting template from online resources with appropriate referencing.

Step 1A:
Using an Excel sheet, list all your monthly incomes and expenses. Once you have identified all the items, populate it with projected figures for the month. You may also include any cash you may have in hand as an opening balance.

Step 2A:
At the end of the month, record actual income and expenses and compare them with the budgeted figures. Analyse the results and write a brief report on how effectively you managed your budget and the measure you may take to maintain it in the future.

Assessment Criteria:
The trainee will be assessed on the following criteria for this assessment task;
- Used an appropriate format for presentation
- Data sheet uses formulas to perform basic calculations
- Budget includes required sections and information
- Demonstrated an ability to prepare simple budgets
- Compared budget against actual income and expenses
- Analysed the outcomes and submitted a report

Submission Guidelines:
The assessment must be completed using MS Excel, MS Word and submitted to the assessor.

Part B:

Data for this major project is derived from the assessment tasks completed in the unit: FNCACC504 Prepare Financial Reports for a Reporting Entity. In that task, you had prepared end of the year financial reports for Bean's Coffee. If you do not have copies of these documents, ask your trainer/assessor for assistance.You may also use any other sample data set for this task in consultation with your assessor.Using the financial reports and other financial information provided as part of the above assessment task (or sample data), you are required to prepare financial budgets and forecasts for the next financial year. You may use the same Excel worksheet template provided for the budgets. For Bean's Coffee, prepare;
- Budgeted Balance Sheet
- Budgeted Profit and Loss
- Expense Budget
- Sales Forecast
- Profit and Loss Forecast for next two quarters
- Market Trends and Factors Impacting Business Growth
- Perceived Financial Risks and Mitigation Strategies

This task has two parts; a documentary part where you will be writing budget and forecast related information and analysis, and a statistical part where you will prepare budgets and forecasts; integrated as an introduction and explanation of the budgets followed by actual data.In order to prepare the budgets, you will first set realistic budget goals and objectives (e.g. cost reduction, debt reduction, business growth etc.) and include milestones and performance indicators within the budgets to monitor financial performance on a quarterly basis. You may need to conduct some research into the retail and hospitality industry/market; and support forecast and growth feasibility based on market trends and perceptions. Include any market reports or trend reports used as references.

Each of the above budgets and forecasts should be prepared in a different tab within the same sheet. You will need to prepare a supporting Word document that covers budget purpose, objectives and other rationales as needed, including budget and forecast assumptions, compliance requirements and parameters for evaluating budget accuracy and effectiveness.

As with any budget, you will need to include perceived financial risks based on the nature of business (e.g. operational risks, liquidity risks, market risks etc.). Ideally, you will identify at least two types of financial risks relevant to the business and suggest strategies to either minimise or mitigate the risks. You may use risk management templates and principles as guides. All the documents and spreadsheets must be prepared and presented in a format appropriate for financial documentation and reporting; taking examples from sample document provided. The data/information should be succinct, accurate and presentable. If used, the spreadsheet links should be functional. In effect, you will be bringing together your knowledge of accounting principles, budgeting, accounting methods and tools in this task.

Assessment Criteria:
The trainee will be assessed on the following criteria for this assessment task;
- Maintained the consistency of financial reports across various tasks and
- Established and articulated realistic budget objectives
- Budget objectives are specific, measurable, achievable, realistic, time-bound and consistent
- The budgets and forecasts are supported by appropriate articulation of mitigating factors, rationale, assumptions, and analysis of market trends
- The budget documentation is appropriately structured and presented as a formal financial document reflecting a real-life example and practice
- Appropriate headings and sub-headings are used to structure the contents
- The content flow covers all the required elements of the plan and contains a logical sequence
- Relevant financial risks (at least two) are identified and appropriate risk mitigation strategies are suggested as control measures
- Budgets and forecast assumptions are based on realistic analysis of market data and trends
- Business growth assumptions are supported by feasibility factors based on the relevant market/industry trends
- Prepared a budgeted balance sheet
- Budgeted balance sheet data is consistent with previous year data
- Prepared budgeted profit and loss
- Budgeted profit and loss data is consistent with previous year data
- Prepared an expense budget
- The financial budgets are prepared based on all the considerations of the financial items
- The budget is balanced and covers all the expected income/funding sources and expenditures
- Prepared a sales forecast based on the information provided
- Prepared a Profit and Loss forecast for the next two quarters using appropriate format
- Forecasts are based on realistic assumptions and parameters to ensure accuracy, relevance and compliance
- Budgets and forecasts are consistent with accounting principle and practices