Post-Workshop Assignment: CMI Level 5 Diploma in Financial Management

This document presents a completed post-workshop assignment for the CMI Level 5 Diploma in Management and Leadership, focusing on Financial Management (Unit 520). The assignment covers key aspects of organizational finance, including the relationship between the finance function and other departments, the impact of financial objectives on decision-making, and the differences between management and financial accounting. It also evaluates the impact of regulatory frameworks on an organization's approach to financial management and addresses the challenges organizations face in accessing finance. Furthermore, the assignment delves into budget setting, financial forecasting, and budget management, requiring the formulation and justification of a budget for a management area. The document analyzes factors impacting budget management, specifies corrective actions for budgetary variances, and discusses reporting procedures. The solution includes detailed explanations, workplace examples, and analysis to meet the assessment criteria, showcasing the application of learning from the module.

Level 5 Diploma in Management and Leadership
Module 5 –Financial Management
Post-Workshop Assignment
CMI Level 5Diploma in Management and Leadership
Unit Number 520 – Managing Finance
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Post-Workshop Assignment
Welcome to your Post-Workshop Assignment
The purpose of this post-work is to help you to reflect on and apply the learning gained from this module by
completing a number of structured activities. These outputs will be submitted to the Chartered Management
Institute (CMI) as evidence of application of learning.
CMI Units
By completing the Pre-Workshop Pack, attending and participating in the workshop and completing this Post-
Workshop Pack you will meet the assessment criteria for the following CMI unit:
 520 – Managing Finance:
Learning Outcome 1 – Understand Finance within organisations
1.1 Analyse the relationship between the financial function and other functional areas within
organisations
1.2 Examine the impact of financial objectives on decision making within organisations
1.3 Differentiate between management accounting and financial accounting
1.4 Analyse the impact of organisational and regulatory frameworks on an organisation’s approach to
financial management
1.5 Analyse the challenges organisations face accessing finance
Learning Outcome 2 – Know how to set and manage budgets
2.1 Differentiate between budget setting and financial forecasting
2.2 Evaluate budget setting approaches used by organisations
2.3 Formulate and justify a budget for an area of management responsibility
2.4 Analyse the factors that impact on budget management
2.5 Specify corrective actions to be taken in response to budgetary variance
2.6 Discuss reporting procedures for authorising corrective actions to a budget
What you need to do
As explained during the workshop, you need to carry out all of the activities in this pack as they will provide
evidence of application of learning. This post-work assignment also counts towards the ‘20% off the job’
training time for your apprenticeship.
Read through the pack and begin to plan in time to carry out the different activities. Book time in with any
colleagues you need to work with to make best use of their and your time.
Carry out all the activities and record in the space provided within this pack the actions you took along with
any findings and outputs. Support your analysis, findings and conclusions by providing additional relevant
documents where the task requires this and illustrate your responses wherever possible with specific
workplace examples.
To achieve a Pass, it is essential that you provide evidence for each and every assessment criterion.
You must also pass every section in this assignment.
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Participant Name:
CMI Registration Number:

Assessment
The assessment and internal verification of this Post-Workshop Assignment will be undertaken by the
accreditation arm of The Learning Space (TLS). The following pages provide full details of the CMI units
covered and what the Assessor will be looking for.
To gain the Level 5 Qualification you must meet the assessment criteria for all learning outcomes. For every
assignment, the CMI only distinguishes between a PASS and a REFER.
This is in line with other management awarding bodies and should an assignment not be up to the standard
of a Pass you will have the opportunity to resubmit your work following feedback from the assessor as to
where further work is required.
Submitting your work
 Once you have completed this pack you must return it, along with any supporting information and/or
documents, to [e-mail]
before the next workshop – please refer to your Assignment Submission deadlines.
 Wherever possible send electronic copies via email, but if this isn’t possible, send hard copy to the
address provided on the following page. Ideally these should be posted a few days prior to the
submission date.
REMEMBER: once you have completed the activities in this pack always retain a copy (along with any
supporting documents) for your own records.
Postal submissions should be sent to:
Melanie James
2 Church Close
Dunston
Staffs
ST18 9AF
The following pages provide details of the CMI assessment criteria and the post-workshop assignment. A
separate marking sheet is provided – this is the document that the Assessor/Internal Verifier will use when
assessing your work.
Please remember that this pack is part of your development and it is vital that you approach it with the right
mind-set and are committed to completing it.
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Assignment for Unit 520 – Managing Finance(Guideline word count for the assignment
– 2500 – 3000 words)
Task 1 - Understand finance within organisations
This task relates to the following CMI criteria:
1.1 Analyse the relationship between the financial function and other functional areas within organisations
1.2 Examine the impact of financial objectives on decision making within organisations
1.3 Differentiate between management accounting and financial accounting
1.4 Analyse the impact of organisational and regulatory frameworks on an organisation’s approach to
financial management
1.5 Analyse the challenges organisations face accessing finance
1.1 Finance and its relationship with other business functions
As part of your pre-work and workshop, you explored the different functions in an organisation and their
relationship with the finance function/system. In the space given below, describe how financial systems and
the financial function interact and relate to other functions within your organisation. Discuss the importance of
this relationship to achieve business objectives and strategies.
Description of the relationship between financial systems/functions and other functions
Finance is considered as one of the most significant systems or functional areas within an
organization; and this plays crucial role in joining other functional areas of a business such as
production, marketing, human resource and others. This relationship is shown below:
Relationship Between Finance and Production – The main duty of production department is
the production of goods; and there is a need for raw materials, labour and other expenses for
production. Production department requires money as well as fund for paying all expenses and
the finance department is responsible for providing the required money and funds. Finance
department is responsible for checking the production budget while allowing the necessary funds
for the department. In case the production department works efficiently, there will be increase in
sales as well as profitability and this is helpful in recycling the same fund with high profit to the
finance department. This implies the dependency of both of these departments on each other.
Relationship between Finance and Marketing – The main duty of marketing department is to
ensure the selling of maximum goods or services for satisfying the customers. There will be
decrease in product input cost in case the marketers of the company become able in selling all the
goods and services. Marketing department needs money and fund for the purposes of the
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promotion and distribution of the products; and to make payment to the salesmen, advertising
budget and other promotional activities. For all these expenses, the marketing department
develops the marketing budget and the finance department is responsible for clearing the same. It
implies that the finance department provides the required funds and money to the marketing
department for continuing its operations. This establishes a connection between these two
departments.
Relationship between Finance and Human Resource –Human Resource department or HR
department is considered as another crucial department within a company. HR department is
responsible for managing the employees and finance department is responsible for managing the
money. Therefore, it is possible for both the departments to satisfy the objectives of the firms in
case these two departments work together. The HR department is responsible for developing the
budgets for salaries, employee compensations and others; and the finance department approves
as well as provides this required fund. This indicates the relationship between these two
departments.
Apart from the above, there are other departments like operation and information technology
departments and the responsibility of finance department is to provide these departments with the
required funds for continuing their operations.
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1.2 Financial Objectives &Decision Making
Use the space provided to evaluate how financial objectives impact on organisational/operational decision
making.
Financial objective Impact on organisation/operational decision making
Cost control Cost control begins with identifying the elements of cost and
look that the cost incurred are required and not unnecessary,
and if necessary then plan ways to cut cost, move to less
expensive plan or change service givers.
Business growth Organizations small or big, all grows every year, expands its
geographic areas, more employees are hired, departmental mangers
are required to create managerial structure. Organizations achieve
growth through Joint venture or partnership or licensing.
Profit maximisation
(Gross and Net Profit)
Profit maximization is the primary objective of any organization. It is
required for the survival of the organization, it helps in measuring
standard and helps in social and economic welfare, by allocating
resources like land, capital and labour.
Value for money Value for money is a vital objective for organizations, as a pound on
hand on the present day is worth more than a pound promised in the
future. A pound promised in the future has less value than a pound
on the present day due to inflation. Present value discounts the
future cash flow back to the present date, with the help of average
rate of return and number of periods. Future value calculates how
much a current cash flow would be valued in the future when
invested at a fixed rate of return and number of periods.
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Economic stability It means absence of huge fluctuations in the macro economy,
with an even output growth and stable and low inflation.
Organizations will be able to expand and take risk when there
is economic stability.
Return on investment
Other
ROI is calculated by dividing net profit by total assets. It
measures the organization’s investment in the assets. A higher
ROI means the organization uses efficiently its assets to incur
sales.
Retained earnings- The profit which is not distributed as dividend is
reinvested in the organization or is put to reserve to pay off debt or
purchase a capital asset.
1.3 Management vs Financial Accounting
Use the space provided to identify and explain the differences between management accounting and
financial accounting and the important role they play in organisations (justify your answer).
Management Accounting Financial Accounting
Management Accounting is the
accounting system which gives
information related to the management to
make plans, strategies and policies to
help to run the business smoothly. It
contains both monetary and non-
monetary information. It is prepared as
and when required by the organization. It
is made only for the top management to
take decision. It contains detailed
information about the different
departments. It is neither audited nor
Financial Accounting is an accounting
system that prepares financial statement
of an organization to provide information
to outsiders. It contains financial
information only. It is prepared at the end
of the accounting year. It contains
summarized reports about the financial
position of the organization. It is required
by law. It is made according to specific
standards and formats. It covers the
entire organization, even if they are
present in different geographical region.
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published by statutory auditors. Reports
are made for any period like daily, weekly,
fortnight, monthly or quarterly. Reports
are “future looking” and is prepared using
statistical and scientific methods to take
decision. The reports can include budget
analysis and comparative analysis,
merger and consolidation reports,
feasibility studies and sales forecasting
reports. There is no fixed format for
presenting information .It contains both
quantitative and qualitative information.
The information is historic and predictive
based on decision making.
It is prepared as per GAAP or IFRS. It is
quantitative in nature. . It is required to be
audited and published by statutory
auditor. It shows the profitability, stability,
liquidity and solvency of the organization.
It is by the shareholders, creditors and
banks.
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1.4 Organisational and regulatory frameworks
Use the space provided to evaluate the impact of regulatory frameworks on your organisation (justify your
answers).
Framework Impact on theOrganisation
Companies Act 2006 Improves the corporate governance framework and the
administration of organization. The Act has introduced
a mechanism in which the directors have the authority
to ratify conflicts of interest at board level. Disclosure of
the company details in letters, websites, business
premises and emails, hence authenticating them. The
directors are no longer required to disclose their home
address, hence they get some privacy and ensure that
the financial statements and the directors’ remuneration
report comply with the Act.
Consumer Protection Act1987 The main focus of the Act is safety of the consumer.
There is no fixed limits on claims for personal injury and
most of the claims are settled out of the court, hence
the reputation of the organization remains intact.
Freedom of Information Act 2000 According to this Act the organization is bind by law to
publish information about its activities. This act makes
the public aware of all the activities performed by the
organization, hence the transparency policy helps the
public to have confidence in the organization.
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General Data Protection
Regulation (GDPR) 2018
The Act deals with the protection of personal data of
the citizens. The organization makes sure that the
personal data are only for the reason of collection,
transparent and lawful.
The National Minimum Wage This Act reduced income differences between the
highest paid and the lowest paid hence improve the
quality of living. It also prevents exploitation of the
workers and income distribution is equal.
Trade Descriptions Act 2017 The Act make sure that the services and products are
described properly. Hence customers are not
misguided and they know on what they are spending
their money on when they go to buy.
Finance Act2017 The Act enables the organization to portray the
financial transactions of it which includes both direct
and indirect tax. It helps to know how much revenue
was received and how much expenditure was incurred
and how much service tax has been given
Framework Impact on the Organisation
International Financial Reporting
Standards (IFRSs)
This Act ensure that when the directors are satisfied
that the financial statement portrays a true and fair view
of the organization, then only they can approve the
financial statement. The discloser of the statements are
vital and the accounting estimates are necessary and
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fair.
Other Regulations
1.5 Financial Challenges
Use the space provided to outline whatyou believe arethe financial challenges and considerations that
organisations face. This might include such things as innovation, the competition, strategic goals, business
risks and historical business performance. Identify, explain and justify as least four challenges.
Challenge Potential Impact on the Organisation
Innovation For success of the Network Rail in control period 5 and
beyond innovation and technology is vital. The research and
development department did not charge anything on the
income statement for the year 2016 -2017. Only the cost
pertaining to important development work was capitalized
under the head of property, plant and equipment
Competition According to the rules for central government organizations,
it is mandatory to appoint Comptroller and Auditor General as
the independent auditor in Network Rail. Hence the
organization is not able to follow the Code and order of
Competition and Market Authority which requires the listed
companies to accept a competitive tender process before the
appointment of the auditor.
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Business Risk Unable to prevent a train accident like derailment or
collision which can be avoided, leading to injuries,
fatality. This impacts the reputation, performance and
finance.
Strategic Goals Creating an environment for employees so that they
can give their best. Making the railway industry
inclusive and diversified. Creating an environment so
that everyone is treated with respect and dignity and
feels safe and taken care of. Aims to retain committed
and dedicated employees.
Historical business performance There was reduction in last time injuries. In 2017-18 it was
580 and in 2016-17 it was 693. There was reduction in train
accidents from 80% to 87.9%.The total efficiency generated
in 2017-18 was £125m adverse to target. Cash compliance
was £38m, a bit ahead of the aimed one due to positive
management actions.
Task 2 - Setting and Managing Budgets
This task relates to the following CMI criteria:
2.1 Differentiate between budget setting and financial forecasting
2.2 Evaluate budget setting approaches used by organisations
2.3 Formulate and justify a budget for an area of management responsibility
2.4 Analyse the factors that impact on budget management
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2.5 Specify corrective actions to be taken in response to budgetary variance
2.6 Discuss reporting procedures for authorising corrective actions to a budget
2.1 Budget Setting vs Financial Forecasting
Use the space below to identify and explain the difference between budgeting and financial forecasting
(justify your answer).
Budget Setting Financial Forecasting
 Budget setting can be considered as the
development of a quantitative business
plan for a specific period developed by the
management of the companies.
 Budget quantifies what the management
of a firm desires to achieve during a
specific period.
 When considering the time horizon, it
needs to be mentioned that the
management of a firm usually sets budget
for short-term, maximum one accounting
period.
 When considering flexibility, it needs to be
mentioned that the budgets are
comparatively static where statements are
updates less frequently in order to remain
connected with the prevailing market
condition.
 In case of the application of budgets, it is
required to mention that budgets serve the
company’s management as a control tool
in order to manage operational
performance in short-term.
 Financial forecasting is considered as the
estimation of the future trends on the basis of
the historical data.
 Financial forecasting quantifies what the firm
will achieve during the specific financial period
 Financial forecasting is done by the
managements of the companies for long-term
that includes several financial period.
 The technique of financial forecasting is
considered as more flexible as compared to
the budgets where it is revised multiple times
for incorporating real time data.
 In case of the application of financial
forecasting, it needs to be mentioned that the
management of a firm use this as an input in
order to prepare budget and get assistance in
the development of the long-term strategic
plans of the companies.
2.2 Budget Setting Approaches
Use the space provided below to outline how budgets are set in your organisation. Consider issues such as:
Do they follow a laid-down process, and if so, what is it and how is it implemented? Who has sign-off? Do
you operate a top-down or a bottom-up system to construct the budget? What elements are under your
control and which are pre-set?
Description of the budget setting approach in your organisation
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Business organizations adopt different types of approaches for the development of budget for their
businesses and the same is also applicable for Network Rail. The following discussion shows the
approach of the development of budget by the company.
It needs to be mentioned that the company utilizes four steps for the development of budget. The first
step involves in the identification of the goals of the business for the identification of information that
needs to be included in the budget plan. The second step involves in reviewing the current budgets
along with other income statements for the projection of cash flows and others. The third step involves
in defining the costs required for the budge. The last step involves in the development of the budget in
the presence of the above information. It needs to be mentioned that the Business Review Team has
all the responsibilities for the development and implementation of the budget that includes
development of business plan and budget and setting the policies and procedures for budgeting. The
Financial Controller Corporate Services & System Operator is responsible for signing-off the budget. It
is also needed to mention that the management of Network Rail uses top-down approach for the
development of their budgets. Under this approach, a high-level budget is developed by the senior-
level management; after that, the top level management allocate the numbers to the individual
functions or departments that is used for the development of detailed budget with the allocation. The
main elements of budgeting under control are plan, operations and resources, financial terms,
coordination, specified accounting period and comprehensiveness.
2.3 Create a Budget
Provide a copy of a budget you have produced within the last 12 months and use the space below to explain
its key features.
If you haven’t created a budget before, use the space below to explain how you would go about it and what
elements you would include and why.
Sample Budget
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Budget and Variance Analysis for the year ended 2018
Particulars
Actual
(£m)
Budgeted
(£m)
Variance
(£m)
Variance
(%)
Revenue 6580 7000 -420 -6.00%
Cost of Goods Sold 4730 4650 80 1.72%
Gross Profit 1850 2350 -500 -21.28%
Labor 200 250 -50 -20.00%
General and Administrative Expenses 250 200 50 25.00%
Operating Income (EBIT) 1400 2200 -800 -36.36%
Interest Expenses 100 150 -50 -33.33%
Profit Before Tax 1300 2050 -750 -36.59%
Taxation Expenses (20% of Profit before Tax) 260 410 -150 -36.59%
Net Income 1040 2460 -1420 -57.72%
It needs to be mentioned that there are certain procedures that need to be followed for the development
of a budget and certain elements are needed to take into consideration in the budgeting process. The
same is also applicable for Network Rail and they are discussed below.
It is a key aspect for the companies to create, monitor and manage a budget. There are three aspects
that need to be considered at the time to develop budgets; they are the projected sales for the budgeted
period, cost of sales of the company and the costs. Network Rail is a profit centre and its main aim is to
generate profit. For this reason, both the budgeted figures and actual figures are taken into consideration.
In the above budget, three major aspects are the revenue, costs and profit. Revenue or sales refer to that
income that the company earns from its normal business activities. After that, cost of goods sold, also
known as cost of sales, refers to how much it costs to Network Rail for producing the products or service.
Gross profit can be obtained from subtracting cost of goods sold from revenue. The next part in the
budget is operating expenses or company costs such as labour and general and administrative
expenses; these are called as overheads. Both controllable and uncontrollable overheads can be seen. It
needs to be mentioned that there are certain differences between costs of goods sold and company
costs in spite of the fact that both are company expenditures. Both of these expenses are shown
separately in the income statement. The main different is that costs of goods sold are the expenditures
that are directly tied with the production process whereas company costs are not directly tied with the
production process. Examples of company costs are rent, utilities, legal costs, sales and marketing and
others. Operating income can be obtained from subtracting these company costs from gross profit. The
above budget also includes interest expenses which is the interest payable by the company on taken
term loans. Net profit or net income can be obtained from subtracting interest expenses and taxation
expenses from the operating income.
After that, the companies are also needed to follow certain step for the preparation of the budget. First, it
will be needed for the Business Review Team of the company to invest considerable amount of time for
the development of the budget since it is required for the development of a comprehensive and realistic
budget. After that, it is needed to use the last year’s figures, but the company is only required to use it as
a guide. Moreover, creation of a realistic budgets is another major aspect that needs to be considered.
For this, it is needed for the company to use historical information, the current business plan and the
alterations in the current operation for the preparation of budget.
There are four major elements that need to be considered in the budgeting process; they are the people,
data, process and end goal. People is needed because budgets cannot be developed without the help of
people. Three major components in this regards are involvement, accountability and time. After that, data
needs to be produced in the budgeting process because budgeting converts data to information. Four
components of data are detail, drivers, timeliness and external information. In the budgeting process,
people and data must be brought together with the help of appropriate process.
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2.4 Getting Back on Budget
Using your sample budget as your template, explain how you would manage and monitor/measure
performance against its key elements (justify your answer). Note down your recommendations in the space
provided.
Budget Management
In case the budget is based on the business plan, it is helpful for the companies in the
creation of financial action plan. This can serve the company in measuring as well as
monitoring the financial performance in case the budget can be reviewed on regular basis as
a part of the annual planning cycle. Thus, the budget can serve as a cost and revenue
indicator interconnected to each other, a way to support the management decisions through
providing information and a mean to monitor as well as control the businesses. In case of
Network Rail, it is possible to manage as well as monitor the performance against the key
elements. Comparing the budget on year to year basis is an excellent manner to benchmark
the business performance of Network Rail where the projected financial figures can be
compared with the previous year’s figures. The management can also compare the figures
for projected margins as well as growth with the same of the other companies. After that, key
performance indicators are another way to measure performance. It is needed to understand
as well as monitor the key drivers of business which is considered as the aspects having
major impacts on the businesses. There are certain factors affecting the performance of the
businesses and thus, these aspects need to be monitored carefully. The three key drivers for
the business are sales, costs and profit. These elements help in measuring the performance
of Network Rail.
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2.5 Budget Analysis
Provide a copy of a spreadsheet that shows actual performance against budget and then analyse it and
identify where it is below plan, on plan or better than plan and then specify what action you would
recommend for key variances, i.e. above and below planned performance. Note down your recommended
actions in the space provided.
If you haven’t created a budget before, use the sample budget you provided for Task 2.3 and then identify
potential variances in key areas and provide possible actions you could take to bring performance back on
plan. Note down your recommended actions in the space provided.
Budget Analysis
Budget and Variance Analysis for the year ended 2018
Particulars
Actual
(£m)
Budgeted
(£m)
Variance
(£m)
Variance
(%)
Revenue 6580 7000 -420 -6.00%
Cost of Goods Sold 4730 4650 80 1.72%
Gross Profit 1850 2350 -500 -21.28%
Labour 200 250 -50 -20.00%
General and Administrative Expenses 250 200 50 25.00%
Operating Income (EBIT) 1400 2200 -800 -36.36%
Interest Expenses 100 150 -50 -33.33%
Profit Before Tax 1300 2050 -750 -36.59%
Taxation Expenses (20% of Profit before Tax) 260 410 -150 -36.59%
Net Income 1040 2460 -1420 -57.72%
It can be seen from the above table that there are certain major differences between the actual
performance of Network Rail and the budgeted performance. This difference between the actual and
budgeted performance is called the variance. First, the actual revenue of the company is less than the
budgeted figure. In order to improve this, the recommendations to Network Rail are to increase the
number of customers, increase the frequency of transaction and raise the prices.Due to the decrease
in revenue as well as increase in cost of goods sold, the gross profit of the company has also
decrease; and the strategy is to decrease the cost of goods sold to increase this profit. After that, it
can be seen that labour expenses has decreased where there is an increase in general and
administrative expenses of the firm. Due to this, the operating profit of the company is less than the
budgeted one. This can be improved through reduction in the general and administrative expenses of
the business. Interest expenses is less than the budgeted one.It can be seen from the above budget
that the net income of the company has decreased as compared to the budgeted net income. The
main strategy to increase this is to ensure increase in sales while decreasing the expenses.
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2.6 Reporting Procedures
Having analysed budget performance, identified variances and identified actions that would improve results,
use the space below to briefly explain how you would present your analysis to senior management, for
example, written/verbal reports, RAG ratings, Dashboards or similar. Note down your answer in the space
provided.
 You may wish to provide a copy of a report and refer to it in your summary explanation.
Reporting Procedures
The above discussion involves in the analysis of budget performance, identification of the variances
and identification of the needed actions need to be taken by the firm. After all these, it is important to
adopt the correct approach or procedure to present the analysis to the senior management.
Considering the nature and content of the whole analysis, the whole analysis will be presented to the
senior management through both verbal as well as written reports. More precisely, the whole analysis
will be presented through a detailed written report. For this reason, it will be required to arrange a
meeting with the senior management where the written report will be presented. In addition, the key
points of the written report will be verbally presented to the senior management through presentation.
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