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ACTIVITIES AND WRITTEN QUESTIONS

Complete the following activities individually or in a group (as applicable to the specific activity and the assessment environment).

Where applicable, a signed observation by either an approved third party or the assessor will need to be included in these activities as proof of completion.

Activity 1A

Estimated Time	15 minutes
Objective	To provide you with an opportunity to allocate funds according to budget and agreed priorities.
	Explain why it is important to agree on organisational priorities before allocating funds. Give three examples of agreed priorities in budgets that you have been involved with. An important part of our job will involve allocating budgetary funds to specific areas of the organisation. Before we can consider allocating any funds, however, we will need to discuss, negotiate, and decide on organisational priorities with key stakeholders. We will need to have a clear understanding of what the organisation’s strategic priorities are, as this will determine how much funding we provide different areas of the business. The organisation’s priorities will usually be summarised in mission statements, vision statements, and work plans, but if we are still unsure we may need to organise a meeting with other financial decision-makers to discuss and clarify our strategic direction. The organisation’s priorities will depend on what kind of business entity it is, the organisation’s position within its market/industry, and its vision for the future. The priorities you decide on will not only allow the company to remain operational, but it will also allow it to flourish in a niche market area, maximising profitability in the long run. Examples of agreed priorities in budgets that I have been involved with: ➢ Promoting a new product or service (marketing) ➢ Expanding your department through increasing staff numbers (human resources) ➢ Developing a new product ➢ Improving product/service quality ➢ Increasing staff retention ➢ Improving reputation among target audiences

Activity 1B

Estimated Time	15 minutes
Objective	To provide you with an opportunity to discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation.
	Why is it important to discuss any expenditure changes with colleagues before implementing them? List the personnel that you would involve in such discussions in your organisation. In most organisations, we will not be responsible for setting priorities and allocating funding alone; usually, we will be part of a team which discusses and negotiates a range of options, in order to establish the best route forward for the organisation. In our organisation, I will need to discuss priorities with: ➢ Managers from relevant departments ➢ Accounting professionals (internal and external) ➢ Supervisors from relevant departments ➢ Owners and directors ➢ Purchasing staff ➢ Marketing staff ➢ Specialists (internal and external) ➢ A spokesperson for employees.

Activity 1C

Estimated Time	15 minutes
Objective	To provide you with an opportunity to consult with and inform relevant personnel about resource decisions.
	Why is it often beneficial to consult other personnel about resource decisions? How do you consult with others in your organisation? Consulting with other financial decision-making personnel will allow us to increase our knowledge of the organisation, including how money is currently spent and what extra needs and requirements there are. For example, a manager from a different department may identify that more staff are needed in a certain operational area, and may be able to provide details about the funding needed to achieve this. Another manager may be able to identify ways of reducing overheads, which in turn will free up funding to be used elsewhere. We may communicate resource decisions to employees in a number of different ways. If decisions affect personnel company-wide, then it is best to call a group meeting to announce decisions. If, however, information concerns specific personnel, then we may choose to arrange smaller meetings, send emails, make telephone calls, or send memos.

Activity 1D

Estimated Time	15 minutes
Objective	To provide you with an opportunity to promote awareness of the importance of budget control.
	When promoting awareness of budget control, what points should you make as a priority? Provide three examples. We may need to stress the importance of: ➢ Expected income in the budgetary period o we may need to cover any strategies that will maximise income ➢ Expected overheads o we may need to cover strategies that will minimise overheads ➢ Funding allocation o how much funding each department will get o specific funding for events o specific funding for development o funding for recruitment and staff training o funding for marketing and advertising ➢ Recording and reporting o all personnel should be clear and confident about how financial data is recorded o all personnel should be clear and confident about how to report financial information to managers and supervisors.

Activity 1E

Estimated Time	15 minutes
Objective	To provide you with an opportunity to maintain detailed records of resource allocation according to organisational control systems.
	Give four examples of different records of resource allocation that you use within your organisation. For one of these, explain what information you need to fill out and give details about why it is important to your company. Records may include: ➢ Purchase orders o proof that a valid purchase was authorised and as an initial indication as to which department and perhaps budget line/code the purchase was intended for ➢ Delivery docket/invoice/statement o these documents demonstrate that the goods which were ordered were in fact received and provide the evidence about how much was spent. ➢ Internal requisitions o these will prove that stock was issued from a central store to a specified department; the quantity and quality of each item will be listed on the requisition, thereby enabling the appropriate amounts to be charged against relevant departments ➢ Interdepartmental transfers o similar to internal requisitions, these documents prove that stock that has been issued to a certain department has been ‘on–sold’ to another department and must now be charged against them ➢ Creditors ledger o a detailed explanation of who your organisation owe money to, and how much.

Activity 2A

Estimated Time	15 minutes
Objective	To provide you with an opportunity to use financial records to regularly check actual income and expenditure against budgets.
	Give five examples of financial records that you can check/monitor to track actual income and expenditure against budgets. For one of these examples, explain what the record shows and why it is used. Types of financial records we may have to check include: ➢ Trial balances o a list of closing balances in ledger accounts ➢ Receivable reports o these reports show how much is owed to the organisation this should not be ignored, as it can represent a large proportion of incoming cash flow ➢ Purchase summary reports o includes all orders we have placed with suppliers this can represent a large proportion of expenses ➢ Stock reports o signifies the overall health of the company o provides investment information ➢ Variance reports o shows differences between planned financial outcomes and actual outcomes this can be a vital tool when comparing income and expenditure against budgets ➢ Wastage reports o indicates resource wastage, including financial wastage

Activity 2B

Estimated Time	15 minutes
Objective	To provide you with an opportunity to include financial commitments in all documentation to ensure accurate monitoring.
	Explain what a financial commitment is and give three examples of regular financial commitments you make in your organisation. A financial commitment is made when an order is placed or a contract is signed for goods/services, with payment agreed to be paid at a later date. These payments may cause a spike in cash flowing out of the organisation, and this can have implications for the budget if it is not accounted for properly in documents as early as possible. Financial commitments may include: ➢ Billed services from external professionals o for example, we may hire an external electrician to fix technology on a one-off basis ➢ Stock orders made o we may order a large stock order, agreeing to make payments at a later date ➢ Anything bought on credit ➢ Rental agreements o rental payments for shop or office space may be due at different points in the year ➢ Purchasing of intellectual property rights o we may owe commission payments if you use other intellectual property.

Activity 2C

Estimated Time	15 minutes
Objective	To provide you with an opportunity to identify and report deviations according to significance of deviation.
	Give three examples of variables that can cause you to deviate from the budget, explaining why each one can affect the budget. Variances may include: Sales volume changes One of the main variances which can cause the organisation to deviate from an original budget is sales volume figures. The sales of products and services will greatly influence income statistics in any organisation, and if income falls or rises then we may need to adapt the budget. Changes to sales volumes may be caused by changes in the economy, with people having more or less spending power depending on economic fluctuations. Advertising, competition, and changes to prices can also have a big impact on sales figures. Materials and supply changes Materials and supplies can also trigger deviations from planned budgets. we may be forced to deviate from a budget if market prices drop or rise and the price of materials changes significantly. we may also be forced to deviate because of the quality of materials purchased, which may affect the price we can charge due to the quality of products and services. Labour Changes in market labour rates, wage rates, and staff sickness rates can also cause expenditure and income variances, which may cause deviations from the budget. The quality of the people we employ – their skill level, knowledge level, and experience – can also affect income and expenditure statistics.

Activity 2D

Estimated Time	15 minutes
Objective	To provide you with an opportunity to investigate appropriate options for more effective management of deviations.
	Describe what your options are for dealing with larger deviations in your organisation’s budgets. Large deviations will generally leave us with fewer options, as budgets become more difficult to adapt when estimations are significantly inaccurate. We may need to consider when it comes to dealing with the deviations: ➢ Make significant changes to the budget o this may mean: reducing or increasing funding accepting overspending in a time period scrapping or rethinking priorities scrapping projects rethinking purchasing levels, wage increases, and new staff.

Activity 2E

Estimated Time	15 minutes
Objective	To provide you with an opportunity to advise appropriate colleagues of budget status in relation to targets.
	Which personnel do you need to update concerning budget statuses? Why is it important for these parties to be updated? We may need to inform: ➢ Senior management o it is likely that senior managers will have been involved in most budget discussions, so it is vital that they are kept updated as much as possible ➢ Mid-level management o e.g. heads of department o these employees often have control over income and expenditure, so it is important that they know the budget’s status ➢ The accounts department o the accounts department may be involved in creating reports, but they should also be kept up-to-date with organisational targets o although accountants’ jobs are focussed on numbers, they must feel involved in the wider context of the organisation, and this requires you to inform them of progress towards goals ➢ A budget committee o such committees are responsible for the ongoing monitoring of income and overseeing revenue against projections ➢ Any other relevant staff members o for instance, those who have worked on creating or monitoring the budget at any stage.

Activity 3A

Estimated Time	15 minutes
Objective	To provide you with an opportunity to assess existing costs and resources and proactively identify areas for improvement.
	Outline five main costs in your organisation and explain how one of these areas of spending could be reduced without harming the customer experience. Costs in other organisations as well as ours may include: ➢ Labour costs o consider wages, recruitment, and training costs ➢ Marketing and advertising costs o consider costs for advertising space and time across all platforms o consider how much it costs to design adverts ➢ General overheads, such as lighting and heating ➢ Administration costs o consider how much it costs to keep the organisation running, including all paperwork requirements ➢ Customer communications o how much does it cost to run a customer hotline, for example? ➢ Returns and refurbishment o how much does it cost to run a dedicated returns and refurb department? ➢ Technology o how much does it cost to replace, maintain, and upgrade technology?

Activity 3B

Estimated Time	15 minutes
Objective	To provide you with an opportunity to discuss desired budget outcomes with relevant colleagues.
	What steps can you take to make sure all relevant colleagues voices are heard when discussing budget outcomes? Effective communication is indeed important as it is the way we convey our message through others. An effective discussion requires all staff members to: ➢ Value everyone’s opinions o we may not agree with our colleagues, but we should learn to encourage and accept all views despite this ➢ Involve the correct people o based on position within the organisation, knowledge, and experience ➢ Communicate clearly o using both verbal and non-verbal communication ➢ Compromise when necessary ➢ Use active listening techniques o listen, clarify, and confirm ➢ Be open-minded to new ideas and points of view ➢ Trust your colleagues.

Activity 3C

Estimated Time	15 minutes
Objective	To provide you with an opportunity to undertake appropriate research to investigate new approaches to budget management.
	Describe two research methods you can use to investigate new approaches to budget management. Consulting experts and colleagues with more experience Research can also be carried out by consulting financial experts – such as accountants – or colleagues that have more experience of managing finances and budgets. These parties may be able to tell us where we are making mistakes, or offer useful insights about how to control budgets. Researching accepted theories Another option for undertaking research is to read/watch/listen to learning materials which examine proven financial management theories and approaches, and why they work. We should make sure we get the information from a variety of trusted sources, and critically evaluate whether any approaches or strategies are likely to work for the organisation before implementing them. Considering what do competitors do Often, a useful research method is to look at how the competitors approach budget management. If this is not possible, look at publically available examples of how successful companies in the industry control their finances. Pay close attention to how they prepare, discuss, monitor, and adapt their budgets, according to what type of budget it is and what its purpose is (e.g. to control finances while developing a new product).

Activity 3D

Estimated Time	15 minutes
Objective	To provide you with an opportunity to define and communicate the benefits and disadvantages of new approaches.
	How can you define new approaches for the benefit of your colleagues? What information should you provide them with? It is vital to define the benefits of any new approaches to budgetary management that we adopt, before communicating them to your team. Defining approaches will require us to meet with other relevant personnel to discuss why it is worth adopting new approaches, and why they will help the organisation to control finances more effectively. All employees who deal with any aspect of organisational finances should be involved in this meeting, as it is these staff that will ensure the new approaches are implemented correctly. A lack of information may lead to a lack of financial control, potentially leading to the failure of new strategies and approaches. Defining the benefits of new approaches will require us to: ➢ Express why they are better than old approaches ➢ Point out why new approaches are more accurate in estimating income and expenditure ➢ Communicate why new approaches will increase efficiency and decrease wastage ➢ Explain how new approaches will help to prioritise organisational goals and objectives ➢ Determine how monitoring, reviewing, and reporting will improve with the adoption of the new approach.

Activity 3E

Estimated Time	15 minutes
Objective	To provide you with an opportunity to take account of impacts on customer service levels and colleagues in developing new approaches.
	How can new approaches to managing finances affect the customer experience? Give at least three examples. New approaches can lead to: ➢ More/less funds for human resources o this may lead to less customer service staff, or lower quality staff ➢ More/less funds for communications o customer hotlines may be understaffed o response times may rise ➢ More/less funds for purchasing materials o products and services may suffer because of this, which will directly impact the customer experience ➢ More/less funds on customer areas – such as shop floors, eating areas, and payment areas o negative experiences can lead customers to think twice before doing business with you again ➢ More/less funds for technology.

Activity 3F

Estimated Time	15 minutes
Objective	To provide you with an opportunity to present clear and logical recommendations for budget management.
	Explain how you would present a recommendation for budget management in your organisation. Describe what information you would use, and how you would present it. It is important to present clear and logical recommendations for budget management, based on review and analysis of current financial controls, and on research carried out. To persuasively make a case for a particular approach or strategy, clear evidence to suggest why it will work should be considered. Details information is shown as follow: Evidence of clear failures or weaknesses Firstly, we must make a case for why change needs to happen, and this should focus on current strategies and approaches which have proven to be inadequate. Focus on any financial data (contained in financial documents) which shows: ➢ Poor estimations of costs and income ➢ Examples of overspending ➢ Examples of significant variances and deviations ➢ Examples of wastage ➢ Examples of poor funding allocation ➢ Examples of objectives and goals that have not been met because of poor control of finances. Evidence of the benefits associated with proposed changes After making a case for change, we should look to supply evidence that certain strategies and approaches are fit for adoption. we should focus on backing up the recommendations by: ➢ Focussing on why proposed changes will work for the organisation ➢ Using examples of how approaches and strategies have worked in other organisations ➢ Presenting experts’ views as to why the recommendations will work ➢ Showing how new approaches will benefit both customers and employees.

Activity 4A

Estimated Time	15 minutes
Objective	To provide you with an opportunity to complete financial and statistical reports within designated timelines.
	List all financial documents that you are responsible for creating, stating how often each one is sent to other parties for monitoring and review. Financial documents include: ➢ Receivable reports – 4-5 times per week ➢ Purchase summary reports – 4-5 times per week ➢ Stock reports – once per week ➢ Wastage reports – once per week ➢ Sales reports – once per day

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