CONTENTS
UNIT OVERVIEW ........................................................................................................................................................ 3
Unit Description ......................................................................................................................................................... 3
ASSESSMENT EVIDENCE ............................................................................................................................................ 4
PERFORMANCE EVIDENCE ..................................................................................................................................................... 4
KNOWLEDGE EVIDENCE ........................................................................................................................................................ 4
ASSESSMENT CONDITIONS .................................................................................................................................................... 5
AQF SPECIFICATIONS FOR ASSESSMENTS ................................................................................................................................. 5
Knowledge ................................................................................................................................................................. 5 Skills ........................................................................................................................................................................... 5
Application ................................................................................................................................................................. 5
ACSF SPECIFICATIONS AND FOUNDATION SKILLS ...................................................................................................................... 6
SUBMITTING ASSESSMENTS .................................................................................................................................................. 6
TRAINING RESOURCES .......................................................................................................................................................... 6
UNIT ASSESSMENT PLAN ................................................................................................................................... 7
UNIT ASSESSMENT PART 1 ................................................................................................................................ 8
UNIT KNOWLEDGE ASSESSMENT (UKA) ........................................................................................................ 8
STUDENT TO COMPLETE AND SUBMIT ........................................................................................................... 8
STUDENT INSTRUCTIONS: ..................................................................................................................................................... 9
UNIT ASSESSMENT PART 2 .............................................................................................................................. 12
UNIT SKILLS ASSESSMENT (UKA) .................................................................................................................. 12
STUDENT TO COMPLETE AND SUBMIT ......................................................................................................... 12
STUDENT INSTRUCTIONS: ................................................................................................................................................... 13
1. CASE STUDY BASED PROJECT REPORT WITH ROLE PLAY TASK ............................................................... 14
REQUIRED RESOURCES: .............................................................................................................................................. 14
APPENDICES ............................................................................................................................................................ 21
APPENDIX: 00 .............................................................................................................................................................. 22
Case study – The nara group ............................................................................................................................. 22
APPENDIX: 01 .............................................................................................................................................................. 24
The nara group bank statements oct/nov/dec 2018 ........................................................................................ 24
APPENDIX: 02 .............................................................................................................................................................. 27
Audit Trail template ............................................................................................................................................... 27
UNIT OVERVIEW
BSBFIM601 Manage Finances
UNIT DESCRIPTION
This unit describes the skills and knowledge required to undertake budgeting, financial forecasting and reporting and to allocate and manage resources to achieve the required outputs for the business unit. It includes contributing to financial bids and estimates, allocating funds, managing budgets and reporting on financial activity.
It applies to individuals who have managerial responsibilities which include overseeing the management of financial and other resources across a business unit, a series of business units or teams, or an organisation. It covers all areas of broad financial management. In a larger organisation this work would be supported by specialists in financial management.
No licensing, legislative or certification requirements apply to this unit at the time of publication.
ELEMENT PERFORMANCE CRITERIA
Elements describe the essential outcomes. Performance criteria describe the performance needed to demonstrate achievement of the element
1. Plan for financial
management 1.1 Review and analyse previous financial data to establish areas which have generated a profit or loss.
1.2 Undertake research to review reasons for previous profit and loss.
1.3 Review business plan to establish critical dates and initiatives that will require or generate resources in the next financial cycle.
1.4 Analyse cash flow trends.
1.5 Review statutory requirements for compliance and liabilities for tax.
1.6 Review existing software and its suitability for financial management.
2. Establish budgets and
allocate funds
2.1 Use previous financial data to determine allocations for resources.
2.2 Make informed estimates of new items for inclusion in budget.
2.3 Prepare budgets in accordance with organisational requirements and statutory requirements.
3. Implement budgets 3.1 Circulate budgets and ensure managers and supervisors are clear about budgets, reporting requirements and financial delegations.
3.2 Manage risks by checking there are no opportunities for misappropriation of funds and that systems are in place to properly record all financial transactions.
3.3 Review profit and loss statements, cash flows and ageing summaries.
3.4 Revise budgets, as required, to deal with contingencies.
3.5 Maintain audit trails to ensure accurate tracking and to identify discrepancies between agreed and actual allocations.
3.6 Ensure compliance with due diligence.
4. Report on finances 4.1 Ensure structure and format of reports are clear and conform to organisational and statutory requirements.
4.2 Identify and prioritise significant issues in statements, including comparative financial performances for review and decision making.
4.3 Prepare recommendations to ensure financial viability of the organisation.
4.4 Evaluate the effectiveness of financial management processes.
ASSESSMENT EVIDENCE
To achieve competency in this unit a student must demonstrate their ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:
PERFORMANCE EVIDENCE
Evidence of the ability to:
§ plan for financial management
§ read and review profit and loss statements, cash flows and aging summaries
§ prepare, implement and revise a budget which aligns with the business plan, is based on research and analysis of previous financial data and cash flow trends, and meets all compliance requirements
§ contribute to financial bids and estimates
§ establish a budget and allocate funds in accordance with statutory and organisational requirements ? communicate with other people including:
§ reporting on financial activity and making recommendations
§ identifying and prioritising significant issues
§ ensuring managers and supervisors are clear about budgets.
§ analyse the effectiveness of existing financial management approaches including reviewing financial management software, managing risks of misappropriation of funds, ensuring systems are in place to record all transactions, maintaining an audit trail and complying with due diligence.
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
KNOWLEDGE EVIDENCE
To complete the unit requirements safely and effectively, the individual must:
§ identify the requirements for financial probity
§ describe the principles of accounting and financial systems
§ explain Australian, international and local legislation and conventions that are relevant to financial management in the organisation
§ outline the requirements of the Australian Tax Office, including Goods and Services Tax, Company Tax, Pay As You Go.
Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial management field of work and include access to:
§ financial data
§ relevant legislation and Australian Tax Office requirements
§ examples of business plans, profit and loss statements, cash flows and aging summaries ? organisational financial policies and procedures ? financial management software.
Assessors must satisfy NVR/AQTF assessor requirements.
AQF SPECIFICATIONS FOR ASSESSMENTS
AQF Specifications for Assessments in Advanced Diploma Qualifications:
This assessment is set in accordance with the criteria for AQF Level 6. As stated in the AQF specification for the Advanced Diploma qualifications must be designed and accredited to enable graduates to demonstrate the learning outcomes expressed as knowledge, skills and the application of knowledge and skills specified in the level 6 criteria and the Advanced Diploma descriptor.
Students at this level will have specialised knowledge and skills for skilled/paraprofessional work and/or further learning.
KNOWLEDGE
Students at this level will have broad theoretical and technical knowledge of a specific area or a broad field of work and learning.
SKILLS
Students at this level will have a broad range of cognitive, technical and communication skills to select and apply methods and technologies to:
• analyse information to complete a range of activities
• interpret and transmit solutions to unpredictable and sometimes complex problems
• transmit information and skills to others
APPLICATION
Students at this level will apply knowledge and skills to demonstrate autonomy, judgement and defined responsibility in contexts that are subject to change and within broad parameters to provide specialist advice and functions.
ACSF SPECIFICATIONS AND FOUNDATION SKILLS
The term ‘Foundation Skills’ is currently used to include the core skills defined in the Australian Core Skills Framework (ACSF) as well as the employability skills identified by employers as critical for effective performance in the workplace.
Foundation skills encompass both the core skills of reading, writing, oral communication, numeracy and learning as described by the Australian Core Skills Framework (ACSF), and the Employability Skills/Core Skills for Work. They exist on a continuum from very basic skills to highly-developed and specialist skills. The foundation skills for this unit are located in the Unit Outline Booklet and have been addressed in the assessment as part of the performance criteria for this unit.
SUBMITTING ASSESSMENTS
Students should submit assessment tasks with the provided cover sheet.
Assessments should be submitted on or before their due date. Extensions for individual assessment tasks may be negotiated in specific circumstances. Consultation on this must occur prior to the due date and extensions due to illness will require a medical certificate. Extensions must be confirmed by the Academic Manager in writing.
TRAINING RESOURCES
The student will have access to the following:
• AIE Student Workbook
• PowerPoint presentation
• Learner Assessment Pack (LAP)
• Access to a computer, the Internet and word-processing system such as MS Word.
UNIT ASSESSMENT PLAN
To demonstrate competence in this unit, you must be assessed as satisfactory in each of the following assessment part.
Evidence recorded
Evidence Type/ Method of assessment Evidence Submitted
Unit Assessment Part 1 Unit Knowledge Assessment (UKA) Yes / No
Unit Assessment Part 2 Unit Skills Assessment (USA) Yes / No
UNIT ASSESSMENT PART 1
UNIT KNOWLEDGE ASSESSMENT (UKA)
STUDENT TO COMPLETE AND SUBMIT
STUDENT INSTRUCTIONS:
You are required to demonstrate the knowledge you have gained from undertaking BSBFIM601 Manage Finances unit of competency.
• All questions must be answered correctly to be completed satisfactorily.
• All knowledge assessments are untimed and are conducted as open book (this means student can refer to textbooks or any resources).
• Student may handwrite/use computers to answer the questions.
• This assessment task may be completed in a classroom, at home, learning management system (i.e. Moodle), or independent learning environment.
• You must complete all questions unassisted by the assessor or other personnel but may refer to reference material as needed.
Submission details
• The Assessment Task is due on the date specified by your trainer. Any variations to this arrangement must be approved in writing by your trainer.
• Fill out and attach the Assessment Submission form to the documents you are submitting to be marked.
• Please answer each question on a separate page provided and clearly indicate the question number at the top of the page.
• The Trainer/Assessor may further prompt and question in order to receive answers of appropriate quality or if further clarification is required and to validate authenticity of your submitted work.
Answer all of the following questions.
Q1. What are the requirements for financial probity?
In your response provide an overview of what financial probity involves and the impact it has upon the organisations financial activities. [40-80 words]
Q2. Briefly describe the following key concepts and principles of accounting: [80-100 words]
a) Accounting Entity Concept
b) Reliability Principle
c) Going Concern Principle
d) Full Disclosure Principle
Q3. Describe the following key principles and tools for effective financial systems: [80-120 words]
a) Transaction Recording
b) Reconciliation Processes
c) Invoicing
d) Cash Flow Management
Q4. Explain the following Australian, international and local legislation and conventions that are relevant to financial management in an organisation. [120-200 words]
Note: You must briefly explain the legislation and the impact it has upon an organisations practices.
a) Competition and Consumer Act 2010
b) Privacy Act 1988
c) National Employment Standards under the Fair Work Act 2009
d) World Trade Organisation and the 10 things the WTO can do
Q5. Outline the requirements of the Australian Tax Office, in regards to Goods and Services Tax, Company Tax, Pay As You Go. Provide an outline of the what the tax is and how it works. [120-180 words]
Note: it is recommended that you use the Australian Government business.gov.au website or the
Australian Taxation Office website for your research
a) Goods and Services Tax
b) Company Tax
c) Pay as You go withholding
UNIT ASSESSMENT PART 2
UNIT SKILLS ASSESSMENT (UKA)
STUDENT TO COMPLETE AND SUBMIT
STUDENT INSTRUCTIONS:
The project is designed to assess the skills required to strategically manage the marketing process and marketing personnel within an organization (simulated business called ‘The Nara Group’).
• If you are not sure about any aspect of the assessment or would like to discuss your particular needs, please speak to your trainer.
• Your trainer will tell you the date you need to submit your assignment.
• You need to complete all parts and submit them together by the due date.
• This project assignment is to be completed using the “The Nara Group” case study. It is included in the “Appendix”.
• The checklist table will identify the records that you are required to prepare and submit (as a single submission).
• Your assignment must be typed (in 12 point type on A4 paper) and you need to complete an Assessment Cover Page.
• Make sure you keep a copy of your assignment before you hand it in to your trainer
Note :
Any Role Play or Presentation needs to be completed in the class with your Trainer / Assessor on the date specified by your trainer.
1. CASE STUDY BASED PROJECT REPORT WITH ROLE PLAY TASK
The skills assessment is designed to assess the students’ knowledge and skills required to undertake budgeting, financial forecasting and reporting and to allocate and manage resources to achieve the required outputs for the business unit, using a fictitious case study-based organization called ‘The Nara Group’. The Assessment has two parts covering:
Part 1: In Part 1 students are required to plan for financial management, establish budgets and allocate funds by analysing financial data and organisational requirements.
Part 2: In Part 2 students are required to implement budgets and report on finances by conducting reviews, making revisions and identifying issues.
REQUIRED RESOURCES:
§ The “The Nara Group” case study.
§ Unit Skills Assessment – Study Copy excel sheet (containing sheets 1-5) ? Appendix 1 – 2
Part 1.
In Part 1 students are required to plan for financial management, establish budgets and allocate funds by analysing financial data and organisational requirements.
?Task 1
In Task 1 students will be planning for financial management by reviewing the Nara Group case study, reviewing financial data and organisational objectives and determining critical information to be used in establishing and implementing budgets in consecutive tasks.
a) Review the financial data provided for Q1, Q2 and Q3 2018, in the Nara Group Operating Budget 2018 [Excel Sheet – 1-Operating Budget]. In your review, analyse the financial data to establish which areas of the Nara Group are in profit or loss in each quarter.
Note: You must consider both the variable and fixed expenses to calculate the profit or loss, making sure that your fixed expenses used in the calculations are quarterly not annual.
b) Research the case study and review the financial data to explain why certain areas of the Nara Group are in profit or loss. Provide a brief explanation of your findings.
c) Analyse the cash flow trends for each of the Nara Group’s business areas. In your analysis, consider any variations in revenue and variable expenses, looking at their impact on the cash inflow/outflow. Provide a brief explanation of your findings.
d) Review statutory requirements for compliance and liabilities for tax by completing the following activities.
Review the provided link to assess the essential legal requirements for an Australian Business. In your review you must list the business registrations required and the fair trading obligations and laws a business must follow.
https://www.business.gov.au/planning/new-businesses/legal-essentials-for-business
Additionally, review the following link and briefly describe the NSW GST, considering how it works, what the rate is and which businesses are required to register for it.
https://www.ato.gov.au/Business/GST
The Nara Group is operating its 3 departments in NSW under a company structure. At the end of each Quarter the Nara Group calculates their income tax liability based on the total profit of the 3 departments.
Research and clearly state the income tax liabilities for companies in NSW.
Note: you must clearly state the NSW company tax rate. The Nara Group pays the full NSW company tax rate not the lower company tax rate which is only for small business entities.
e) Review the business plan and financial data to determine the main business initiative that will require resources for the Q4 2018 budget, as well as the critical dates for the budget and the initiative. Once you have conducted the review, compose an email to the Nara Group executive team, using the template provided, explaining your findings.
To: executiveteam@naragroup.com.au
From: [enter your email address]
----------------------------------------------------------------------------------------------------
Dear [Insert recipient/s name],
[Opening greeting]
[Email text – business initiative, resources required, critical dates]
[Final Greeting]
Kind regards,
[Insert sender name]
Note: In your email you must list the months which will be covered in the Q4 2018 budget, the expense items and any growth objectives. Your email should be approximately 100 words in length.
f) Research and review existing financial management/business accounting software’s available in the market and evaluate their appropriateness for the Nara Group. In your review consider: i. Price
ii. Usability
iii. Features and Functions iv. Pros and Cons
In your review you must consider at least 3 software’s and choose 1 software which you think is the most suited for Nara Group. Provide a brief explanation for your choice.
Note: Your response should be approximately 400 words in length.
?Task 2
In Task 2 students will be establishing budgets and allocating funds. By completing the activities below, students will be allocating resources, making informed estimates for budget inclusions, and preparing budgets in accordance with requirements.
a) Using the information in the case study and the financial data provided allocate the required resources and funding needed for each item for Q4 2018. You must do this by completing [Excel Sheet – 2-Operating Budget Q4].
Note: you must allocate resources (funds) by calculating both the variable and fixed expenses using the information provided in the growth objectives of the case study. Ensure your figures are for the quarter not annual.
b) The Nara Group executive team informs you that they would like to sponsor the mining conference in Sydney. They have requested that you read the sponsorship policy and account for the maximum sponsorship amount in the Q4 2018 budget. Use [Excel Sheet – 2-Operating Budget Q4] to complete this activity.
Note: The sponsorship is only for the Nara Business Hotel and Nara Conference Centre, as such the expense for Nara Resorts will be zero. The sponsorship is a one off event and so it must be included in the variable expenses. Account for all new budget inclusions.
c) Using the information from the case study and your completed activities in (a) & (b), prepare and finalise the Q4 2018 budget. In your budget you must include the projected revenue, the projected variable and fixed expenses and the projected tax liability for the Nara Group. Use [Excel Sheet – 2Operating Budget Q4] to complete this activity.
Note: the revenue can be calculated by assessing the forecasted occupancy rates for Q4 in the case study.
PART 1: Your assessor will be looking for:
Before you hand in the Part 1 assessment tasks, use the checklist below to make sure you have completed all the activities and have included all relevant information. To satisfy the criteria of this part, ensure you have:
• Reviewed the financial data provided and established which areas of the Nara Group were in profit or loss in each quarter.
• Researched and reviewed the case study and financial data to explain why certain areas of the Nara Group were in profit or loss, providing brief explanation of your findings.
• Analysed the cash flow trends for each of the Nara Group’s business area and provided a brief explanation of your findings.
• Reviewed statutory requirements by listing business registrations required and fair trading obligations. Additionally, reviewed the NSW GST and the NSW income tax liability.
• Reviewed the business plan and financial data to determine critical dates and initiatives requiring resources in the next financial cycle. Your findings are explained in an email using the provided template.
• Researched existing financial management software available and assessed its suitability for the Nara Group.
• Allocated resources (funds) using the case study and financial data provided.
• Included new items in the budget based on the information provided in the case study.
• Prepared a budget, using the information previously determined and in accordance with organisation and statutory requirements [Excel Sheet – 2-Operating Budget Q4].
Part 2.
In Part 2 students are required to implement budgets and report on finances by conducting reviews, making revisions and identifying issues.
?Task 1
a) As the financial manager you have completed the budget for Q4 2018. You must now implement your budget by composing an email and circulate your budget across the organisation to managers and supervisors, using the email template provided. In your email you must make it clear for the managers and supervisors, of their commitment to meeting the financial targets of the budget and the fact that they must report to the finance department upon completion of the budget period.
Note: your email must not be more than 150 words in length.
To: managers@naragroup.com.au
From: [enter your email address]
----------------------------------------------------------------------------------------------------
Dear [Insert recipient/s name],
[Opening greeting]
[Email text – context]
[Final Greeting – informing them of attached budget file]
Kind regards,
[Insert sender name]
b) In order to manage financial risks, you must prevent misappropriation of funds. As the financial manager of Nara Group, you will ensure that funds are allocated in accordance with the budget. To achieve this you will prepare a risk management strategy that will be used to record all financial transactions.
To complete this activity you must create a risk management strategy to properly record all financial transactions. In your risk management strategy you must create a reporting system which includes the frequency of reporting, to whom will the managers be reporting, whether the managers will be reporting before or after the transactions and the frequency of reviews conducted by the person to whom they are reporting. Your strategy must also include internal controls, explaining what managers must do to remain compliant.
c) Review the Nara Groups accounts and statements by completing the following activities.
Using the actual performance figures provided in [Excel Sheet – 3-Performance Figures Q4], review the Q4 2018 budget and determine actual profit and loss for the quarter.
Review the ageing summaries for Q4 2018 in [Excel Sheet – 4-Ageing Summaries]. In your review, complete the summaries and determine the outstanding accounts receivable at the end of Q4 2018.
Using the figures you have determined in your profit and loss and ageing summaries review and complete the Cash Flow Statement for Q4 2018, in [Excel Sheet – 5-Cash Flow Statement].
d) You conduct due diligence by reading the contingency requirements in the case study. In reading the requirements you realise that the Q4 2018 budget has not accounted for contingency. Revise the Actual Performance Q4 2018 Operating Budget to include the policy’s requirements [Excel Sheet – 3-Performance Figures Q4].
e) Conduct an audit trail by reconciling the Nara Group bank statements with the financial statements.
In order to reconcile the financial data you must review the bank statements for
October/November/December 2018 (Appendix 1) against the Operating Budget, Cash Flow
Statement and Accounts Receivable, by checking if the figures match or if there are discrepancies.
Use the audit template provided in Appendix 2 for your review.
f) You have conducted due diligence by reading the Nara Group case study. In your due diligence you find that the Nara Group had the main growth objective of doubling its profits in Q4 2018 as compared to Q3 2018. Ensure compliance with due diligence findings, by calculating if the Nara Group achieved its objective.
Note: be sure to use the actual profit not the budgeted profit for Q4 2018. Use pre-tax profit.
?Task 2
As the financial manager, who has conducted an audit on the Nara Group’s budgets, you must now prepare a report highlighting your findings. Using the information you have collected in previous tasks, prepare a variation report, of approximately 300 words in length, reviewing the budgeted period. Your report must meet the following format as required by the organisation:
1. Name of Reviewer
2. Date of Review
3. Budget Period in Review
4. Address the following points:
a. List the top 3 areas of greatest concern, with discrepancies between the forecasted budget and actual performance.
Provide a brief explanation of each discrepancy, stating why it may have occurred and why it is of concern.
b. What was the organisations tax liability for the period? What is the difference between the actual tax liability and the budgeted tax liability? (Note: use the total profit in Part 2 Task 1 (d) not Part 2 Task 1 (c).
c. Evaluate the effectiveness of the financial management process, by considering its ability to ensure that the forecasts of the budget are achieved.
5. Recommendations for next budget period to ensure financial viability of the organisation and prevent the discrepancies from reoccurring.
Note: you should refer to your findings in Task 1.
PART 2: Your assessor will be looking for:
Before you hand in the Part 2 assessment tasks, use the checklist below to make sure you have completed all the activities and have included all relevant information. To satisfy the criteria of this part, ensure you have:
• Circulated budget using the email template provided, ensuring managers and supervisors are clear about the budget, their reporting requirements and financial delegations.
• Created a financial transactions recording system which manages risk and ensures that the risk for misappropriation of funds is managed.
• Reviewed profit and loss statements, ageing summaries and cash flow statement.
• Revised the operating budget to include the organisations requirements to account for contingencies.
• Completed an audit trail by reconciling the Nara Group bank statements with the financial statements, identifying and recording discrepancies.
• Ensured compliance with due diligence by determining whether the organisations objectives were actioned.
• Prepared a variation report, following the required structure and addressed all the required points within the allocated word limit.
APPENDICES

APPENDIX: 00
CASE STUDY – THE NARA GROUP
Background
The Nara Group has been operating within the Sydney CBD as a hospitality group for the past 20 years. In this time the Nara Group has built a reputation as a high quality accommodation and conference space provider which offers residents a unique and flawless experience in one of their 3 hotels.
The Nara Hospitality Group consists of three departments:
1. Nara Resorts (NR)
2. Nara Business Hotel (NBH)
3. Nara Conference Centre (NCC)
The Nara Group has seen immense success over the years. However, recently due to a change in management the groups profits have declined and as such, the shareholders have asked the finance department to identify and fix the issues. The Nara Group has determined that due to ineffective marketing, poor customer service and seasonal fluctuations, occupancy rates for the Nara Business Hotel and Nara Conference Centre have drastically declined in 2018. However, whilst this may be the case the Nara Resort has seen consistently strong performance due to excellent customer service, good brand reputation and good relationships with booking websites. With this in mind, the Nara Group would like to ensure the final budget period in 2018 does not follow the same trend.
The budget periods are:
Q1 = Jan – March
Q2 = April – June
Q3 = July – September
Q4 = October – December
Mission
The Nara Group’s mission is to consistently deliver an enjoyable and memorable accommodation experience for travellers visiting the Sydney CBD in a business or vacation context.
Vision
The Nara Group’s vision is to become an industry leader in business and vacation accommodation/corporate space.
Growth Objectives
The Nara Group has identified that their Business Hotel and Conference Centre are
underperforming and have caused a decline in the Group’s profits in Q1/Q2/Q3 2018. The Group requires that the finance department ensures that this trend does not occur in Q4 2018. As such, the finance department has placed the financial manager (you the student) for creating, implementing and monitoring the budget to achieve the growth objective. The growth objective set for this period is to double the profit in Q4 2018 as compared to Q3 2018. To ensure this is delivered upon the financial manager is required to conduct an audit at the end of the budget period as well as regular revisions throughout.
Growth Initiatives
The Nara Group has identified that there will be a large mining conference in Sydney from 12-22nd November. They have estimated that in targeting this conference the occupancy rate for the Nara Business Hotel will be 73% and 30% for the Nara Conference Centre in Q4 2018.
In order to target the conference the following resources will be needed for the NBH and NCC as compared to Q3 2018:
• 10 more staff members in each hotel, charging $17,500 each per quarter
• 15% increase in cleaning costs
• 32% increase in AHMG operating fee
• 40% increase in room maintenance costs
• 50% increase in utilities costs
• 4 new marketing contractors for the NBH at $20,000 per annum each
• 5 new marketing contractors for the NCC at $17,000 per annum each
Note: All other expenses will remain the same as Q3 2018.
Revenue Forecasts for Q4 2018 Budget
Q4 2018 NR NBH NCC
Occupancy Rate 77% 73% 30%
Unless specified otherwise, all other factors remain the same as the Q3 2018 budget.
Sponsorship Policy
The Nara Group will only undertake sponsorship of events/conferences with the approval of the executive team. The maximum sponsorship amount is $30,000 per Nara Group department. The sponsorship period cannot exceed more than one quarter.
For every sponsorship period, the Nara Group provides the event/conference with promotional material, costing $2,000 per department. This is an additional expense which must also be accounted for when sponsoring an event/conference.
Nara Group Contingency Policy
The Nara Group requires that in order to prepare for any unforeseen expenses, 2% of the total revenue should be deposited into a contingency account at the end of each quarter. This contingency allowance should be included as a 3rd expense on the operating budget, in addition to the variable and fixed expenses.
APPENDIX: 01
THE NARA GROUP BANK STATEMENTS OCT/NOV/DEC 2018
Note: brackets imply a negative figure
Bank Statement October 2018
Transactions Debited Credited Balance
1-Oct Balance Forward $ 730,000 $ 730,000
2-Oct Sponsorship Cost $ 32,200 $ 697,800
3-Oct Management Software Payment $ 15,416 $ 682,384
4-Oct Building Rent NR $ 125,000 $ 557,384
5-Oct Promotional Material Cost $ 5,000 $ 552,384
6-Oct Community Contributions $ 4,583 $ 547,801
7-Oct Operating Revenue Cash $ 243,845 $ 791,646
8-Oct Marketing Contracts $ 41,250 $ 750,396
9-Oct Room Furnishing $ 165,000 $ 585,396
10-Oct Room Cleaning Cost $ 36,766 $ 548,630
11-Oct Room Maintenance Cost $ 27,766 $ 520,864
12-Oct AHMG Operating Fee $ 24,066 $ 496,798
13-Oct Building Rent NBH $ 104,166 $ 392,632
14-Oct Staff Salaries Payment NG $ 557,083 $ (164,451)
15-Oct $ (164,451)
16-Oct Operating Revenue Cash $ 212,700 $ 48,249
17-Oct Utilities Cost $ 11,566 $ 36,683
18-Oct $ 36,683
19-Oct Building Rent NCC $ 79,166 $ (42,483)
20-Oct Room Cleaning Cost $ 36,766 $ (79,249)
21-Oct $ (79,249)
22-Oct Building AM Cost $ 41,666 $ (120,915)
23-Oct Operating Revenue Cash $ 231,000 $ 110,085
24-Oct $ 110,085
25-Oct Accounting and Reporting Costs $ 3,263 $ 106,822
26-Oct $ 106,822
27-Oct $ 106,822
28-Oct Staff Salaries Payment NG $ 557,083 $ (450,261)
29-Oct Operating Revenue Cash $ 255,350 $ (194,911)
30-Oct Booking.com Cash Receipt $ 280,000 $ 85,089
30-Oct Trivago Cash Receipt $ 420,000 $ 505,089
30-Oct Expedia Cash Receipt $ 250,000 $ 755,089
31-Oct P.L Farthings Cash Receipt $ 136,000 $ 891,089
31-Oct J Smyth & Co Cash Receipt $ 100,000 $ 991,089
31-Oct L.L Advisory Cash Receipt $ 425,000 $ 1,416,089
Bank Statement November 2018
Transactions Debited Credited Balance
1-Nov Balance Forward $1,416,089 $ 1,416,089
2-Nov Sponsorship Cost $ 32,300 $ 1,383,789
3-Nov Management Software Payment $ 15,417 $ 1,368,372
4-Nov Building Rent NR $ 125,000 $ 1,243,372
5-Nov Room Cleaning Cost $ 36,766 $ 1,206,606
6-Nov Community Contributions $ 4,583 $ 1,202,023
7-Nov Operating Revenue Cash $ 194,500 $ 1,396,523
8-Nov Marketing Contracts $ 41,250 $ 1,355,273
9-Nov Room Furnishing $ 165,000 $ 1,190,273
10-Nov $ 1,190,273
11-Nov AHMG Operating Fee $ 24,067 $ 1,166,206
12-Nov Operating Revenue Cash $ 261,425 $ 1,427,631
13-Nov Building Rent NBH $ 104,167 $ 1,323,464
14-Nov Staff Salaries Payment NG $ 557,083 $ 766,381
15-Nov Room Maintenance Cost $ 27,767 $ 738,614
16-Nov $ 738,614
17-Nov Utilities Cost $ 11,567 $ 727,047
18-Nov Operating Revenue Cash $ 211,500 $ 938,547
19-Nov Building Rent NCC $ 79,167 $ 859,380
20-Nov Room Cleaning Cost $ 36,770 $ 822,610
21-Nov $ 822,610
22-Nov Building AM Cost $ 41,666 $ 780,944
23-Nov $ 780,944
24-Nov $ 780,944
25-Nov Accounting and Reporting Costs $ 3,263 $ 777,681
26-Nov $ 777,681
27-Nov Operating Revenue Cash $ 218,400 $ 996,081
28-Nov Staff Salaries Payment NG $ 557,084 $ 438,997
29-Nov $ 438,997
29-Nov Booking.com Cash Receipt $ 400,000 $ 838,997
29-Nov Trivago Cash Receipt $ 327,000 $ 1,165,997
30-Nov Expedia Cash Receipt $ 230,000 $ 1,395,997
30-Nov P.L Farthings Cash Receipt $ 150,000 $ 1,545,997
30-Nov J Smyth & Co Cash Receipt $ 80,500 $ 1,626,497
30-Nov L.L Advisory Cash Receipt $ 370,000 $ 1,996,497
Bank Statement December 2018
Transactions Debited Credited Balance
1-Dec Balance Forward $ 1,996,497 $ 1,996,497
2-Dec $ 1,996,497
3-Dec Management Software Payment $ 15,417 $ 1,981,080
4-Dec Building Rent NR $ 125,000 $ 1,856,080
5-Dec Operating Revenue Cash $ 243,450 $ 2,099,530
6-Dec Community Contributions $ 4,584 $ 2,094,946
7-Dec $ 2,094,946
8-Dec Marketing Contracts $ 41,250 $ 2,053,696
9-Dec Room Furnishing $ 165,000 $ 1,888,696
10-Dec Room Cleaning Cost $ 36,766 $ 1,851,930
11-Dec Room Maintenance Cost $ 27,767 $ 1,824,163
12-Dec AHMG Operating Fee $ 24,067 $ 1,800,096
13-Dec Building Rent NBH $ 104,167 $ 1,695,929
14-Dec Staff Salaries Payment NG $ 557,084 $ 1,138,845
15-Dec Operating Revenue Cash $ 220,500 $ 1,359,345
16-Dec $ 1,359,345
17-Dec Utilities Cost $ 11,567 $ 1,347,778
18-Dec $ 1,347,778
19-Dec Building Rent NCC $ 79,167 $ 1,268,611
20-Dec Room Cleaning Cost $ 36,766 $ 1,231,845
21-Dec Operating Revenue Cash $ 265,000 $ 1,496,845
22-Dec Building AM Cost $ 41,667 $ 1,455,178
23-Dec $ 1,455,178
24-Dec $ 1,455,178
25-Dec Accounting and Reporting Costs $ 3,264 $ 1,451,914
26-Dec $ 1,451,914
27-Dec Operating Revenue Cash $ 247,150 $ 1,699,064
28-Dec Staff Salaries Payment NG $ 557,083 $ 1,141,981
29-Dec Contingency Account Transfer $ 144,362 $ 997,619
30-Dec Booking.com Cash Receipt $ 270,000 $ 1,267,619
30-Dec Trivago Cash Receipt $ 275,000 $ 1,542,619
30-Dec Expedia Cash Receipt $ 240,000 $ 1,782,619
31-Dec P.L Farthings Cash Receipt $ 150,000 $ 1,932,619
31-Dec J Smyth & Co Cash Receipt $ 80,000 $ 2,012,619
31-Dec L.L Advisory Cash Receipt $ 425,000 $ 2,437,619
APPENDIX: 02
AUDIT TRAIL TEMPLATE
AUDIT TRAIL FORM
Auditor Name:
Audit Period: Q1/Q2/Q3/Q4
Date of Audit:
Audit Item Audit Notes
Yes/No?
If no, provide further details. What was the amount received/paid? How much was the discrepancy?
Does the operating cash revenue received match the cash flow statement?
Do the debtors cash receipts match the accounts receivable for October 2018?
Do the debtors cash receipts match the accounts receivable for November 2018?
Do the debtors cash receipts match the accounts receivable for December 2018?
Do the variable expenses paid match the operating budget?
Do the fixed expenses paid match the operating budget?
Auditor Signature: