SITXFIN003 Manage Finances Within a Budget
SITXFIN003
Manage finances within a budget
Learner Guide
Table of Contents
Unit of Competency
..........................................................................................................................
4
Application
...........................................................................................................................................
4
Performance Criteria
............................................................................................................................
5
Foundation Skills
..................................................................................................................................
6
Assessment Requirements
...................................................................................................................
7
1. Allocate budget resources
.............................................................................................................
9
1.1 – Allocate funds according to budget and agreed priorities
........................................................... 10
Budgets
..............................................................................................................................................
10
Allocating funds based on organisational priorities
..........................................................................
10
Activity 1A
..........................................................................................................................................
12
1.2 – Discuss changes to income and expenditure priorities with appropriate
colleagues prior to
implementation
.....................................................................................................................................
13 Discussing changes to income and expenditure
................................................................................
13
Activity 1B
..........................................................................................................................................
16
1.3 – Consult with and inform relevant personnel about resource decisions
....................................... 17
Consulting personnel about resource decisions
................................................................................
17
Informing personnel about resource decisions
.................................................................................
18
Activity 1C
..........................................................................................................................................
19
1.4 – Promote awareness of the importance of budget control
........................................................... 20
Promoting awareness of budget control
...........................................................................................
20
Activity 1D
..........................................................................................................................................
22
1.5 – Maintain detailed records of resource allocation according to
organisational control systems . 23
Recording resource allocation
...........................................................................................................
23
Budgetary terms
................................................................................................................................
24
Activity
1E...........................................................................................................................................
25
2. Monitor financial activities against budget
...................................................................................
26
2.1 – Use financial records to regularly check actual income and
expenditure against budgets .......... 27
Monitoring financial records
..............................................................................................................
27
Checking expenditure against budgets
..............................................................................................
29
Checking income against budgets
......................................................................................................
30
Activity 2A
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31
2.2 – Include financial commitments in all documentation to ensure accurate
monitoring ................ 32
Including financial commitments in all documentation
.................................................................... 32
Activity 2B
..........................................................................................................................................
33
2.3 – Identify and report deviations according to significance of deviation
......................................... 34
Identifying
deviations.........................................................................................................................
34
Variances
............................................................................................................................................
34
Significance of
deviations...................................................................................................................
35
Reporting deviations
..........................................................................................................................
35
Activity 2C
..........................................................................................................................................
36
2.4 – Investigate appropriate options for more effective management of
deviations ......................... 37
Managing deviations
..........................................................................................................................
37
Activity 2D
..........................................................................................................................................
38
2.5 – Advise appropriate colleagues of budget status in relation to
targets......................................... 39
Advising colleagues of budget status
.................................................................................................
39
Circulating budget status reports
......................................................................................................
39
Activity
2E...........................................................................................................................................
40
3. Identify and evaluate options for improved budget performance
................................................. 41
3.1 – Assess existing costs and resources and proactively identify areas
for improvement ................. 42
Assessing existing costs and resources
..............................................................................................
42
Identifying areas for improvement
....................................................................................................
43
Activity 3A
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44
3.2 – Discuss desired budget outcomes with relevant colleagues
........................................................ 45
Holding useful discussions
.................................................................................................................
45
Discussing budget outcomes
.............................................................................................................
46
Activity 3B
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47
3.3 – Undertake appropriate research to investigate new approaches to
budget management ......... 48
Researching new approaches
............................................................................................................
48
Activity 3C
..........................................................................................................................................
49
3.4 – Define and communicate the benefits and disadvantages of new
approaches ........................... 50
Defining and communicating the benefits of new approaches
......................................................... 50
Defining and communicating the disadvantages of approaches
....................................................... 50
Activity 3D
..........................................................................................................................................
51
3.5 – Take account of impacts on customer service levels and colleagues in
developing new
approaches
.............................................................................................................................................
52 Impact on customer service
...............................................................................................................
52
Impact on colleagues
.........................................................................................................................
53
Activity
3E...........................................................................................................................................
54
3.6 – Present clear and logical recommendations for budget management
........................................ 55
Presenting recommendations for budget management
................................................................... 55
Presenting evidence
...........................................................................................................................
56
Activity 3F
...........................................................................................................................................
57
4. Complete financial and statistical reports
....................................................................................
58
4.1 – Complete financial and statistical reports within designated
timelines ....................................... 59
Completing financial and statistical reports
......................................................................................
59
The financial report
............................................................................................................................
59
The statistical report
..........................................................................................................................
60
Activity 4A
..........................................................................................................................................
61
4.2 – Prepare and present clear and concise information to enable informed
decision making .......... 62
Using information to inform decision-making
...................................................................................
62
Preparation and presentation
............................................................................................................
62
Activity 4B
..........................................................................................................................................
63
Summative Assessments
........................................................................................................................
64
Appendices
.....................................................................................................................................
65
Accounting software
..........................................................................................................................
65
References
.............................................................................................................................................
66
Unit of Competency
Application
This unit describes the performance outcomes, skills and knowledge required
to take responsibility for budget management where others may have
developed the budget. It requires the ability to interpret budgetary
requirements, allocate resources, monitor actual income and expenditure,
and report on budgetary deviations.
The skills and knowledge for budget development are covered in SITXFIN004
Prepare and monitor budgets.
This unit applies to all tourism, travel, hospitality and event sectors.
The budget may be for an entire organisation, for a department or for a
particular project or activity.
It applies to those who operate independently or with limited guidance from
others. This includes supervisors and departmental managers.
No occupational licensing, certification or specific legislative
requirements apply to this unit at the time of publication.
Unit Sector
Cross-Sector
Performance Criteria
Element Performance Criteria
Elements describe the Performance criteria describe the performance needed
to essential outcomes. demonstrate achievement of the element.
1. Allocate budget 1.1 Allocate funds according to budget and agreed
priorities resources 1.2 Discuss changes to income and expenditure
priorities with appropriate colleagues prior to implementation
1.3 Consult with and inform relevant personnel about resource decisions
1.4 Promote awareness of the importance of budget control
1.5 Maintain detailed records of resource allocation according to
organisational control systems
2. Monitor financial 2.1 Use financial records to regularly check actual
income and activities against expenditure against budgets
budget 2.2 Include financial commitments in all documentation to
ensure accurate monitoring
2.3 Identify and report deviations according to significance of deviation
2.4 Investigate appropriate options for more effective management of
deviations
2.5 Advise appropriate colleagues of budget status in relation to targets
3. Identify and evaluate 3.1 Assess existing costs and resources and
proactively identify options for improved areas for improvement budget
performance 3.2 Discuss desired budget outcomes with relevant colleagues
3.3 Undertake appropriate research to investigate new approaches to budget
management
3.4 Define and communicate the benefits and disadvantages of new approaches
3.5 Take account of impacts on customer service levels and colleagues in
developing new approaches
3.6 Present clear and logical recommendations for budget management
4. Complete financial 4.1 Complete financial and statistical reports within
designated and statistical reports timelines
4.2 Prepare and present clear and concise information to enable informed
decision making
Foundation Skills
This section describes language, literacy, numeracy and employment skills
incorporated in the performance criteria that are required for competent
performance.
➢ Reading skills to: o interpret business and financial documents ➢ Writing
skills to:
o document clear recommendations based on budget information and reports ➢
Oral communication skills to:
o discuss budget requirements and seek and provide feedback ➢ Numeracy
skills to:
o interpret and use budget figures in day-to-day work operations o
calculate budget estimates and scenarios for performance improvement ➢
Problem-solving skills to:
o identify budget deviations and deficiencies and develop options for
improved budgetary performance
➢ Teamwork skills to: o discuss desired budget outcomes with team members
and provide direction on resource use ➢ Technology skills to: o use
accounting software packages.
Assessment Requirements
Performance Evidence
Evidence of the ability to complete tasks outlined in elements and
performance criteria of this unit in the context of the job role, and:
➢ Manage a budget for a business over a three-month period that meets the
specific business’ needs ➢ Undertake at least two of the following to
inform management of the above budget:
o discussions with existing suppliers o evaluation of staffing and
rostering requirements o evaluation of impact of potential roster changes o
review of operating procedures o sourcing new suppliers
➢ Monitor income and expenditure and evaluate budgetary performance over
the above budgetary life cycle
➢ Complete financial reports related to the above budget within designated
timelines and using correct budget terminology.
Knowledge Evidence
Demonstrated knowledge required to complete the tasks outlined in elements
and performance criteria of this unit:
➢ Types of financial records:
o bank deposit documentation o bank statements o banking summaries o
business activity statements o cheque books
o credit card transaction statements
o invoices o journal entries o labour and wages reports o merchant
statements o merchant summaries o transaction reports ➢ Types of budgets: o
cash budgets o cash flow budgets o departmental budgets o event budgets o
project budgets o purchasing budgets o sales budgets o wage budgets
o whole of organisation budgets
➢ Factors for consideration in the preparation of financial and statistical
reports:
o cash flow o commercial account activity o commission earnings o covers
and financial return o daily, weekly and monthly transactions
o expenditure
o income
o occupancy rates and financial return
o performance of department, project and/or products and services o sales
performance o sales returns o staff costs o stock levels
o variance in income and/or expenditure
o wastage o yield
➢ Use, contents of and formats for:
o budgets
o financial reports o statistical reports
➢ Budget terminology
➢ Specific industry sector and organisation:
o use of budgets to control costs and enhance profitability
o importance of budget control o techniques for maximising budget
performance o financial reporting procedures and cycles o features and
functions of accounting software programs used to manage budgets.
Assessment Conditions
Skills must be demonstrated in an operational tourism, travel, hospitality
or events business operation for which budgets are managed. This can be:
➢ An industry workplace
➢ A simulated industry environment.
Assessment must ensure access to:
➢ Computers, printers and accounting software packages
➢ Budgets for specific projects, events or operational activities
➢ Others with whom the individual can discuss budget components; these can
be:
o those in an industry workplace who are assisted by the individual during
the assessment process; or
o individuals who participate in role plays or simulated activities, set up
for the purpose of assessment, in a simulated industry environment operated
within a training organisation.
Assessors must satisfy the Standards for Registered Training Organisations’
requirements for assessors.
Links
Companion Volume Implementation Guide: -
1. Allocate budget resources
1.1. Allocate funds according to budget and agreed priorities
1.2. Discuss changes to income and expenditure priorities with appropriate
colleagues prior to implementation
1.3. Consult with and inform relevant personnel about resource decisions
1.4. Promote awareness of the importance of budget control
1.5. Maintain detailed records of resource allocation according to
organisational control systems
1.1 – Allocate funds according to budget and agreed priorities
Budgets
In simplified terms, a budget is a spending plan which is created by
estimating revenue, income, and resources over a specified period of time.
Budgets are usually created to help manage expenditure in specific
areas/departments of a business. They will also help managers to prioritise
and allocate funding for projects, events, or organisational goals.
As a general rule, a budget will contain the following information:
➢ Known costs, e.g., for facilities or administrative costs
➢ Estimated costs for the elements that are not fixed or known, e.g., staff
work hours ➢ Income that is received which offsets the costs.
As a departmental manager or supervisor, much of your work will involve
creating, monitoring, and managing budgets, as well as making managerial
decisions based on budgetary allowances. As you will already be aware,
budgets affect nearly every decision you make as a manager.
You may be responsible for managing a number of different budgets across
your organisation – some of these may be listed below.
Types of budgets include:
➢ Departmental budgets
➢ Event budgets
➢ Project budgets
➢ Purchasing budgets
➢ Labour and wage budgets
➢ Sales budgets
➢ Whole of organisation budgets.
Allocating funds based on organisational priorities
An important part of your job will involve allocating budgetary funds to
specific areas of your organisation. Before you can consider allocating any
funds, however, you will need to discuss, negotiate, and decide on
organisational priorities with key stakeholders.
What are your organisation’s priorities?
You will need to have a clear understanding of what your organisation’s
strategic priorities are, as this will determine how much funding you
provide different areas of the business.
Your organisation’s priorities will usually be summarised in mission
statements, vision statements, and work plans, but if you are still unsure
you may need to organise a meeting with other financial decisionmakers to
discuss and clarify your strategic direction.
Your organisation’s priorities will depend on what kind of business entity
it is, your organisation’s position within its market/industry, and its
vision for the future. The priorities you decide on will not only allow
your company to remain operational, but it will also allow it to flourish
in a niche market area, maximising profitability in the long run.
For example, your organisation’s priorities may include:
➢ Promoting a new product or service (marketing)
➢ Expanding your department through increasing staff numbers (human
resources)
➢ Developing a new product
➢ Improving product/service quality
➢ Improving customer communications
➢ Increasing staff retention
➢ Improving reputation among target audiences.
Allocating funds
How much funding you direct to any part of your organisation will depend on
how much is needed to meet goals and remain operational.
Estimating expenditure in different departments and across different
projects can usually be done by looking at historic expenditure patterns to
identify the level of funding needed to achieve goals and reach desired
outcomes.
Activity 1A
1.2 – Discuss changes to income and expenditure priorities with appropriate
colleagues prior to implementation
Discussing changes to income and expenditure
In most organisations, you will not be responsible for setting priorities
and allocating funding alone; usually, you will be part of a team which
discusses and negotiates a range of options, in order to establish the best
route forward for the organisation.
Who do you need to discuss priorities with?
The colleagues that you need to hold discussions with will vary depending
on the size of your organisation and how it operates (this should be clear
in organisational protocols and procedural documents).
In most cases, you will need to involve all key stakeholders and financial
decision makers, holding group meetings where appropriate. At the same
time, you should be careful to only involve those who stand to be affected
by decisions, or who hold specific skills, knowledge, or experience in the
areas being discussed.
Having a discussion group which is too large can cause confusion, and
decision-making can become a much more difficult process.
Normally, you will need to discuss priorities with:
➢ Managers from relevant departments
➢ Accounting professionals (internal and external)
➢ Supervisors from relevant departments
➢ Owners and directors
➢ Stakeholders
➢ Purchasing staff
➢ Marketing staff
➢ Specialists (internal and external)
➢ A spokesperson for employees.
Discussions
Usually, the best format for holding discussions is a formal, face-to-face
meeting, which involves all decision makers and key stakeholders.
A formal meeting allows all parties to field ideas and raise
concerns/disagree when necessary, as well as allowing those attending to
ask questions and clarify points. Organised meetings generally improve
chances of reaching decisions quickly and efficiently, and will ensure that
all parties are aware of changes to income and expenditure priorities prior
to their implementation.
Expenditure changes
If your organisation is going to control its financial situation and stay
within budget, it is vital that all managers and financial decision-makers
are clear about expenditure requirements – Including how it requires them
to change their practices and overall approach. All spending must
contribute to the organisation’s goals and strategic direction in some way;
any spending outside these goals is usually classified as waste.
Expenditure can be broken down into departmental spending – such as labour
and wages, stock purchasing, general overheads, marketing and advertising,
training, and wastage.
Other than general overheads, which will usually remain constant in order
to keep the business running, the organisation’s other costs can change as
priorities change. For example, priorities for one month may include
training new staff; the month after may be more focussed on developing new
products or improving customer services.
Remember: you won’t be able to spend on every area at once (if you are to
stay within budget), which is why it is important to prioritise carefully.
All personnel will need to know:
➢ How to make expenditure choices that contribute to the organisation’s
overall goals
➢ Which areas of the organisation require reduced spending and cutbacks
➢ Which priorities will require extra funding and why
➢ Time periods for priority funding and expenditure
➢ Any budgetary changes made to support priorities
➢ Exact monitoring methods to finances are controlled
➢ How financial records need to be kept
➢ How financial information needs to be reported.
Income
Although controlling expenditure will be your main priority, you should not
forget about monitoring and managing sources of income. Colleagues will
also have to be informed about expected revenues and sources of income
during budgetary periods, so that they can work towards ensuring these
areas are monitored and focused on.
You should communicate:
➢ Expected sales figures
o make sure colleagues receive a breakdown of expected sales figures for
key services and products
➢ Expected investment
➢ Expected commission earning figures
➢ Expected donations
➢ Occupancy and gross income.
Note: the term yield is used to define the income return on an investment.
Activity 1B
1.3 – Consult with and inform relevant personnel about resource decisions
Consulting personnel about resource decisions
You must consult with all parties who were listed in chapter 1.2 about the
exact uses of your organisation’s financial resources – Including
departmental managers, supervisors, owners, accountants and other key
stakeholders.
You will need to discuss how finances are currently allocated and how they
need to be allocated in the future, in order to meet organisational goals
without running over budget.
Consulting with other financial decision-making personnel will allow you to
increase your knowledge of your organisation, including how money is
currently spent and what extra needs and requirements there are. For
example, a manager from a different department may identify that more staff
are needed in a certain operational area, and may be able to provide
details about the funding needed to achieve this. Another manager may be
able to identify ways of reducing overheads, which in turn will free up
funding to be used elsewhere.
You will only be able to find out about requirements in different areas of
your organisation by consulting with a range of personnel.
Spending on resources
You may decide to invest more or less in any of the following areas.
Resource decisions may involve:
➢ Human resources o expenditure includes:
▪ wages
▪ number of personnel at each level of the hierarchy
▪ recruitment
➢ Physical resources o expenditure includes:
▪ the buying of products
▪ the building and maintenance of infrastructure
▪ the buying and maintenance of equipment and technology
➢ Non-physical assets o intellectual property
➢ Marketing and advertising o expenditure may include:
▪ TV advertising
▪ magazine and newspaper space ▪ Billboards.
Informing personnel about resource decisions
You will need to inform all personnel about resource decisions, so that
they can make appropriate financial decisions in their own departments, and
so that all parties can work toward the same organisational goals.
You may communicate resource decisions to employees in a number of
different ways. If decisions affect personnel company-wide, then it is best
to call a group meeting to announce decisions. If, however, information
concerns specific personnel, then you may choose to arrange smaller
meetings, send emails, make telephone calls, or send memos.
Activity 1C
1.4 – Promote awareness of the importance of budget control
Promoting awareness of budget control
It is essential to explain and promote the importance of budget control to
all personnel that you manage, mentor, or supervise. Educating personnel
and pushing the importance of budget control can be the key to staying
within budget, while also achieving agreed objectives.
Ensuring all personnel know why a budget is in place, and are aware of the
goals and priorities that have been agreed upon, will allow employees to
feel involved at all levels of the organisation. This feeling of
involvement can motivate employees to adhere to the organisation’s strategy
and make decisions that support any budget in place.
The overall efficiency of the organisation – including how well it controls
expenditure and maximises all forms of income – relies on the involvement
of all employees, at all levels of the organisational hierarchy. Just
because managers and supervisors make the decisions, it doesn’t mean they
can guarantee the delivery of work objectives within budget on their own.
All staff need to be involved.
You will need to stress the importance of:
➢ Expected income in the budgetary period o you may need to cover any
strategies that will maximise income
➢ Expected overheads o you may need to cover strategies that will minimise
overheads
➢ Funding allocation o how much funding each department will get o specific
funding for events o specific funding for development o funding for
recruitment and staff training o funding for marketing and advertising
➢ Recording and reporting o all personnel should be clear and confident
about how financial data is recorded
o all personnel should be clear and confident about how to report financial
information to managers and supervisors.
Explaining budgets
You may need to explain and promote the importance of a wide range of
different budgets, depending on the employee’s position within the company,
and their involvement with tasks that could affect any budgets. You will
need to make it clear why each budget exists and how their actions can help
to manage, monitor and support it.
Depending on the personnel you promoting awareness to, you may need to
explain:
➢ Cash budgets o an estimation of cash inflows and outflows for a specific
period
➢ Departmental budgets o estimates income and expenses for a single
department within an organisation
➢ Wage budgets
o an estimation of the cost of employees’ wages
➢ Project specific budgets
o an estimation of the costs associated specifically with one project
➢ Purchasing budgets o an estimation of the costs associated with buying
stock and other physical assets
➢ Sales and revenue budgets (which may incorporate debtors) o an estimation
of sales revenue and expenditure
o it is important that you know you have the financial means to carry out
planned activities
➢ Cash flow budgets
o an estimation of all cash receipts and cash expenditures that are
expected to occur in a certain period.
Activity 1D
1.5 – Maintain detailed records of resource allocation according to
organisational control systems
Recording resource allocation
It is vitally important to record all resources allocated, if you want to
manage finances within a budget.
You will need to be sure about how funding has been allocated – for
example, which departments have received how much funding? You will also
need to be sure about this funding is being used, and this will require
good record keeping practices by all personnel.
Expenses records
You must keep certain records when resources and funding are allocated in
your organisation.
The expenses records that need to be kept include:
➢ Purchase orders
o proof that a valid purchase was authorised and as an initial indication
as to which department and perhaps budget line/code the purchase was
intended for
➢ Delivery docket/invoice/statement
o these documents demonstrate that the goods which were ordered were in
fact received and provide the evidence about how much was spent.
➢ Internal requisitions
o these will prove that stock was issued from a central store to a
specified department; the quantity and quality of each item will be listed
on the requisition, thereby enabling the appropriate amounts to be charged
against relevant departments
➢ Interdepartmental transfers
o similar to internal requisitions, these documents prove that stock that
has been issued to a certain department has been ‘on–sold’ to another
department and must now be charged against them
➢ Creditors ledger o a detailed explanation of who your organisation owe
money to, and how much.
Tracking physical resources
Every item of equipment bought should be given an identifying number or
code. When the item is issued to a department, its whereabouts should be
recorded in a dedicated assets register.
The assets register may also record the date of purchase, the supplier,
when warranties run out, the price paid, date issued to the department, as
well as details about when the item requires maintenance/service and/or
replacement.
Items covered by this register may include cars, in–room facilities (such
as beds, televisions and fridges), technology, and office equipment. Some
registers record all items of equipment, including what may be regarded as
‘small equipment’; some registers record only ‘large equipment’ or items
over a certain cost price.
Asset registers can also be used to allocate expenses against departments
when a purchase has been made and for purposes of calculating depreciation.
Budgetary terms
When dealing with budgets, knowing the right terminology will help you to
navigate through and understand the different parts that make up your
organisation’s budgets.
Terms used in budgets (this list is not exhaustive) include:
➢ Allotment – amounts of money which are allocated within the budget
➢ Budget code – a numeric code that can be used to differentiate between
different budget areas
➢ Fixed costs – costs which do not change
➢ Variable costs – costs which are subject to fluctuation
➢ Semi-variable costs – costs which must occur but which have a variable or
option (e.g., rental equipment may be rented for a short or long period of
time)
➢ Direct costs – costs which are specific to an element involved
➢ Indirect costs – costs which must be incurred but are unspecific
➢ Budget variance – any difference found between budgeted and real amounts
➢ Balanced budget – where the expenditure correctly equals the income
➢ Pro forma balance sheet (or income statement) – a budgeted balance sheet
(or income sheet).
Activity 1E
2. Monitor financial activities against budget
2.1. Use financial records to regularly check actual income and expenditure
against budgets
2.2. Include financial commitments in all documentation to ensure accurate
monitoring
2.3. Identify and report deviations according to significance of deviation
2.4. Investigate appropriate options for more effective management of
deviations
2.5. Advise appropriate colleagues of budget status in relation to targets
2.1 – Use financial records to regularly check actual income and
expenditure against budgets
Monitoring financial records
The monitoring of budgets will form a large part of your role as a manager,
and to do this you will have to regularly check financial records to be
aware of actual income and expenditure.
Studying documents such as balance sheets, revenue reports, and overall
expenditure reports will give you a good overview of actual income and
expenditure, but you may have to investigate further to understand the
exact status of current finances against budgets.
Types of financial records
You will need to check a range of financial records to understand your
organisation’s financial status, and to confirm that funds are being spent
in the correct areas.
Types of financial records you may have to check include:
➢ Trial balances o a list of closing balances in ledger accounts
➢ Receivable reports o these reports show how much is owed to your
organisation
▪ this should not be ignored, as it can represent a large proportion of
incoming cash flow
➢ Purchase summary reports o includes all orders you have placed with
suppliers
▪ this can represent a large proportion of expenses
➢ Stock reports o signifies the overall health of the company o provides
investment information
➢ Variance reports
o shows differences between planned financial outcomes and actual outcomes
▪ this can be a vital tool when comparing income and expenditure against
budgets
➢ Wastage reports o indicates resource wastage, including financial wastage
➢ Sales reports o shows the number of products sold during a specified time
period
➢ Supporting reports, such as covers, occupancy rates, staff costs and
units sold
➢ Business activity statements o used for reporting and paying goods and
services tax
➢ Labour and wages reports o clearly shows wage costs at different levels
of the organisation’s hierarchy
➢ Cash flow statement
o records the amount of cash and cash equivalents entering and leaving the
company o does not include the amount of future income and outgoing cash
➢ Bank statements
o shows amounts actually paid in and withdrawn
➢ Bank deposit documentation
o proves that money has been deposited into bank accounts
➢ Credit card transaction statements
o shows items that have been bought on credit
➢ Banking summaries
o similar to bank statements, where amounts paid and taken out are seen,
and may also contain summary information on money activities for a period
of time
➢ Cheque books
o Your organisation’s cheque books for payments made; you may need to make
an additional record of all cheques paid out (and those received) to
document payees, amounts paid and the date these were generated
➢ Invoices
o used to evidence sales and money activities with customers and own
suppliers/contacts; these will be invoices sent out to customers/clients
for goods
or sales made and where money is owed, or invoices received for services or
goods bought which your financial department will need to make payment for
➢ Journal entries
o a record of financial activities documented in a financial journal; these
are made in chronological order, whereas accounts documented in a ledger
are recorded by accounts
➢ Merchant statements
o shows the banking activities of the organisation, i.e., the financial
trading activities
➢ Merchant summaries
o shows the summary of the organisation’s trading financial activities
➢ Covers
o Details a transaction which offsets a liability or obligation
➢ Expenditure o shows where and how much money has been spent in
organisational activities
➢ Occupancy rates o shows the costs involved in use and maintenance of
business premises
➢ Transactions
o reports detailing where, when and to whom organisational transactions
have been made, these may be made daily, weekly and monthly.
Checking expenditure against budgets
It is important to make thorough checks of the above financial records in
order to understand what funds have been spent on, and in what areas of
your organisation. Your main priority should be to check that spending has
not exceeded forecasted predictions, and that all allocated funding has
been focussed on agreed priorities and overall business goals.
You will need to pay particular attention to the primary areas of
expenditure, including labour costs, the purchasing of stock, rent,
technology, and maintenance, in order to ensure that these areas are
controlled as much as possible. It will also be important to account for
any debts that have not yet been settled, as this can greatly affect
overall expenditure figures.
If you identify any areas of overspending, unfocussed spending, or wastage,
you should look to take action to tighten control of finances. Taking early
action in these cases will often give you a better chance of sticking to
the budget.
Checking income against budgets
It is equally important to make checks on all money coming into the
organisation – including money yet to be paid – to ensure that overall
income is meeting forecasted levels, as specified in the budget. This must
be done to make sure that enough money is coming in to the organisation to
fund planned business activities.
Important income statistics include overall sales volumes, revenue,
investment levels, donations, and money yet to be paid by debtors.
If you recognise that income has fallen below expected levels then you may
be forced to adjust the budget to reduce spending in the same period.
Activity 2A
2.2 – Include financial commitments in all documentation to ensure accurate
monitoring
Including financial commitments in all documentation
It is important to include all financial commitments in documents and
records, in order to provide a real and accurate budget status which shows
income and expenditure.
Most costs, such as staffing costs, are paid out regularly, remaining much
the same from month to month; other costs, however, may be one offs, with
payment expected at a specified date in the future. You must take steps to
ensure the latter type of cost is included in documents, in order to
receive a true impression of expenditure.
Financial commitments
A financial commitment is made when an order is placed or a contract is
signed for goods/services, with payment agreed to be paid at a later date.
These payments may cause a spike in cash flowing out of the organisation,
and this can have implications for the budget if it is not accounted for
properly in documents as early as possible.
You must include all financial commitments into finance documents, so that
spikes and troughs in cash flow are foreseen and accounted for. A failure
to include commitments into documents can make it extremely difficult to
control a budget, as you may well find yourself overspending in months
where large payments are due.
Examples of commitments include:
➢ Billed services from external professionals
o for example, you may hire an external electrician to fix technology on a
one-off basis
➢ Stock orders made
o you may order a large stock order, agreeing to make payments at a later
date
➢ Anything bought on credit
➢ Rental agreements
o rental payments for shop or office space may be due at different points
in the year
➢ Purchasing of intellectual property rights o you may owe commission
payments if you use other intellectual property.
Activity 2B
2.3 – Identify and report deviations according to significance of deviation
Identifying deviations
Your organisation may choose, or be forced, to deviate from a budget for a
wide range of different reasons. Usually, these reasons are called
variances, and refer to any number of variables which can cause estimations
for expenditure and income to be significantly inaccurate.
Variances
Sales volume changes
One of the main variances which can cause your organisation to deviate from
an original budget is sales volume figures. The sales of products and
services will greatly influence income statistics in any organisation, and
if income falls or rises then you may need to adapt the budget.
Changes to sales volumes may be caused by changes in the economy, with
people having more or less spending power depending on economic
fluctuations. Advertising, competition, and changes to prices can also have
a big impact on sales figures.
Materials and supply changes
Materials and supplies can also trigger deviations from planned budgets.
You may be forced to deviate from a budget if market prices drop or rise
and the price of materials changes significantly.
You may also be forced to deviate because of the quality of materials
purchased, which may affect the price you can charge due to the quality of
products and services.
Labour
Changes in market labour rates, wage rates, and staff sickness rates can
also cause expenditure and income variances, which may cause deviations
from the budget. The quality of the people you employ – their skill level,
knowledge level, and experience – can also affect income and expenditure
statistics.
Disaster/emergency
Disasters and emergencies which result in the loss or damage of assets, or
that require spending to fix, can also hit budgets in a negative way. For
example, if a flood damages your organisation’s computer technology, you
may have to use funds to buy new technology in the short-term, while
insurance claims are organised.
Significance of deviations
It is important to identify the significance of any deviations, and
classify them according to the action you need to take. You may choose to
categorise deviations as minor or insignificant, in which case no action
will need to be taken. However, you will need to take action in the event
of mid-level deviations, which require close monitoring and small budget
adjustments, and large deviations, which require immediate action and
budget re-writing.
You will need to:
➢ Identify the size of the variances to understand the likely impact on
budgets
o small variances often have little consequence, and therefore do not
require extensive action or reporting
➢ Establish whether you are dealing with variances that have positive or
negative effects on the budget o for example, do the variances cause an
increase or decrease in profits?
➢ Establish whether variances can be controlled and whether any action you
take is likely to make a positive difference.
Reporting deviations
If you identify significant variances that are likely to affect the budget
in a positive or negative way, then you must report this information to
your superiors, including business owners and directors.
You should aim to deliver regular reports on budget control, but you should
also communicate any potential budget deviations immediately. Proper
reporting will allow finances to be controlled, and budgets to be amended
if necessary.
You may:
➢ Organise face-to-face meetings to report budget deviations
➢ Send reports by email
➢ Highlight deviations on computer systems
➢ Report details by phone
➢ Send graphs, charts, and updated financial documents.
2C
2.4 – Investigate appropriate options for more effective management of
deviations
Managing deviations
The options you have for managing deviations will largely depend on whether
variances are favourable or unfavourable, and the significance of
deviations.
It is vital to take appropriate action as soon as you notice the emergence
of a significant deviation; otherwise the deviation is likely to grow
larger.
The specific action you take will vary according to the area of work
concerned and the detail of the statistics themselves, but in most cases
you will have to adjust your budget for the next quarter immediately,
usually by altering the estimates for expenditure.
Small to mid-size deviations
You will have more options available to you if deviations are only small or
mid-sized, as budgets can usually be easily adapted in these circumstances.
Options for managing small to mid-size deviations include:
➢ Reducing funding from specific resources, areas and departments
➢ Increasing funding in resources, areas, and departments
➢ Switching to different budgeting systems, if you are sure that deviations
are a one off o for example, a cash flow budget may be more appropriate
➢ Increasing/decreasing expenditure and income estimations
➢ Reducing wastage
➢ Reducing/increasing number of goals/priorities for the budget.
Large deviations
Large deviations will generally leave you with fewer options, as budgets
become more difficult to adapt when estimations are significantly
inaccurate.
You may need to:
➢ Make significant changes to the budget o this may mean :
▪ reducing or increasing funding
▪ accepting overspending in a time period
▪ scrapping or rethinking priorities
▪ scrapping projects
▪ rethinking purchasing levels, wage increases, and new staff.
2D
2.5 – Advise appropriate colleagues of budget status in relation to targets
Advising colleagues of budget status
Just as it is important to inform your colleagues about budgetary forecast
and agreed priorities, it is also important to update them on a budget’s
status in relation to agreed targets.
Regularly updating key stakeholders about a budget’s status will ensure
that all key decision makers remain aware of current activity, and will
often help to keep them focussed on targets. Regular updates can also allow
decision-makers to raise concerns, ask questions, and offer their own ideas
concerning the budget.
Circulating budget status reports
You should look to create regular reports which clearly show overall
expenditure and income levels, as well as a breakdown of the main areas of
expenditure and income. This should be sent to all those who have any
financial decision-making power at organisational or departmental level.
Ensuring that all appropriate parties receive reports will help your
colleagues make responsible and informed decisions to control spending,
maximise and monitor income, and contribute towards targets. This then
gives every relevant party a chance to express their thoughts on the
proposal and to make suggestions regarding what to change and what to keep.
You may need to inform:
➢ Senior management o it is likely that senior managers will have been
involved in most budget discussions, so it is vital that they are kept
updated as much as possible
➢ Mid-level management o e.g. heads of department
o these employees often have control over income and expenditure, so it is
important that they know the budget’s status
➢ The accounts department o the accounts department may be involved in
creating reports, but they should also be kept up-to-date with
organisational targets
o although accountants’ jobs are focussed on numbers, they must feel
involved in the wider context of the organisation, and this requires you to
inform them of progress towards goals
➢ A budget committee o such committees are responsible for the ongoing
monitoring of income and overseeing revenue against projections
➢ Any other relevant staff members o for instance, those who have worked on
creating or monitoring the budget at any stage.
2E
3. Identify and evaluate options for improved budget performance
3.1. Assess existing costs and resources and proactively identify areas for
improvement
3.2. Discuss desired budget outcomes with relevant colleagues
3.3. Undertake appropriate research to investigate new approaches to budget
management
3.4. Define and communicate the benefits and disadvantages of new
approaches
3.5. Take account of impacts on customer service levels and colleagues in
developing new approaches
3.6. Present clear and logical recommendations for budget management
3.1 – Assess existing costs and resources and proactively identify areas
for improvement
Assessing existing costs and resources
Before you can begin to suggest improvements to a budget, you must first
evaluate its current status by assessing existing costs and resources.
You should aim to evaluate all areas of expenditure to get an overview of
money and resources leaving your organisation. Each area of spending should
be reviewed to make sure there is no avoidable wastage occurring. For
example, you may identify that your organisation is consistently ordering
stock that does not sell well, or that is not popular with customers. In
this case, you could make immediate changes to cut the quantity of certain
items in upcoming stock orders.
Next, you should check all areas of expenditure to make sure that all funds
are being used to work toward agreed organisational priorities; any
expenditure that falls outside these priorities should be refocussed so
that is used as efficiently as possible. For example, you may identify that
one department has focussed its marketing activities on an aging product,
when agreed priorities called for the promotion of a new product.
Remember: all funding in each of the following expenditure areas should
contribute towards organisational goals and objectives.
You may need to assess expenditure areas such as:
➢ Labour costs o consider wages, recruitment, and training costs
➢ Marketing and advertising costs
o consider costs for advertising space and time across all platforms o
consider how much it costs to design adverts
➢ General overheads, such as lighting and heating
➢ Administration costs
o consider how much it costs to keep the organisation running, including
all paperwork requirements
➢ Customer communications o how much does it cost to run a customer
hotline, for example?
➢ Returns and refurbishment o how much does it cost to run a dedicated
returns and refurb department?
➢ Technology o how much does it cost to replace, maintain, and upgrade
technology?
Identifying areas for improvement
It is vital that you can critically evaluate financial decision-making and
current financial activity to make the necessary improvements.
Cutting wastage
You should look to consult other managers to discuss areas where waste is
occurring, and then implement strategies to try and reduce that waste.
Think about the products and materials you are buying, the suppliers you
are buying them from, the technology you are using, the standard procedures
used by your organisation’s employees, customer service, and human resource
spending. You are likely to find a multitude of areas which are inefficient
and in need of re-thinking.
Organisational goals
As has already been covered, all funding should contribute towards
organisational goals. You may be able to identify areas of spending that
need to be refocussed on organisational goals, in order to improve overall
efficiency.
Internal communication
Methods of internal communication should be considered, as positive methods
can allow all parties to be updated on budgets, spending goals, and overall
organisational goals. In short, this can help improve efficiency and focus
spending where it is needed more.
Organisational structure
Structure is the way your organisation is organised; the departments and
teams at various levels of the hierarchy must be able to communicate and
work together to cut wastage and focus organisational funding on the
appropriate goals.
Human resources
Human resource requirements refer to your organisation’s personnel. The
numbers and quality of employees, the skills and experience they have, and
the way they work together will have a huge impact on performance and,
therefore, budgets.
You should also note that any staff working on a commission basis will have
variable wage amounts.
Commission may be paid to staff as a percentage, such as a percentage of a
sale, or as a flat dollar rate. This makes staff wages a variable costing
to the organisation.
Activity 3A
3.2 – Discuss desired budget outcomes with relevant colleagues
Holding useful discussions
Holding focussed discussions can be extremely useful when making decisions
about budgetary improvements. To improve a budget’s performance, you should
aim to discuss the budget’s outcomes with the same personnel that you
discussed budget priorities with. Holding discussions with these personnel
will help to inform all major financial decision makers, reach decisions,
make the most of people’s knowledge and experience, and develop ideas.
Effective discussions require you to:
➢ Value everyone’s opinions
o you may not agree with your colleagues, but you should learn to encourage
and accept all views despite this
➢ Involve the correct people o based on position within the organisation,
knowledge, and experience
➢ Communicate clearly
o using both verbal and non-verbal communication
➢ Compromise when necessary
➢ Use active listening techniques o listen, clarify, and confirm
➢ Be open-minded to new ideas and points of view
➢ Trust your colleagues.
Discussing budget outcomes
You should look to discuss the following questions with the appropriate
members of your team.
What is the budget supposed to achieve?
You will have already discussed budget priorities with your colleagues, so
all personnel should be clear about why specific budgets exist. For
example, you may have created a budget to help improve financial control
within a specific department.
All budget goals and objectives should be reiterated to make sure everyone
is clear what they are.
Is the budget achieving what it is meant to?
You should discuss whether the budget you have in place is helping to
control finances. If it is not and you conclude that estimated income and
expenditure figures are incorrect, you will need to discuss why that is.
For example, it may because of a one-off unforeseen event – such as a
natural disaster – or it may be because of continued wastage in certain
departments.
What action needs to be taken if budgets are not achieving what they are
supposed to?
You will need to discuss and establish reactive protocols for adjusting and
improving budgets when they are not helping to control finances. For
example, you should clarify when a reassessment of costs needs to be
carried out, and when income and expenditure estimates need to be adjusted.
Activity 3B
3.3 Undertake appropriate research to investigate new approaches to budget
management
Researching new approaches
Researching new approaches to budget management is an essential step when
working to improve budgets.
Research can take many forms, which may include some of the following.
What do competitors do?
Often, a useful research method is to look at how your competitors approach
budget management. If this is not possible, look at publically available
examples of how successful companies in your industry control their
finances.
Pay close attention to how they prepare, discuss, monitor, and adapt their
budgets, according to what type of budget it is and what its purpose is
(e.g. to control finances while developing a new product).
Consulting experts and colleagues with more experience
Research can also be carried out by consulting financial experts – such as
accountants – or colleagues that have more experience of managing finances
and budgets. These parties may be able to tell you where you are making
mistakes, or offer useful insights about how to control budgets.
Researching accepted theories
Another option for undertaking research is to read/watch/listen to learning
materials which examine proven financial management theories and
approaches, and why they work. You should make sure you get your
information from a variety of trusted sources, and critically evaluate
whether any approaches or strategies are likely to work for your
organisation before implementing them.
Activity 3C
3.4 Define and communicate the benefits and disadvantages of new approaches
Defining and communicating the benefits of new approaches
It is vital that you define the benefits of any new approaches to budgetary
management that you adopt, before communicating them to your team.
Defining approaches will require you to meet with other relevant personnel
to discuss why it is worth adopting new approaches, and why they will help
the organisation to control finances more effectively. All employees who
deal with any aspect of organisational finances should be involved in this
meeting, as it is these staff that will ensure the new approaches are
implemented correctly.
A lack of information may lead to a lack of financial control, potentially
leading to the failure of new strategies and approaches.
Defining the benefits of new approaches will require you to:
➢ Express why they are better than old approaches
➢ Point out why new approaches are more accurate in estimating income and
expenditure
➢ Communicate why new approaches will increase efficiency and decrease
wastage
➢ Explain how new approaches will help to prioritise organisational goals
and objectives
➢ Determine how monitoring, reviewing, and reporting will improve with the
adoption of the new approach.
Defining and communicating the disadvantages of approaches
While it is important to emphasise why a particular approach will work, it
is also important to point out the drawbacks.
Defining and communicating the disadvantages of approaches that you are
planning to adopt will ensure that all staff know what pitfalls to watch
out for, and how to minimise the effect of disadvantages. Again,
communication is vital, so make sure you organise a dedicated meeting to
cover all areas.
You may need to communicate:
➢ Why new approaches/strategies can lead to lack of control or incorrect
budget estimations
➢ When disadvantages are likely to occur
➢ What areas of the organisation or budget the disadvantages are likely to
occur in
➢ How staff can act to minimise the impact of disadvantages
➢ Key monitoring and reporting protocols which will help to minimise the
impact of disadvantages.
Activity 3D
3.5 Take account of impacts on customer service levels and colleagues in
developing new approaches
Impact on customer service
You must be aware of the effect that adopting new financial approaches is
likely to have on your organisation’s customers.
Trying to re-direct, cut, and control expenditure within your organisation
will have an effect on customers’ experiences – whether they are positive
or negative.
You must be extremely careful that your organisation’s actions when
controlling expenditure do not negatively impact on the customer
experience. Ideally, you should make small adjustments to financial
management approaches, so that you can easily monitor the effect they have
on customers. If you are making fundamental changes to approaches, you must
regularly review the effect this has on customers and be prepared to make
changes if new approaches are not working.
A key part of monitoring will be to ask customers for feedback, and this
can be done through interviews, questionnaires, social media, feedback
forms, email, and phone calls.
Be aware, new approaches can lead to:
➢ More/less funds for human resources
o this may lead to less customer service staff, or lower quality staff
➢ More/less funds for communications o customer hotlines may be
understaffed o response times may rise
➢ More/less funds for purchasing materials
o products and services may suffer because of this, which will directly
impact the customer experience
➢ More/less funds on customer areas – such as shop floors, eating areas,
and payment areas
o negative experiences can lead customers to think twice before doing
business with you again
➢ More/less funds for technology.
Impact on colleagues
When new financial management approaches are introduced, there is often an
adjustment process, in which employees have to learn, accept and feel
comfortable with new methods and strategies. This may take some time, and
you will need to account for this and for the impact that this is likely to
have on the organisation.
To improve the transition process, you should focus on clear and regular
communication with your employees. Communicating what changes are expected
and why those changes are happening, will improve their chances of
understanding and supporting any new approaches.
Often, it can be beneficial to publicise financial information within the
organisation to improve the engagement of employees – even if they have no
financial decision-making power. Doing this can make employees feel
involved with the organisation’s goals and overall activity, and show them
how their actions affect income and expenditure.
Activity 3E
3.6 – Present clear and logical recommendations for budget management
Presenting recommendations for budget management
It is important that you can present clear and logical recommendations for
budget management, based on review and analysis of current financial
controls, and on research carried out.
To persuasively make a case for a particular approach or strategy, you will
need to have clear evidence to suggest why it will work.
Evidence can be broken down into the two categories outlined below.
Evidence of clear failures or weaknesses
Firstly, you must make a case for why change needs to happen, and this
should focus on current strategies and approaches which have proven to be
inadequate.
Focus on any financial data (contained in financial documents) which shows:
➢ Poor estimations of costs and income
➢ Examples of overspending
➢ Examples of significant variances and deviations
➢ Examples of wastage
➢ Examples of poor funding allocation
➢ Examples of objectives and goals that have not been met because of poor
control of finances.
Evidence of the benefits associated with proposed changes
After making a case for change, you should look to supply evidence that
certain strategies and approaches are fit for adoption.
You should focus on backing up your recommendations by:
➢ Focussing on why proposed changes will work for your organisation
➢ Using examples of how approaches and strategies have worked in other
organisations
➢ Presenting experts’ views as to why your recommendations will work
➢ Showing how new approaches will benefit both customers and employees.
Presenting evidence
The way you make recommendations and present evidence will depend on your
organisation’s policies and procedures, the company’s hierarchy, and who
you have to persuade to make changes a reality.
You may need to present evidence to numerous other managers and key
stakeholders, in order to secure agreement for change; or you may just need
to make your recommendations to one person (usually a director or owner)
who has overall decision-making power over any financial changes that are
made. It is important that you know who you need to persuade, so that you
can tailor your evidence to appeal to those parties.
Activity 3F
4. Complete financial and statistical reports
4.1. Complete financial and statistical reports within designated timelines
4.2. Prepare and present clear and concise information to enable informed
decision making
4.1 – Complete financial and statistical reports within designated
timelines
Completing financial and statistical reports
It is important that you can create financial reports quickly and
accurately when required.
Reports may be expected at regular intervals by owners, other managers,
supervisors, and other key stakeholders. The timely deliverance of reports
will allow these parties to make decisions, based on the most accurate and
up-to-date information available.
You should be comfortable with creating:
➢ Trial balance
➢ Receivable reports
➢ Purchase summary reports
➢ Stock reports
➢ Variance reports
➢ Wastage reports
➢ Sales reports
➢ Supporting reports, such as covers, occupancy rates, staff costs and
units sold
➢ Business activity statements
➢ Labour and wages reports
➢ Cash flow statements.
The financial report
A financial report contains all the relevant account documentation and
reports that make up an organisation’s financial records. This usually
contains information from one financial year so the report can be submitted
at the end of the financial year for legal reporting requirements. An
organisation also needs to keep financial reports to evidence the
organisation’s financial activities and for any obligations to report
financial activities to a board of directors or to shareholders.
An organisation may also choose to create a financial report more
frequently, such as each quarter period, for compiling financial
information more frequently and for performing financial analysis, for
example, to track income and profit or losses.
Essentially a financial report will contain the following information:
➢ The income statement – to show revenues, expenses, profit and losses,
this shows the operational results of an organisation
➢ The balance sheet – to show the assets, liabilities and equity as it
stands at the reporting date, this provides information on the liquidity
and capital of an organisation
➢ The statement of cash flows – to show the cash inflows and outflows that
occurred during the reporting period
➢ Statement of retained earnings – to show any changes in equity, for
example, sale of stocks, dividend payments and changes caused by profit or
loss.
The above is usual for the audited or reported financial statement; for
internal purposes and use, a financial statement may only contain the
income statement and balance sheet. All submitted financial reports will
usually contain disclosure information as relevant to the business.
Information that is included in a financial report has been sourced from,
‘The four basic financial statements’ at Accounting Tools:
http://www.accountingtools.com/questions-and-answers/the-fourbasic-financial-statements.html
(access date: 08.03.2017).
The statistical report
This type of report is compiled to assess particular areas of business so
the organisation can become informed and gain knowledge and understanding.
Information is gathered together from applicable sources so that things
such as common factors or general outcomes can be analysed. This is about
assessing if activities have a positive or negative result for an
organisation, or to identify potential changes or risks in business.
In accounting, statistics help an organisation to make forecasts and to
understand how financial activities affect the overall financial position
of the business.
Information in an accounting statistical report will include the relevant
data that is gathered from a particular area, for example, sales over the
last quarter-period, and the variations in the information that need to be
understood. Variations will be the different manipulations made from the
information, such as identifying repeated customer sales, items over and
under a certain amount, and sales on different days of the week. These
enable analysis to be made on specific elements.
The report will outlay the information for analysis, the analysis and
results of this, conclusions of the analysis and any recommendations that
may be in the financial interest of the organisation.
Activity 4A
4.2 – Prepare and present clear and concise information to enable informed
decision making
Using information to inform decision-making
All financial decision-making relies on accurate and up-to-date information
and data, so you must be adept at preparing and presenting that data to
ensure that it is clear, easy to understand, and available when it is
needed.
Information may include:
➢ Overall expenditure
➢ Expenditure in various departments
➢ Focus of expenditure
➢ Income from a range of sources
➢ Overall income.
Preparation and presentation
You should always look to present information so that is clear as possible,
and so that conclusions can be drawn easily. You may choose from a number
of different formats to achieve this.
You may choose to present information and data in:
➢ Written summary reports
➢ Charts o such as pie charts
➢ Graphs o such as bar graphs
➢ Digital tables, where data is sortable.
Activity 4B
Summative Assessments
At the end of your Learner Workbook, you will find the Summative
Assessments.
This includes:
➢ Skills assessment ➢ Knowledge assessment
➢ Performance assessment.
This holistically assesses your understanding and application of the
skills, knowledge and performance requirements for this unit. Once this is
completed, you will have finished this unit and be ready to move onto the
next one – well done!
Appendices
Accounting software
Software used in accountancy will depend upon the organisation that you
work for. Dedicated software packages are used to help capture financial
data and display these in ways that are easy to view and interpret, such as
through the use of graphs and charts. They enable data manipulation and
analysis to be made in simple steps and with accuracy (avoiding potential
situations of human error in making handwritten reports and analysis).
Software available includes:
➢ MYOB
➢ QuickBooks
➢ Sage
➢ Xero.
Standard Business Reporting
The Australian Securities and Investments Commission (ASIC) use software
known as the ‘Standard Business Reporting’ (SBR) program. Organisations
that use accounting/payroll software which s SBRenabled, can lodge their
financial reports to ASIC in this way. This software program has been
produced by the Government and is administered by the Treasury. It uses
pre-fill forms, removes unnecessary duplication across its forms, and uses
a single reporting language based on international standards and best
practice (XBRL format and also iXBRL for reading XHTML).
There is a secure online log-in known as AUSkey which enables designated
users to report electronically to all applicable agencies. In using this
software, you will receive confirmation of your activities through
validation and receipt of reports.
References
These suggested references are for further reading and do not necessarily
represent the contents of this unit.
Websites
Information that is included in a financial report has been sourced from,
‘The four basic financial statements’ at Accounting Tools:
http://www.accountingtools.com/questions-and-answers/the-fourbasic-financial-statements.html
All references accessed on and correct as of 08.03.2017, unless other
otherwise stated.
