Financial Planning and Forecasting Techniques

This document covers various topics related to financial planning and forecasting techniques, budgetary control, sources of information for financing and investing, and more.

Assessment Details
Qualification Code/Title Diploma of Accounting
Assessment Type Assessment -1 Time allowed
Due Date Location AHIC Term / Year
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Instructions to the Candidates
 This assessment is to be completed in class supervised by assessor.
 Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will
be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency.
 If you are not sure about any aspect of this assessment, please ask for clarification from your assessor.
 Please refer to the College re-submission and re-sit policy for more information.
 If you have questions and other concerns that may affect your performance in the examination please inform the assessor
immediately.
Question 1
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Unit of Competency
National Code/Title FNSACC501-Provide Financial and Business Performance Information

In what section of the financial plan are compliance obligations found? List the common forms that
have resulted from government financial policies.
a. Where can financial management instructions be found in meeting compliance obligations
and for identifying changes in legislation?
b. How can clients’ liabilities to state government charges be calculated?
c. List the five common taxes or charges levied by state or territory governments.
Discuss in 120 to 150 words.
Response:
Question 1
In a financial plan, we generally find the compliance obligations in the objectives/ financial information
sought part.
Some of the common forms which are a result of governmental policies are listed below in point form:
 Income Tax Forms (IT)
 Business Activity Statement (BAS)
 Superannuation Forms
 Tax Withholding Forms
 GST Filing and Registration Forms
Part a
All financial management instruction for effectively meeting compliance obligations and for recognizing
change in regulations can be found in governmental websites. All changes made to legislations are made
in the official website of Australian Tax Office. In addition to this, information relation to taxes can be
collected from statutory returns.
Part b
The computation of the liability of the client can be computed considering the state taxes levy on
individuals and the same can be assessed by checking the assets and income which is generated by the
individual. For instance, in order to claim property tax, the state government would firs value the
property and then the amount of annual fees can be computed considering the value of the property.
Part c
The five common types of taxes whose charges are levied by state or territory governments are listed
below in point form:
 Goods and Service Tax
 Property Taxes
 Payroll Taxes
 Fringe Benefit Taxes
 Taxes on Gambling (Lotteries)
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Question 2
List and describe four areas that are likely to cause taxation issues for clients.
Response:
The four areas which are related to tax and which are likely to cause issues with the clients are listed
below:
a. Low Interest Loans on Superannuation funds: There is a significant controversy when it is
associated with whether low interest rate or nil interest rate should be applied when borrowing
from self-managed superannuation fund. There are two private rulings which are provided by
ATO which are mostly like to result in more conflicts.
b. Stamp Duty in SMSF: There is a conflict in the rulings for stamp duty which is associated with
Super funds. Section 67 of the Superannuation Industry (Supervision) Act, 1993 prohibits a SMSF
from borrowing money. However, there is an exception to this ruling which states that SMSF can
enter into a limited resource borrowing arrangement. The expectation to be applicable requires
assets to be kept in trust which makes stamp duty payment less and a conflict is created when
client takes advantage of the concession by transferring property.
c. Application for Deductions: There is wide range of conflicts between the clients and the ATO
when it comes to claiming of deductions which are applicable on the assessable income of the
client. There are various provisions where deductions are negotiable and therefore in most of the
situation conflicts arises.
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d. Private Rulings and Tax Audit: There are often negotiation and conflicts when a private ruling is
given by the ATO. There is also a degree of negotiation in the private ruling process, as taxpayers
and the Australian Taxation Office (ATO) attempt to determine the correct application of the law
Question 3
Conduct the appropriate research and compare and contrast forecasting techniques. Discuss your
findings in 150 to 180 words.
Response:
The different types of forecasting techniques which are used by businesses are listed below in details:
 Qualitative and Quantitative Forecasting Techniques: This is an important technique in
forecasting of information. Qualitative forecasting techniques considers opinions of the
individuals for forecasting whereas quantitative forecasting involves use of past numerical data
for predicting the future. Simple exponential smoothing, multiplicative seasonal indexes, simple
and weighted moving averages are techniques used in quantitative forecasting.
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 Casual Forecasting Techniques: This is another technique which is used in forecasting which
involves regression analysis and autoregressive moving average as a forecasting technique for
predicting variables using underlying factors. These analysis uses mathematical functions for
known variables for predicting the future.
 Time Series Forecasting Method: This method is also an extension of the quantitative forecasting
analysis of data as the technique uses exponential smoothing, moving average and trend analysis
which generally uses past data for predicting the future outcomes. This type of analysis identifies
a growth pattern and the same is used for the purpose of estimating the future outcomes.
Question 4
List and describe (50 to 80 words each) the benefits and application of the methods for presenting
and formatting financial data.
Response:
The financial information can be effectively presented in a format of financial statements and the
benefits for the same are listed below:
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 Income Statement: The income statement effectively presents all the income and expenses of
the business for the year and systematically can compute the profits which is generated by the
business. In addition to this, the items are appropriately represented in the financial statements.
The users of the financial information can appropriately identify different items which are
included in the financial statement.
 Balance Sheet: The balance sheet is a statement which is included in the annual reports of a
business and the same shows all the assets and liabilities of the business. The balance sheet
effectively shows the assets which are owned by the business during the period and also the
liabilities of the business. In addition to this, the balance sheet also shows equity of the business
that is, the funds which is used in the business which can be equity share capital or preference
share capital.
 Cash Flow Statement: The cash flow statement is also a part of the financial statements which is
prepared by company. The cash flow statement effectively shows cash inflows and outflows of
the business. The cash flows statement effectively shows cash which is generated from different
operations which is undertaken by a business.
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Question 5
List two broad measures of budgetary control.
Response:
The two broad measures which are associated with Budgetary control practices are listed below:
 Budgetary control effectively formulates a budget which acts a guide to the employee of a
business. The budget effectively sets a target which needs to be followed by the staff in order to
attain the goals and objectives of the business.
 Budgetary control can also be used for measuring performance of the business and also make
comparisons with past year performance. In other words, budgets can be used for performance
management as well as planning and forecasting process in a business. A company can compare
the actual performance of the business with budgeted estimates in order to identify the
variances and investigate accordingly for the reasons of such variances.
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Question 6
Why would you implement budgetary controls for expenses including wages, inventory, telephone
and motor vehicles? Discuss in 120 to 150 words.
Response:
Budgetary control is a process with the help of which businesses can effectively control and supervise the
operations of the business as well as make plans for the future. In case of a business, budgets are
prepared for monitoring the costs and also ensuring that goals and objectives of the business can be
followed. The objective of a business is to maximize profits and therefore it is imperative that the costs
of the business must be controlled and reduced. Budgeting provides a guideline to the staff members for
limiting the expenses of the business and thereby enhancing the profits of the business. Any variances in
costs figures can be investigated by the management so that such variances does not take place in
future.
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Question 7
What are the main sources of information when considering financing and investing? Discuss in 150
to 180 words.
Response:
The main sources of information when considering financing and investing decisions are listed below in
point form:
 The financial reports which are prepared and presented by companies are important source of
information for making investing and financing decisions as they appropriately portray the
performance of the business and ability of the business for future periods.
 A client can take assistances from financial advisors for selecting the best possible options for
investment and financing decisions as the have appropriate idea and knowledge for providing
the best possible option.
 Another important source of information for making investments and financial decisions is from
the information which is collected from financial publications which outlines the best possible
firms and their returns. Such factors would facilitate decisions regarding investments or
financing.
 Another information source which potential clients can be looking for is websites and brochure
which are available in the market. Such brochure and analysis of the websites provide a clear
understanding of the finance market situation and on the basis of the same decisions can be
taken appropriately.
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Question 8
Outline five risks and contingencies and risk management options relating to financial and business
performance. Discuss in 150 to 180 words.
Response:
The five-risk management and contingencies options which are related to financial and business
performance are listed below in details:
 Risk Forecasting: The first step is risk forecasting which is used for determining the quantity and
level of risks which the business utilizes. This step identifies the nature of the risks whether they
are human, operational, financial, environmental/weather-related, political, procedural,
technical or project-based. There are several methods available for identifying the risks of the
business.
 Composite Risk Index: This is the next step wherein the risks are rated on the basis of one is to
five in order to identify the risks which is likely to causse most damage and on the basis of the
same appropriate strategies are formulated.
 Risk Option Evaluation: Once the risk is rated and identified as to which risks the business is
likely to face, the management can formulate risk management strategies. There are four
approaches which is available to the business which are risk avoidance, risk reduction, risk
sharing or transfer, and risk retention.
 Contingency Planning: The management of the company needs to formulate a contingency plan
in order to deal with any situation with which risk arises. The contingency plan would be
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formulated considering the nature of the risk and its impact on the business.
 Plan Evaluation: In order to ensure that the contingency plans are active, the management
needs to review such plans and make changes to them if required. Evaluation of plans makes a
business ready for any kind of risks.
Question 9
List and briefly describe five aspects of legislation that protects a client’s rights and responsibilities
Response:
The legislations which protects the rights and responsibilities of the clients are listed below in details:
 Privacy Act 1988: The privacy act secures the way in which personal information of the clients
are handled and ensure safety of the same. The privacy act provides some rights to the clients
such as it is optional to identify themselves, protect personal information from being collected or
used.
 Competition and Consumer Protection Act: This act also protects the rights of the consumers
and ensure that there is fair trade practices in the country. There is also a provision in the act to
ensure that the consumers are safe from any kind of threats. Any violation of such provisions
would lead to civil and criminal penalty for the parties.
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 Australian Contract Law: The contract act specially deals with performance of a contract
between two parties and therefore effectively portrays the responsibilities of both the parties in
terms of performance of the contract as per provisions.
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