FNSACC523_AE_Sk3of3

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TAFE NSW - Sydney Institute *

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523

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Accounting

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Apr 3, 2024

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Assessment event 3 of 3: Skills Unit code and name FNSACC523 – Manage budgets and forecasts Qualification code and name FNS50222 – Diploma of Accounting Student name Student number Document title: FNSACC523_AE_Sk3of3 Page 1 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Version: 20230403 Date created: 23 November 2022 © 2023 TAFE NSW RTO Provider Number 90003 | CRICOS Provider Code: 00591E This assessment can be found in the: Learning Bank The content in this document is copyright © TAFE NSW 2023 and should not be reproduced without the permission of TAFE NSW. Information contained in this document is correct at the time of printing: 1 April 2024. For current information please refer to our website or your Teacher/Assessor as appropriate. Document title: FNSACC523_AE_Sk3of3 Page 2 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Assessment information Table 1 – Assessment information Information Details Assessment event overview This assessment event aims to assess your performance in skills and knowledge required to prepare, document, and manage budgets and forecasts. It involves forecasting estimates and monitoring budgeted outcomes. The unit applies to individuals who use specialised knowledge and analytical skills to prepare and manage strategic organisational information. This assessment is in 3 parts: Part 1: Scenario Part 2: Presentation Part 3: Report And is supported by: Azure Beach Accountants and Financial Service’s Budget Policy FNSACC523_AE_Sk3of3_Appx_2_Templates.zip , which contains: o FNSACC523_AE_Sk3of3_Appx1_Skyward_Budget_and Performance Report template o FNSACC523_AE_Sk3of3_Appx2_Skyward_Budget_Comme ntary_template o FNSACC523_AE_Sk3of3_Appx3_Skyward_Budget_Report_ Presentation_template o FNSACC523_AE_Sk3of3_Appx4_Skyward_Half Yearly Financial_Report_template Observation Checklist Assessment checklist Unit assessment guide (UAG) Refer to the Unit assessment guide (UAG) before attempting this assessment event. The UAG contains information including assessment requirements and how to achieve a satisfactory result. Submission instructions When you complete this assessment, submit it for marking as Document title: FNSACC523_AE_Sk3of3 Page 3 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Information Details directed by the assessor. Refer to the Submission Checklist at the end of the assessment to ensure you have submitted all requirements. It’s important to keep a copy of all the electronic and hardcopy assessments you submit to TAFE NSW and complete the assessment declaration when submitting the assessment. Document title: FNSACC523_AE_Sk3of3 Page 4 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Submission points This assessment event includes different submission points. To effectively complete this assessment, you will need to individually submit evidence for each submission point and then await assessor feedback before moving onto the next section. The assessment instructions identify where these submission points are. Task instructions The assessor will use the criteria in the tasks to determine if you have satisfactorily completed this assessment event. Follow these instructions to ensure you demonstrate the required knowledge and skills. SUBMISSION 1 Part 1: Scenario To complete this part of the assessment, read the scenario and complete the following task/s. Scenario: This scenario is based on the simulated organisation Azure Beach Accountants and Financial Services . You are continuing your role working as an Assistant Accountant with Azure Beach Accountants and Financial Services. Your role has expanded to include the preparation of budgets for clients of medium-sized companies. You have received a new client. The business is a travel agent called Skyward Travel that has offices across New South Wales, Victoria and Queensland. Skyward specialises in packaged travel tours to eastern Asian countries. Nationally 30 permanent staff are employed with casual staff supporting the high-volume periods. The busiest time of the year is during the Australian winter when tourists from the east coast of Australia travel to Asia for holidays to escape the cold winters. The client wants you to prepare an annual budget for the business for 2023/24 broken down into quarters and presented to the Executive team before implementation. Since the COVID- 19 restrictions were lifted across Asia, the Executive has requested forecasted budgets informed by market trends with the expectation of a 13.5% increase in sales over 2023/24. Document title: FNSACC523_AE_Sk3of3 Page 5 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

The client has requested the budget presentation be ready for the next Executive team meeting that is scheduled in 2 weeks. Additional Information Azure Beach has conducted research into the Australian Travel Agency and Tour Arrangement Services and you can use this additional information to complete your budget. Refer to 2.9.2 of Azure Beach Accountants and Financial Services Budget Policy for detail on understanding the current and future market conditions. Document title: FNSACC523_AE_Sk3of3 Page 6 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Based on this information, the following is relevant to your client:  Seasonal breakdown of sales is generally: o January – March: 15% o April – June: 30% o July – September: 35% o October – December: 20%  Cost of sales (variable costs) will move in line with the seasonal breakdown of sales with the following cost increases: o flights price increase by 20% o in-country tours and accommodation increase by 8% o in-country insurance increase by 25%  Employee Costs (paid monthly): o permanent staff wages to increase by 6.5% o casual wage increases of 7.2% with the seasonal breakdown as per sales o increase of superannuation to be factored in according to ATO information. Further detail can be obtained from the following link: https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/? =redirected_SuperRate&anchor=Superguaranteepercentage#Superguarantee percentage o Payroll Tax varies across states and territories so an average budget percentage of 5.02% is applied across all permanent and casual staff. Further information can be obtained from the following link: https://www.payrolltax.gov.au/resources#resources__rates_and_thresholds o Resources | Payroll Tax .  Increase in expenses due to inflation and other factors as follows: o Annual cost of Azure Accountants and Financial Services budgeting services $20,000, (Paid monthly) o Electricity and Water: 8% (paid quarterly) o Insurance: 6.5% (Bill due and paid annually in December, with expense accrued monthly across the year) Document title: FNSACC523_AE_Sk3of3 Page 7 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

o Internet and Computer Systems: 3.5% (paid monthly) o Rent is paid monthly across all three states and is due to increase in 2023/24 as follows:  NSW – 5.5%  QLD – 4.2%  VIC – 4.8% o Advertising – 2.5% (paid quarterly) o Other operating expenses – 2% (paid monthly). The finance department has also supplied the following actual data set from 2022/2023. Document title: FNSACC523_AE_Sk3of3 Page 8 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Income statement 2022/2023 – Skyward Table 2 – Income statement Sales 6,681,900 Less: Cost of Sales: 3,103,962 flights 1,225,897 in-country tours 1,350,897 in-country accommodation 402,395 in-country tour insurance 124,773 Gross profit 3,577,938 Salaries and Wages 1,867,066 permanent 781,266 casual 1,085,800 Superannuation 196,042 Payroll Tax 93,727 Total Employee Costs 2,156,835 Advertising 28,700 Rent of Premises: 430,000 Parramatta, Sydney 215,000 Frankston, Melbourne 150,000 Ferndale, Brisbane 65,00 0 Other Operating Expenses: 32,950 general 17,95 0 staff amenities 9,00 0 stationery. 6,00 0 Utilities: 39,411 electricity across 3 sites 12,44 2 water across 3 sites 1,47 8 internet/phone costs 5,11 6 database/computer systems 20,37 5 Insurance 100,300 Depreciation - Office Equipment 25,800 Total Expenses 657,161 Net profit 763,942 Document title: FNSACC523_AE_Sk3of3 Page 9 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Further detail of Utilities per State is provided below : NSW VIC QLD TOTAL Electricity 5,626 4,218 2,598 12,442 Water 625 498 355 1,478 Internet/Phone 2,780 1,538 798 5,116 Database/Computer systems 9,587 7,299 3,489 20,375 Task 1: Prepare budget estimates A. Prepare Budgeted Income Statement  Using the FNSACC523_AE_Sk3of3_Appx1_Skyward_Budget_and Performance Report template found in FNSACC523_AE_Sk3of3_Appx _2_Templates.zip , prepare budget estimates for each quarter of the 2023/24-year.  Your budget must include the following calculations schedules: o 1A Cost of Sales o 1B Employee Costs o 1C Utilities and Rent o 1D Annual Budget by Quarter  Ensure that you have addressed all relevant budgetary items and details of the assumptions used for all calculations Document title: FNSACC523_AE_Sk3of3 Page 10 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

B. Prepare Annual Budget Commentary  Using the FNSACC523_AE_Sk3of3_Appx2_Skyward_Budget_Commentary_template found in FNSACC523_AE_Sk3of3_Appx_2_Templates.zip , document the budget ready for distribution.  In your budget commentary, you will be able to assess whether the financial goals that were identified by Skyward are appropriate as follows: o Budget objectives are aligned to section 2.3 of Azure Beach Accountants and Financial Service’s Budget Policy o budgetary monitoring targets including relevant milestones and performance indicators are appropriately based on forecast data and market trends To complete this task successfully, the student must submit:  Completed EXCEL Spreadsheet for the FNSACC523_AE_Sk3of3_Appx1_Skyward_Budget_and Performance Report template found in FNSACC523_AE_Sk3of3_2_Appx_Templates.zip including all relevant assumptions and calculations for the budget to be provided to the client  Completed WORD Document for the FNSACC523_AE_Sk3of3_Appx2_Skyward_Budget_Commentary_template found in FNSACC523_AE_Sk3of3_Appx_2_Templates.zip including all relevant budget objectives, performance indicators and contingencies. End of Submission 1 You have now completed this submission point. Submit the evidence for this submission point and then await assessor feedback before moving onto the next section. Document title: FNSACC523_AE_Sk3of3 Page 11 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

SUBMISSION 2 Part 2: Presentation To complete this part of the assessment, present the information you have prepared in Part 1 to a group, answering any questions they might have. If you are completing your course online, you will need to digitally record and submit the presentation as video evidence. Follow the Video recording instruction (pdf) . These instructions include useful tips, links to resources, and a demonstration video. During the presentation, you must:  present yourself in a professional manner  demonstrate positive communication and non-verbal skills  use language that will engage a range of personnel sitting on the Skyward Executive team. Read all instructions carefully and complete all requirements of the assessment. In addition, refer to the Observation checklist and Assessor checklist , which the assessor will use to assess your performance and record your results. Task 1: Deliver a budget presentation You are now required to deliver your budget presentation to the Executive team of Skyward. Using the FNSACC523_AE_Sk3of3_Appx3_Skyward_Budget_Report_Presentation_template found in FNSACC523_AE_Sk3of3_Appx_2_Templates.zip you are to design and deliver a presentation that must include:  an identified audience for your presentation  a high-level overview of the budget summary including: o key budget figures (sales, gross profit, net profit) o graphs and visuals o forecasting, circumstances, assumptions, risks and contingencies. You will be allocated a maximum of 10 minutes per presentation to provide the information and answer any questions To complete this task, you must submit:  a recording of the presentation  a copy of a completed Skyward Budget Report Presentation template. Document title: FNSACC523_AE_Sk3of3 Page 12 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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 End of Submission 2  You have now completed this submission point. Submit the evidence for this submission point and then await assessor feedback before moving onto the next section. Document title: FNSACC523_AE_Sk3of3 Page 13 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

SUBMISSION 3 Part 3: Half-Yearly Report To complete this part of the assessment, prepare a Half Yearly Financial Report based on your analysis of the current circumstances faced by the client and by completing the following tasks. Scenario – Additional Information 6 months after your presentation, a recession has been declared in Australia. During the first half of the year, many people were travelling and first and second quarter sales were higher than the budgeted numbers. This data has been provided by Skyward in the table below: Skyward Travel Half-Yearly Actual Data For the period ended 31 December 2023 1st Quarter Actual $ 2nd Quarter Actual $ Sales 3,185,262 1,895,989 Less Cost of Sales 1,478,651 880,150 Gross profit 1,706,611 1,015,840 Gross Profit % 54% 54% Less operating expenses: Employee Expenses 755,147 540,904 Advertising 8,090 8,090 Rent 112,811 112,811 Other Operating Expenses 10,004 10,004 Utilities 10,354 10,354 Insurance 26,705 26,705 Depreciation of Office Equipment 6,450 6,450 Document title: FNSACC523_AE_Sk3of3 Page 14 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Accounting Fees 5,000 5,000 Total operating expenses 934,560 720,317 Net profit 772,050 295,522 Net Profit % 24% 16% With the third quarter about to start, forecasted sales are down 35% from budgeted numbers for the third and 4 th quarters. Variable costs for the first and second quarters were accurately budgeted, however, variable costs are now forecasted to rise by 5% for the third and 4 th quarters. Fixed costs have remained the same for the duration of the budget. Additional information relating to cash flow is also provided:  Sales: o cash sales = 5% of total sales (EFTPOS, bank transfers and cash are reconciled daily) o of credit sales, 65% paid within the month of sale and a 2% on-time payment discount is applied. The remaining 35% paid within the month following the sale.  Purchases: o All purchases are made on credit with 80% paid the month of purchase and the remaining 20% paid within the month following purchase.  Cash balance as of 31 December 2023 was $883,253.  Additional information for the cash flow projection is shown in the following table : Cash Flow Data December January February March Sales 258,300 229,658 309,521 198,325 Purchases 176,895 185,241 175,632 188,522 Employee Expenses 251,716 251,756 251,756 251,756 Advertising 2,697 2,697 2,697 2,697 Rent 37,604 37,604 37,604 37,604 Other Operating Expenses 3,335 3,335 3,335 3,335 Utilities 3,451 3,451 3,451 3,451 Insurance 8,902 8,902 8,902 8,902 Accounting Fees 1,667 1,667 1,667 1,667 Document title: FNSACC523_AE_Sk3of3 Page 15 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Task 1: Prepare a report A. Review Half Yearly Performance and Revise Projections Using the FNSACC523_AE_Sk3of3_Appx1_Skyward_Budget_and Performance Report template found in FNSACC523_AE_Sk3of3_Appx_Templates.zip review the data provided by Skyward for the first two quarters of the year. Review the current assumptions and parameters of the budget for accuracy and relevance and conduct appropriate research into the relevant industry to identify the feasibility of forecasts. Use your research and the additional information provided by Skyward to perform relevant analysis to determine an appropriate response to the previous 2 budgetary quarters. To perform this analysis, complete the following schedules in the EXCEL Template: o 3A Half Yearly Performance ( by quarter – first and second quarters) o 3B Revised projections (for the third and fourth quarter) Make sure that your Excel Spreadsheet includes all appropriate formulas and calculations including links across worksheets. B. Prepare Cash Flow Forecast Using the FNSACC523_AE_Sk3of3_Appx1_Skyward_Budget_and Performance Report template found in FNSACC523_AE_Sk3of3_2_Appx_Templates.zip prepare a cash flow forecast for the third quarter and including calculations for cash Receipts and cash payments. To prepare this budget complete the following in the EXCEL Template: o 3C Cash Flow Forecast Make sure that your Excel Spreadsheet includes all appropriate formulas and calculations including links across worksheets. Document title: FNSACC523_AE_Sk3of3 Page 16 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

C. Prepare Half Yearly Financial Report Using the FNSACC523_AE_Sk3of3_Appx4_Skyward_Half Yearly Financial_Report_template found in FNSACC523_AE_Sk3of3_Appx_2_Templates.zip prepare the half-yearly Financial Report for submission to Skyward’s Executive Team. Document title: FNSACC523_AE_Sk3of3 Page 17 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Make sure that the structure of your report follows the template headings and includes the following:  First and second-quarter performance analysis and review  Third and fourth quarter revised projections for 2023/2024 with detailed assumptions  Detailed cash flow forecast for the third quarter  Provide detailed analysis and discussion for delivering the outcomes outlined in the 2023/24 Annual budget including: o Recommendations to achieve a cash surplus o Review of budget processes. Document title: FNSACC523_AE_Sk3of3 Page 18 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Observation Checklist The assessor will use this checklist to assess your performance whilst observing you complete the presentation. Use this observation checklist to understand what skills you need to demonstrate. The Observation checklist lists the observable criteria in this assessment. You must meet all the criteria. Note that S = Satisfactory and U/S = Unsatisfactory. Table 3 – Student details Student name Table 4 – Observation details Observations details Details of observation Observation Date: Location: Assessor name: Assessor signature: Table 5 – Assessor observations OC # Observable criteria Did the student? OBS 1 Part 2: Presentation Task 1: Deliver a budget presentation S ☐ U/S ☐ 1. Present data in a clear format appropriate for budget reporting . S ☐ U/S ☐ 2. Complete reports for specified periods and projects within agreed timeframes . S ☐ U/S ☐ 3. Identify feasibility of forecasts by comparing projections with market growth and development . S ☐ U/S ☐ 4. Distributed budget report to required personnel . S ☐ U/S ☐ Document title: FNSACC523_AE_Sk3of3 Page 19 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

OC # Observable criteria Did the student? OBS 1 Part 2: Presentation 5. Presents financial information to a range of personnel using language and concepts appropriate to the audience and purpose . S ☐ U/S ☐ Table 6 – Assessor feedback OB 1 Assessor feedback – Deliver a budget presentation Table 7 – Overall observation feedback Overall observation feedback Document title: FNSACC523_AE_Sk3of3 Page 20 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

Assessment checklist The Assessment checklist lists the requirements for each task in this assessment as outlined in the student assessment instructions. The assessor will use this checklist to ensure all required tasks have been completed and submitted and provide feedback for each task. Note that S = Satisfactory and U/S = Unsatisfactory. Table 8 – Assessment feedback Part 1 – Did the student S or U/S Feedback Task 1 Prepare a budget – Completed a budget within a presentation document and included accurate details for:  an identified audience and timeline for budget  prepared budget o budget objectives aligned to Azure Beach Accountants and Financial Services Budget Policy o all relevant budgetary items o budgetary monitoring targets S ☐ U/S ☐ Document title: FNSACC523_AE_Sk3of3 Page 21 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Part 1 – Did the student S or U/S Feedback  forecast estimates o forecast data o assumptions and parameters according to Azure Beach Accountants and Financial Services Budget Policy document and credible sources  identified risks and contingency recommendations  mathematical calculations and uses a range of mathematical problem-solving techniques to analyse, estimate, and forecast financial data  research that consolidated and evaluated a range of information and financial data, identifying key aspects needed for work requirements and Document title: FNSACC523_AE_Sk3of3 Page 22 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Part 1 – Did the student S or U/S Feedback analysing trends  specific and logically structured written and graphical information for a range of audiences and purposes  clear and concise language, incorporating correct spelling, grammar, terminology, and conventions, to convey accurate information  the main features and functions of digital technologies to access, extract and share information to achieve required outcomes. Table 9 – Assessment feedback Part 3 – Did the student S or U/S Feedback Task 1 Prepare a report – Completed an adjusted budget and included accurate details for: S ☐ U/S ☐ Document title: FNSACC523_AE_Sk3of3 Page 23 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Part 3 – Did the student S or U/S Feedback  economic situation leading to variances  variances o calculated o recommendations responding to variances addressed to executive  budget process review. Document title: FNSACC523_AE_Sk3of3 Page 24 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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Submission checklist Submit the following for marking: ☐ This completed Assessment 2 of 3: Skills Additional evidence for verification of assessment Assessors may ask additional questions to clarify your understanding during or after an observation. You may be asked questions:  to clarify your understanding. (for example, ‘Why did you select that particular piece of equipment?’)  to capture contingencies that may form part of the demonstration (for example, dealing with faults or unexpected events)  to prevent a work, health and safety incident. If additional questions are required, these questions and your responses will be recorded in this table. Table 10 – Additional evidence Additional question/s asked by the assessor Maps to Part or Task: Student response to the additional question/s Document title: FNSACC523_AE_Sk3of3 Page 25 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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This page is not required for online assessment submissions Student assessment declaration This assessment is my original work and has not been:  copied from any source without proper referencing  written for me by any other person except where such collaboration has been approved by a teacher or assessor. Student signature and date Assessment feedback ☐ Reasonable adjustment was in place for this assessment event. If so, please provide details of any reasonable adjustment strategies that were implemented: Reasonable adjustment strategies : Assessment outcome ☐ Satisfactory ☐ Unsatisfactory Comments : Assessor name, signature and date Student acknowledgement of assessment outcome Would you like to make any comments about this assessment? Student name, signature and date Document title: FNSACC523_AE_Sk3of3 Page 26 of 26 Resource ID: SEMX_22_003_FNSACC523_AE_Sk3of3 Version: 20230403

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