BSBFIM601
BSBFIM601
MANAGE FINANCES
BSBFIM601 Manage Finance
Review and analyse previous financial data to establish
areas which have generated a profit and loss
If an organisation intends to make profit there must be a sound
financial management structure and high-level financial planning.
When developing budgets for the next fiscal period it will be
necessary to review and analyse financial data from the previous
periods and to establish areas which have generated profit or loss. It
will then be necessary to identify the reasons for previous profit and
loss.
Information gleaned from these analyses and from cash flow trends,
product/services costing etc will all contribute to a determination of
what the organisation can do over the next period and what needs to
e incorporated into the budget to support the organisational goals
BSBFIM601 Manage Finance
Type of information
Organisations need reliable financial information about past performance,
cu
ent trends and forecasts which enables them to determine:
★ what to do
★ how to do it
★ what is necessary to do.
★ what it is not necessary to do
★ how it can best be done
★ when it should be done
★ who should do it
★ how well it is cu
ently being done
★ what resources have been uses
★ what resources are available
★ what resources will be needed
BSBFIM601 Manage Finance
Financial Data
Financial data inform organizational, strategic and operational plans and
support resource requirements in every area of the organization. Data must
e gathered from both the external and internal environment. Financial data
which business operators and their employees need to review to find
easons for previous profit and loss are:
★ previous budgets and forecasts
★ budget reports which identify incoming and outgoings, budget variations, profit and loss,
debtors, and reasons for profit and loss figures
★ cash flow/profit reports
★ financial/operational statements and reports (expenditures and receipts, profit and loss
statements)
★ market valuations
★ statutory and regulatory information that included national and international business/trade
conventions and regulations
BSBFIM601 Manage Finance
Review business plans
Logs,
ledgers,
journals and
spreadsheet-
ased
ecords
Wages and
salaries
payments
and record
keeping
Petty cash
ecords
Credit card
statements
and records
Banking
processes
and the
verification of
ank
statements
Debt
collection
and debt
ecordings
All organizations have a business plan, and that business plan should be
eviewed to help establish critical dates and initiatives that require or will
generate resources in the next budget period. All companies should research
about the data relating to assets, credit analysis, GST transactions, inventory
management, invoices and accounts etc, which are to be collected and
analyzed so that management can monitor and control cash flow, production
and productivity, solve problems, plan implement, implement quality control
procedures and plan future strategies
BSBFIM601 Manage Finance
Analyse cash flow trends
Financial report, more specifically cash flow can give us a useful
snapshot of the cu
ent financial situation and a
ief, comparative
history of the organisation or of the cost centres within the
organisation. These information can be recorded in the report:
❑ What is owned today? Cash, cars, machinery, equipment,
property, etc.
❑ What is owed today? Bank loans, investors, money owed to
suppliers, etc.
❑ What resources flow in? Sales of products, bank interest, any other
evenue sources, etc
❑ What resource flow out? Wages paid, electricity paid, rent, phone
ills, etc.
BSBFIM601 Manage Finance
Statutory requirements for compliance and liabilities
of tax
A range of legislation and statutory requirements impact on all businesses.
These need to be reviewed in the light of a proposal for new budget.
Organisations must identify and review their compliance with legislation
and statutory requirements and with taxation liabilities.
Requirements relevant to financial management of Australian
organizations can include those relating to:
✓ Internal control procedures
✓ Limits on the volume and types of finance of transactions
✓ Reporting of duty, excise and other overseas government charges
✓ Reporting periods
✓ ATO requirements (including the collection of GST and payroll tax
✓ Consumer protections
✓ Audit requirements
✓ Superannuation, etc
✓ International Agreements
✓ International standards and legislation in other countries
BSBFIM601 Manage Finance
ATO Requirements
• The ATO is Australia’s governing body, responsible for collecting the
Commonwealth Government’s main revenue stream. The ATO is the
statutory body responsible for any and all administration involved with
the Australian taxation system.
• Some of the ATO’s main roles include managing and moulding the tax
evenue and superannuation systems, along with administering
legislation for taxes and superannuation.
• The ATO also supports and oversees the delivery of other services,
including;
• Private Health Insurance
• Family Assistance
•Energy Grants
• Valuation Services
BSBFIM601 Manage Finance
Taxation
• All Australian business organizations, both private and non-profit
and the individuals working must comply with the Australian
Taxation legislation which is overseen by the Australian Taxation
Office. Companies earn money, and in the case of non-profit
organisations, they receive money as a result of grants, etc. When
dealing with their incomings and outgoings they are bound, by
legislation, to make appropriate accounting and to follow specific
eporting procedures to pay their liable tax amount.
BSBFIM601 Manage Finance
Goods and Service Tax (GST) Requirements
The financial management function within each organisational business entity will
also be responsible for ensuring that Goods and Service Tax (GST) is applied as
equired. The GST in Australis is a value added tax of 10% on most goods and
services transactions. The GST in Australia is a value added tax of 10% levied on
most goods and services transactions in the production process but is refunded to
all parties in the chain of production other than the final consumer.
Businesses with an annual turnover of $75,000 or more must register for GST
Businesses with an annual turnover of less than $75,000 may elect to register fo
GST
Not for profit businesses with an annual turnover of $150,000 must register for GST
Taxi operators must register regardless of turnover.
BSBFIM601 Manage Finance
Other requirements:
PAYG: PAYG stands for ‘Pay As You Go’. It is where employers are required
to withdraw a part of their employee’s wage to pay to the ATO as the tax
amount on their pay.
PAYG instalment is a system that allows a business to meet thei
income tax obligations through regular payments, i.e., instalments
made throughout the year. In this system, tax is collected from
usiness and/or investment income. On the other hand, PAYG
withholding is a system that allows a business to withhold income tax
from an employee or contractor’s salary or wages and pay all these
withheld amounts to the ATO later on. In this system, tax comes from
the withheld salaries or wages.
BSBFIM601 Manage Finance
Legislative Requirements:
• Corporation Act: The Corporations Act is the principal legislation
egulating companies in Australia. It regulates matters such as the
formation and operation of companies (in conjunction with a
constitution that may be adopted by a company), duties of officers,
takeovers, and fundraising.
• Financial Management and Accountability Act: The main purpose of
this Act is to provide a framework for the proper management of
public money and public property. Broadly, those terms refer to
money or property that is owned or held by the Commonwealth,
including money or property held on trust.
BSBFIM601 Manage Finance
• Australian Securities and Investments Commission Act: The Australian
Securities and Investments Commission Act 2001 (ASIC Act) requires ASIC
to strive to: maintain, facilitate and improve the performance of the
financial system and entities within it in the interests of commercial
certainty, reducing business costs, and the efficiency and development of
the economy.
• Income Tax Assessment Act: It is an Act to provide for the imposition,
calculation and collection of Commonwealth income taxes and fo
elated purposes such as the administration of the Commonwealth
Income Tax Regime by the Australian Taxation Office.
• Australian Accounting Standards (AASB): General purpose financial
statements that comply with accounting standards should present fairly
the financial position, financial performance and cash flows of an
organisation. This information will be useful to owners, investors,
creditors, analysts, employees, regulators and others in making and
evaluating decisions about the allocation of scarce economic resources.
BSBFIM601 Manage Finance
Review existing software and its sustainability for financial
management
At the point where the statutory requirements, compliance and
liabilities are being reviewed it is probably a good idea to also review
the technology that is being used for financial management.
In the review process it might be necessary to consider:
➢ Programs that are being used – capacity and capability
➢ The skills of employees and managers who are using the software programs (whethe
more training is needed to increase efficiency and accuracy)
➢ Server capacity and capability
➢ Software capacity and capability
There are many good accounting software programs that can be used
for example Xero, MYOB, QuickBooks, Manager etc.
BSBFIM601 Manage Finance
Company Tax
• Company tax is a tax charged on corporate income in Australia
• The amount of company tax to be paid is determined by the type of
company your workplace/organisation is. Full tax rates of 30% are
applicable to all companies, corporate unit trusts and public trading
trusts. If the company is eligible for the lower tax rate (i.e., the
workplace/organisation is a base rate or small business entity within a
given time), they must just pay 27.5%.
BSBFIM601 Manage Finance
• There are also numerous organizations that offer services with
egard to management of financial information. These can be
accessed via the Internet.
• Some organization will build, or pay contractors to build, their own
financial information management systems.
• Regardless of the system used regular review should be conducted
to determine whether the system is operating at maximum
efficiency and whether there are new or improved systems o
versions of the system that could serve the organization better.
BSBFIM601 Manage Finance
Use previous financial data to determine allocations fo
esources
Budget provides for money and specify where it should be spent. They
determine who should be accountable for what activity and are used to
allocate human sources to processes, functions and projects. They are also
used to match resources to results.
The intention of budgets is to ensure:
❖ Maximum profitability
❖ Sufficient cash flow which will meet all financial obligations
❖ Cost effective resource management
Data that contribute to the new budget must be cu
ent, reliable and valid.
This means that accurate records of all of the organisations transactions
must be kept.
Transactions include purchases and sales, wages, plus other fixed and non-
fixed costs and income.
BSBFIM601 Manage Finance
Make informed estimates of new items for inclusion in
udget
• Each organisation’s financial plan identifies it’s assets, liabilities, financial
objectives and tolerance for risk. The financial plan will summarise the
organisation goals, operational and financial objectives and make
ecommendation for strategies, activities or specific actions intended to
achieve those goals and objectives.