SITXFIN003 Answer 3

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Melbourne Business School *

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004

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Business

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Feb 20, 2024

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Pichit Pangsri WIN210110 Assessment Task 1 – Project Industry: Hospitality 1. Specific industry sector and organisation information on budgeting. a. How are budgets used to control costs and to enhance probability? Budgets are used to control costs by setting financial goals and objectives, tracking spending and monitoring performance. Budgeting helps to establish a plan for income and expenses, evaluate the risks of a business venture, and enhance the probability of achieving financial goals. b. What is the importance of budget control? Budget control is important because it helps to ensure that resources are allocated and used efficiently and effectively. The budgeting process also helps to identify areas of potential cost savings, improves decision-making, and helps to ensure that resources are allocated and used in the most cost-effective manner. c. Discuss relevant industry sector techniques appropriate for maximising budget performance. Relevant industry sector techniques for maximising budget performance include cost control, performance evaluation, cost-benefit analysis, trends analysis, and benchmarking. Cost control involves monitoring and controlling costs and expenses in order to achieve a set budget. Performance evaluation is used to measure the effectiveness and efficiency of budgeting and spending. Cost-benefit analysis assesses the costs and benefits of a particular project or activity. Trends analysis assesses past performance and trends in order to predict future performance. Benchmarking is the process of comparing performance to industry standards in order to identify areas for improvement. d. What are the relevant financial reporting procedures and cycles? Relevant financial reporting procedures and cycles include the preparation of financial statements and reports, the analysis of financial data, and the preparation of budgets. Financial statements and reports provide an overview of the financial performance of a business, while the analysis of financial data helps to identify areas of potential cost savings. The preparation of budgets involves setting financial goals and objectives, monitoring spending, and evaluating performance. e. Identify and discuss the features and functions of accounting software programs used in the industry sector to manage budgets. Accounting software programs used in the hospitality industry to manage budgets include QuickBooks, Xero, Sage, and MYOB. These programs provide an automated system for tracking financial data, creating budgets, and generating financial reports. Features of these programs include budget planning and forecasting, budget tracking, cost analysis, and trend analysis. Additionally, they provide tools for budgeting and planning, such as budget templates, budget reports, and budget analysis tools.

2. Types of budgets. a. Cash budgets: A cash budget is a financial plan that projects a business’s expected cash inflows and outflows during a specified period of time. It is used to manage cash flow and assess the business’s ability to pay its bills. b. Cash flow budgets: A cash flow budget is a financial plan that projects expected cash inflows and outflows over a specified period of time. It is used to track changes in cash flow and identify potential sources of short-term liquidity. c. Departmental budgets: Departmental budgets are financial plans that project expected revenue and expenses for a specific department within an organization. They are used to help manage resources and ensure that departments stay within their allocated budgets. d. Event budgets: Event budgets are financial plans used to plan and manage the costs of events such as conferences, meetings, and workshops. They are used to ensure that the event is planned within its allocated budget. e. Project budgets: Project budgets are financial plans used to plan and manage the costs of projects. They are used to ensure that the project is planned and executed within its allocated budget. f. Purchasing budgets: Purchasing budgets are financial plans used to plan and manage the costs of purchasing goods and services. They are used to ensure that purchases are within the allocated budget and that necessary items are purchased in a timely manner. g. Sales budgets: Sales budgets are financial plans used to plan and manage the costs of selling goods and services. They are used to ensure that sales goals are met within the allocated budget. h. Wage budgets: Wage budgets are financial plans used to plan and manage the costs of wages and salaries. They are used to ensure that wages are paid within the allocated budget and that employees are compensated fairly. i. Whole of organisation budgets: Whole of organisation budgets are financial plans used to plan and manage the costs of an entire organisation. They are used to ensure that the organisation’s overall financial goals are met within the allocated budget.

3. Budget terminology. 1. Allocation: The assignment of funds to various activities or departments within an organization. 2. Appropriations: Funds that are allocated by an organization for a specific purpose. 3. Balance Sheet: A financial statement that summarizes an organization’s assets, liabilities, and equity on a particular date. 4. Budget: A plan that outlines an organization’s expected income and expenses over a period of time. 5. Cash Flow: The inflow and outflow of money into and out of an organization. 6. Debt Financing: Funds borrowed from external sources to finance activities. 7. Deficit: A situation when expenses exceed income. 8. Equity Financing: Funds acquired from investors in exchange for partial ownership of the organization. 9. Forecasting: The prediction of future financial performance. 10. Income Statement: A financial statement summarizing an organization’s revenues and expenses for a given period. 11. Operating Budget: A budget focused on the day-to-day operations of an organization. 12. Revenue: Funds acquired from the sale of goods or services. 13. Surplus: A situation when income exceeds expenses. 14. Variance Analysis: A comparison of actual results to budgeted results to identify any discrepancies. 15. Zero-Based Budgeting: A budgeting system that requires each expense to be justified each period.

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4. Report on the use, contents and formats of budgets. What is a Budget? A budget is a financial plan that outlines how and when money should be spent. It is used to track and manage income and expenses, and to ensure that the business is financially healthy. Budgets are used by all types of businesses, including hospitality businesses, to help them manage their money and plan for the future. What is a Budget Used For? Budgets are used to help businesses to understand their financial position and plan for the future. They can be used to set goals and objectives, allocate resources, track spending and manage cash flow. In the hospitality industry, budgets are used to plan costs and pricing, operational costs, track expenses, and monitor performance. What is the Content of a Budget? The content of a budget will depend on the type of business and the specific needs of the business. Generally, budgets will include an income statement, a balance sheet, a cash flow statement, and a budget summary. The budget summary will usually include estimated income and expenses, as well as any other relevant information that the business needs to track. What are the Available Formats for Budgets? Budgets can be created in a variety of formats, including spreadsheets, online budgeting software, printed documents, or even handwritten notes. The format of the budget will depend on the needs of the business and the preferences of the budget creator. Conclusion Budgets are an important part of financial planning and management in the hospitality industry. They are used to track and manage income and expenses, and to ensure that the business is financially healthy. Budgets can be created in a variety of formats, including spreadsheets, online budgeting software, printed documents, or even handwritten notes. The content of a budget will vary depending on the type of business and the specific needs of the business.

5. Factors for consideration in the preparation of financial and statistical reports. a. Cash flow: Cash flow is the movement of money in and out of a business, including all cash receipts, payments and investments. It is an important factor to consider when preparing financial and statistical reports, as it provides an indication of the financial health of the business. b. Commercial Account Activity: This refers to the activity of a business's commercial accounts, such as sales, purchases and other transactions. This information is important for tracking the performance of the business and can be used to make decisions about future operations. c. Commission Earnings: This refers to the amount of money earned by sales personnel through commission or other compensation. It is an important factor to consider when preparing financial and statistical reports, as it provides an indication of the sales performance of the business. d. Daily, Weekly and Monthly Transactions: These are the transactions that take place on a daily, weekly or monthly basis. They are important for tracking the performance of the business and can be used to make decisions about future operations. e. Expenditure: This refers to the money spent by the business on items such as goods and services, rent, payroll and other costs. It is important to track these expenses in order to assess the financial health of the business. f. Income: This refers to the money earned by the business through sales, investments, and other sources. It is important to track these incomes in order to assess the financial health of the business. g. Occupancy rates, covers and financial return: Occupancy rates refer to the percentage of available rooms that are occupied by guests. Covers refer to the number of meals served. Financial return refers to the profit or loss made by the business. These metrics are important for tracking the performance of the business, and can be used to make decisions about future operations. h. Performance of Department, Project and/or Products and Services: This refers to the performance of a particular department, project or product/service within the business. It is important to monitor these metrics in order to assess the effectiveness of the business. i. Sales Performance: This refers to the number of sales, the amount of money earned from sales, and the cost of goods sold. It is important to track these metrics in order to assess the performance of the business. j. Sales Returns: This refers to the amount of money that is refunded to customers for returned items. It is important to track this information in order to assess the performance of the business. k. Staff Costs: This refers to the money spent by the business on salaries and wages, benefits, and other related costs. It is important to track these costs in order to assess the financial health of the business. l. Stock Levels: This refers to the number of items in inventory at any given time. It is important to track this information in order to assess the performance of the business. m. Variance in Income and/or Expenditure: This refers to the difference between actual income and/or expenditure and budgeted income and/or expenditure. It is important to track this information in order to assess the financial health of the business.

n. Wastage: This refers to the amount of goods or materials that are discarded due to spoilage, obsolescence, or other causes. It is important to track this information in order to assess the performance of the business. o. Yield: This refers to the rate of return earned on an investment. It is important to track this information in order to assess the performance of the business.

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Assessment Task 2 – Observation Allocate the budget resources: 1. To reduce 3% of expenses in the food and beverage department, we recommend allocating funds according to the following priorities:  Reducing the portion size of food items  Reducing the number of ingredients used  Utilizing existing stock and supplies  Negotiating with vendors for lower prices  Refraining from purchasing unnecessary items 2. Before implementing any changes, it is important to identify and discuss any changes to the income and expenditure priorities with the appropriate personnel. This includes managers, staff, suppliers, and other stakeholders who may be affected. 3. During the decision-making process, it is important to consult with relevant personnel about resource decisions. This will ensure all parties involved are aware of the decisions, and any potential implications. 4. Throughout the process, it is important to promote awareness of the importance of budget control. This can be done through regular staff meetings, emails, or other communication methods. 5. Finally, it is important to maintain detailed records of all resource allocations. This will help to ensure that the budget control process is successful, and that all decisions are made in accordance with the agreed priorities. Budgetary life cycle: 6. Financial records will be checked on a regular basis to identify any differences between actual income and expenditure and the set budgets. 7. All documents related to finances will include relevant financial commitments to ensure accurate monitoring. 8. Any significant deviations from the budget will be reported to the appropriate personnel. 9. Effective management options will be explored to address any identified deviations. 10. Budget status will be reported to relevant colleagues on a regular basis to keep them apprised of progress towards set targets.

Steps to identify and evaluate options for improved budget performance: 11. In order to assess the existing costs and resources, and proactively identify areas for improvement, a complete analysis of the current expenditures should be conducted. This should include an examination of costs related to personnel, inventory, supplies, and other related expenses. A review of the existing resources should also be conducted in order to identify any potential areas of waste or inefficiency. Through this process, any areas of improvement can be identified and addressed in order to help achieve the desired budget outcome. 12. With relevant colleagues, it is important to discuss the desired budget outcomes in order to ensure that all involved are aware of the desired objectives and desired timeframes for achieving them. This includes discussing any targets that need to be met, potential strategies for reaching them, and any other pertinent information. Additionally, it is important to ensure that all involved personnel are aware of any potential risks or consequences associated with the budget goals. 13. In order to investigate new approaches to budget management, at least two of the following activities should be undertaken: a. Discussions with existing suppliers - This will allow for the evaluation of current contracts and negotiations for better terms, as well as obtaining information on potential new suppliers that may offer better pricing and terms. b. Evaluation of staffing and rostering requirements - This will allow for an assessment of the current staffing levels and efficiency of the current roster in order to determine if any changes need to be made. c. Evaluation of impact of potential roster changes - This will allow for the evaluation of any potential roster changes in order to ensure that customer service levels and employee satisfaction are not negatively impacted. d. Review of operating procedures - This will allow for the review of existing procedures in order to identify any potential areas of waste or inefficiency. e. Sourcing new suppliers - This will allow for the evaluation of potential new suppliers and the negotiation of better terms and prices. 14. In order to identify the benefits and disadvantages of new approaches, it is important to evaluate any potential changes from multiple angles. This includes assessing the impact on customer service levels, employee satisfaction, and budget goals. Once the potential benefits and disadvantages of any new approaches have been identified, they should be communicated to the relevant personnel in order to ensure that everyone is aware of the potential impacts of the proposed changes. 15. When developing new approaches to budget management, it is important to consider the impacts on customer service levels and colleagues. This includes assessing the potential impacts on customer service levels in terms of quality, speed, and consistency. Additionally, it is important to consider the potential impacts on colleagues in terms of workload, job satisfaction, and morale. 16. Once all of the information has been gathered and assessed, the findings should be presented in a clear and logical manner. This should include an outline of the proposed approaches, the potential benefits and risks associated with the changes, and any other pertinent information. The presentation should also include any recommended actions that should be taken in order to reach the desired budget goals.

Discussion with assessor: a. Bank deposit documentation: Bank deposit documentation is used to record and track the money that is deposited into the business’s accounts, such as cash or checks. This record keeping allows the business to accurately track its financial position and can be used to record and monitor expenses. b. Bank statements: Bank statements are used to provide a summary of all transactions that have occurred within a certain period of time. They provide an overview of the total amount of money that has been deposited and withdrawn from a business’s account and can be used to reconcile the total amount of money that is held in the account. c. Banking summaries: Banking summaries provide a summary of the transactions that have occurred on a specific account. This can help businesses track their financial position and can be used to monitor expenses. d. Business activity statements: Business activity statements provide a detailed summary of the transactions that have occurred within a certain period of time. This can be used to help businesses track their financial position and can be used to monitor expenses. e. Cheque books: Cheque books are used to record the payments that have been made from a business’s accounts. This record keeping allows businesses to accurately track their financial position and can be used to monitor expenses. f. Credit card transaction statements: Credit card transaction statements provide a detailed summary of all the transactions that have occurred on a specific credit card. This can help businesses track their financial position and can be used to monitor expenses. g. Invoices: Invoices are documents that are used to record the sales of goods and services. This record keeping allows businesses to accurately track their financial position and can be used to monitor expenses. h. Journal entries: Journal entries are used to record the transactions that have occurred within a certain period of time. This record keeping allows businesses to accurately track their financial position and can be used to monitor expenses. i. Labour and wages reports: Labour and wages reports are used to track the amount of money that is paid out to employees for the services that they have provided. This record keeping allows businesses to accurately track their financial position and can be used to monitor expenses. j. Merchant statements: Merchant statements provide a summary of the transactions that have occurred on a specific account. This can help businesses track their financial position and can be used to monitor expenses. k. Merchant summaries: Merchant summaries provide a summary of the transactions that have occurred on a specific account. This can help businesses track their financial position and can be used to monitor expenses. l. Transaction reports: Transaction reports provide a detailed summary of all the transactions that have occurred within a certain period of time. This can be used to help businesses track their financial position and can be used to monitor expenses.

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Types of budget and how they were implemented: a. Cash budgets: A cash budget is a financial plan that shows the expected cash inflows and outflows for a specified period of time. It helps the food and beverage department of Hotel M to identify how much cash is required to be generated to cover the expected expenses. This budget was used to identify where costs could be reduced and the potential for cash savings. b. Cash flow budgets: Cash flow budgets are similar to cash budgets, except they provide a more comprehensive picture of the cash flow of the food and beverage department. This budget was used to forecast the expected cash inflows and outflows and measure the performance of Hotel M's food and beverage department in relation to expected targets. c. Departmental budgets: Departmental budgets are budgets that are set for each department in the hotel. They are used to set targets and objectives for the departments, as well as to track the performance of each department in meeting their objectives. The departmental budget for the food and beverage department at Hotel M was used to identify where cost savings could be achieved in order to reach the overall goal of reducing 3% of expenses. d. Event budgets: Event budgets are budgets that are set for specific events or promotions held by the hotel. For example, the budget for a dinner event or a promotional campaign. The event budget for the food and beverage department at Hotel M was used to identify potential promotions or events that could be used to reduce costs. e. Project budgets: Project budgets are budgets that are set for specific projects or initiatives. For example, the budget for a new menu or a kitchen renovation. The project budget for the food and beverage department at Hotel M was used to analyze the cost of any new initiatives or projects that could be implemented to reduce costs. f. Purchasing budgets: Purchasing budgets are budgets that are set for the purchasing of supplies and materials. They are used to ensure that the food and beverage department at Hotel M is able to purchase the necessary supplies to run the department without going over budget. This budget was used to analyze the cost of purchasing new supplies or materials and to identify potential areas where cost savings could be made. g. Sales budgets: Sales budgets are budgets that are set for the sales of products and services. They are used to ensure that the food and beverage department at Hotel M is able to generate the necessary revenue to cover its costs without going over budget. This budget was used to analyze the likely sales figures for the department and to identify potential areas where cost savings could be made. h. Wage budgets: Wage budgets are budgets that are set for the wages of employees. They are used to ensure that the food and beverage department at Hotel M is able to pay its employees the necessary wages without going over budget. This budget was used to analyze the cost of wages and to identify potential areas where cost savings could be made. i. Whole of organisation budgets: Whole of organisation budgets are budgets that are set for the entire organisation. They are used to ensure that the hotel is able to meet its financial goals and objectives without going over budget. This budget was used to analyze the financial performance of the entire organisation and to identify potential areas where cost savings could be made.

Assessment Task 3 – Written Test 1 What information will help you to allocate funds? Information that would help to allocate funds would include budget information and expenditure details, cash flow forecasts, revenue projections, and any industry or market trends that may affect the budget. Additionally, data related to the organization's mission, goals, and objectives, as well as any legal or regulatory requirements, could be helpful in determining the best use of the funds. 2 Why is it important to discuss any changes to the priorities and consult with relevant personnel about budgets and resource decisions? It is important to discuss any changes to the priorities and consult with relevant personnel about budgets and resource decisions to ensure that all stakeholders are informed and involved in the decision-making process. This helps to ensure that the decisions are made for the benefit of the organization and its stakeholders, rather than for personal gain. Additionally, involving all relevant personnel in budget and resource decisions allows for a more comprehensive analysis of the impact of any changes and the potential risks associated with them. This can help to ensure that the final decisions are sound and beneficial to the organization. 3 Identify three ways you could promote awareness of the importance of budget control with staff. 1. Host regular budget control seminars or workshops for staff. Give employees the opportunity to learn about budget control and how to implement it in their work. 2. Develop an internal budget control training program and offer incentives for staff who complete it. 3. Share success stories of projects that have been completed within budget. Showcase employees who have been successful in keeping costs down and demonstrate how budget control can benefit the organization. 4 How should you maintain records of resource allocation? 1. Use an online project management software: Online project management software, such as Basecamp, Trello, or Asana, can help you track and manage resource allocations. These tools allow you to view your team's activities in real time and set up automated reminders to ensure that everyone is on the same page and tasks are completed on time. 2. Create a spreadsheet: Spreadsheets are an excellent way to keep track of resource allocations. You can create a spreadsheet with each team member's tasks and resources, as well as any other relevant information, such as deadlines, priorities, and progress updates. 3. Utilize a project management app: Project management apps, such as Wrike, can help you keep track of resource allocations. These apps allow you to assign tasks to individual team members and track their progress in real time and provide notifications when tasks are completed.

4. Use an online resource management system: An online resource management system, such as Resource Guru or Float, can help you keep track of resource allocations. These systems allow you to assign tasks to team members and visually track their progress, as well as check availability and assign resources to tasks. 5 Why is it important to use available financial records to check the budgeted values against the actual values? Using financial records to check the budgeted values against the actual values is important because it allows you to identify any potential discrepancies or issues with the budget. It also helps you to more accurately track spending, identify areas where costs are overrunning and make adjustments accordingly. Finally, it helps you to evaluate the success and effectiveness of the budget. 6 What are the benefits of including financial commits in all documentation? 1. Increased transparency and accountability: Financial commits provide a clear record of what funds are being allocated and how they are being spent. This makes it easier to track and identify any issues or discrepancies. 2. Improved planning: By incorporating financial commitments into documentation, organizations can better plan for future needs and anticipate potential problems. 3. Increased efficiency: Financial commitments help streamline operations and reduce administrative overhead. This can help organizations save money in the long run. 4. Improved compliance: By including financial commitments in all documentation, organizations can ensure that their financial activities are in compliance with applicable laws and regulations. 7 What are the two main types of deviations that will need to be investigated and reported? 1. Favourable deviations: A favourable deviation occurs when actual results are better than the budgeted or expected results. For example, if a business expected to make $100,000 in revenue in a given period but actually made $120,000, this would be a favourable deviation. These deviations can be the result of factors such as cost savings, increased sales, or better-than-expected performance. 2. Unfavourable deviations: An unfavourable deviation occurs when actual results are worse than the budgeted or expected results. For example, if a business expected to make $100,000 in revenue in a given period but only made $80,000, this would be an unfavourable deviation. These deviations can be the result of factors such as cost overruns, lower-than-expected sales, or poor performance. 8 What methods are commonly used to investigate deviations? a) Variance analysis: This involves comparing actual results to the budgeted amounts and analyzing the differences, or variances. Variances can be either favourable (where actual results are better than budgeted) or unfavourable (where actual results are worse than budgeted). By analyzing the variances, businesses can identify the areas where they need to make adjustments.

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b) Root cause analysis: This involves identifying the underlying causes of the deviations from the budget. Businesses can use tools such as the "5 Whys" technique to drill down into the root causes of the variances and identify the factors that are driving the deviations. c) Trend analysis: This involves looking at the trend in the variances over time. By analyzing the trends, businesses can identify whether the deviations are improving or worsening over time and take corrective action accordingly. d) Benchmarking: This involves comparing the budgeted amounts to industry benchmarks or best practices. By comparing their performance to industry standards, businesses can identify areas where they may be falling behind and take corrective action. e) Scenario analysis: This involves testing different scenarios to see how they would impact the budget. For example, businesses could simulate the impact of a new product launch or a change in pricing strategy to see how it would impact their budget. By doing so, businesses can identify the potential risks and opportunities associated with different scenarios and make informed decisions accordingly. 9 Who are the appropriate colleagues that will need to be advised of budget status in relation to targets? a) Senior management: Senior management members are responsible for overseeing the entire organization, and they are usually the ones who set the budget targets. They will need to be informed regularly about the budget status and whether the targets are being met. b) Department heads: Department heads are responsible for managing their respective departments and ensuring that their teams are staying within the allocated budget. They will need to be informed about the budget status and whether their department is meeting the targets. c) Finance department: The finance department is responsible for managing the company's finances, and they will need to be informed about the budget status to ensure that they are able to manage the cash flow effectively. d) Project managers: Project managers are responsible for managing individual projects and ensuring that they are delivered on time and within budget. They will need to be informed about the budget status of their projects and whether they are meeting the targets. e) Team leaders: Team leaders are responsible for managing teams within departments, and they will need to be informed about the budget status to ensure that their teams are staying within budget and meeting the targets. 10 What are three examples of existing costs or resources that may be assessed to identify areas for improvement? 1. Overhead costs: Overhead costs refer to expenses that a business incurs for maintaining its operations but are not directly related to the production of goods or services. Examples include rent, utilities, and insurance. By analyzing overhead costs, a business can identify areas where it may be overspending and find ways to reduce these expenses. 2. Variable costs: Variable costs are expenses that vary with the level of production or sales. Examples include raw materials, labor costs, and sales commissions. By analyzing variable costs, a business can identify areas where it may be able to reduce costs without negatively impacting operations.

3. Capital expenditures: Capital expenditures refer to investments in long-term assets such as buildings, equipment, and technology. By analyzing capital expenditures, a business can identify areas where it may be overspending on assets that are not providing a sufficient return on investment or where it may be underinvesting in assets that could provide a competitive advantage. 11 What steps can you task to ensure you are well positioned when discussing and negotiating desired budget outcomes with relevant colleagues? 1. Prepare thoroughly: Before the meeting, ensure that you have a clear understanding of the budget requirements, including the goals and objectives, expected outcomes, and potential challenges. 2. Gather relevant data and evidence: Collect data and evidence that supports your budget requests, such as financial reports, market research, and performance metrics. 3. Identify key stakeholders: Identify the key stakeholders who will be involved in the budget decision-making process, including decision-makers, influencers, and advocates. 4. Develop a clear and concise message: Develop a clear and concise message that outlines your proposal and its benefits. Be sure to address any potential concerns or objections that may arise. 5. Practice your pitch: Practice your pitch and be prepared to respond to any questions or objections that may arise. Consider rehearsing with a colleague or mentor to receive feedback and improve your presentation skills. 6. Be flexible and open-minded: Be willing to compromise and consider alternative solutions if necessary. This will demonstrate that you are open-minded and collaborative, and increase the likelihood of reaching a mutually beneficial agreement. 7. Follow up: After the meeting, follow up with the key stakeholders to thank them for their time and support. This will help build relationships and maintain momentum for future budget discussions. 12 Outline the four steps in managing the budgeting process. 1. Planning: The first step in managing the budgeting process is planning. This involves defining the organization's goals and objectives, and determining the resources required to achieve them. This step also involves identifying the various revenue sources and estimating the expenses that will be incurred in achieving the goals. 2. Developing the budget: Once the planning stage is complete, the next step is to develop the budget. This involves creating a detailed plan that outlines the expected revenues and expenses for the period. The budget should be developed in accordance with the organization's goals and objectives, and should take into account any constraints or limitations. 3. Implementation: The third step in managing the budgeting process is implementation. This involves putting the budget into action and monitoring progress. This step also involves making any necessary adjustments to the budget based on changes in circumstances or unforeseen events.

Evaluation: The final step in managing the budgeting process is evaluation. This involves reviewing 4. the budget to determine whether the organization achieved its goals and objectives, and whether the budget was effective in managing resources. The evaluation should identify any areas for improvement and provide insights for future budgeting processes. 13 Why is it important to define and communicate any benefits and disadvantages of new approaches? Defining and communicating benefits and disadvantages of new approaches is essential for making informed decisions, allocating resources effectively, and managing risks. For example, communicating the disadvantages of new approaches helps stakeholders identify potential risks and develop risk management strategies. By understanding the potential risks, stakeholders can take measures to mitigate them. 14 Why should you consider the impact of budget changes on colleagues and customer service levels? By considering the impact of budget changes on colleagues and customer service levels, organizations can make informed decisions that balance financial goals with the well-being of their employees and the satisfaction of their customers. 15 How should recommendations for budget management be presented? It is important to present recommendations for budget management in a clear, structured, and organized manner that focuses on the benefits of the proposed changes and addresses potential concerns. 16 Briefly identify and discuss the use, contents and formats of financial reports. Uses:  Provide an overview of an organization's financial performance  Help with decision-making related to budget planning and management  Identify financial trends and patterns over time  Evaluate the effectiveness of financial strategies and initiatives  Provide transparency and accountability to stakeholders Contents:  Income statement, which provides a summary of revenues and expenses over a specified period  Balance sheet, which shows an organization's assets, liabilities, and equity at a given point in time  Cash flow statement, which shows how cash flows in and out of an organization over a specified period

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 Notes to the financial statements, which provide additional information about the organization's financial performance and accounting policies Formats:  Financial statements can be presented in tables or charts to help visualize the data  Narrative explanations can be provided to give context to the financial statements and highlight significant changes or events  Financial reports can be presented in different formats, including annual reports, quarterly reports, and monthly reports, depending on the needs of the organization and its stakeholders 17 Briefly identify and discuss the use, contents and formats of statistical reports. Uses:  Identify trends and patterns in financial data  Make informed decisions based on past performance and current conditions  Identify areas of the budget that may require adjustment or further scrutiny  Develop projections and forecasts for future budget planning Contents:  Historical financial data, including revenue and expenses  Breakdown of budgeted vs. actual spending  Variance analysis to identify differences between expected and actual results  Financial ratios to assess financial health and performance  Projections and forecasts for future budget planning Formats:  Graphs and charts to visualize trends and patterns  Tables to display numerical data and comparisons  Written reports to provide context and analysis of the financial data  Presentations to communicate financial information to stakeholders 18 What is the information that will need to be presented in your report to inform decision making? Information such as historical financial data, budgeted or actual spending, variance analysis, financial ratios, projections and forecasts. 19 Briefly discuss the following types of financial reports: a. Bank deposit documentation: This refers to any documentation related to deposits made into a bank account, such as deposit slips or electronic deposit confirmations. Bank deposit documentation is important for record-keeping and accounting purposes, and can be used to reconcile bank statements and track cash flow.

b. Bank statements and Banking summaries: Bank statements and banking summaries provide a record of transactions that have occurred in a bank account over a specific period of time. They are important for reconciling accounts, tracking cash flow, and identifying any discrepancies or errors. c. Business activity statements: Business activity statements are a type of financial report used in Australia to report goods and services tax (GST), pay as you go (PAYG) tax, and other taxes. They are typically submitted to the Australian Taxation Office (ATO) on a quarterly basis. d. Cheque books: Cheque books are a set of pre-printed cheques that can be used to make payments or withdrawals from a bank account. They provide a record of transactions and can be used to reconcile bank statements and track cash flow. e. Credit card transaction statements: Credit card transaction statements provide a record of transactions made using a credit card over a specific period of time. They are important for reconciling accounts, tracking expenses, and identifying any fraudulent or unauthorized transactions. f. Invoices: Invoices are documents that detail the goods or services provided by a business and the amount owed by the customer. They are important for record-keeping and accounting purposes, and can be used to track revenue and accounts receivable. g. Journal entries: Journal entries are a type of accounting record used to track financial transactions. They detail the accounts that are debited and credited for each transaction and are used to prepare financial statements and reports. h. Labour and wages reports: Labour and wages reports provide a record of employee wages and other labour-related expenses. They are important for tracking labour costs and complying with tax and labour laws. i. Merchant statements and summaries: Merchant statements and summaries provide a record of credit card transactions processed by a business. They are important for reconciling accounts and tracking revenue. j. Transaction reports: Transaction reports provide a detailed record of financial transactions that have occurred over a specific period of time. They are important for tracking cash flow, identifying errors or discrepancies, and preparing financial reports.

SITXFIN003 Answer 3

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