The nature and purpose of a budget varies according to the work context, but the principles of developing a budget remain the same. Individuals responsible for developing budgets work in middle to senior management roles in which they are responsible for analysing financial information to inform the budget development process prior to developing budgets.

Skills relating to monitoring budget performance are found in the unit CUEFIN02C Manage a budget. Combined assessment of these units is appropriate.

ELEMENT

PERFORMANCE CRITERIA

1. Plan for a budget

1.1. Confirm the scope and nature of the activity for which budget is being developed with relevant personnel, including any guidelines or directives for budget development

1.2. Correctly identify, access and analyse data required for budget preparation

1.3. Analyse internal and external environmental factors to identify potential impacts on budget

1.4. Determine budget parameters with estimates, based on research, consultation and negotiation with the appropriate personnel and organisation/project objectives

1.5. Provide relevant colleagues with the opportunity to contribute to the budget planning process

2. Develop and prepare budget

2.1. Draft budget based on analysis of all available information and in accordance with organisational policy

2.2. Clearly identify and support income and expenditure estimates with valid, reliable and relevant information

2.3. Assess and present options when appropriate

2.4. Present recommendations clearly, concisely and in an appropriate format

2.5. Circulate draft budget to the appropriate personnel for comment at the appropriate time

2.6. Agree and incorporate modifications accurately and in consultation with colleagues

2.7. Negotiate final budget in accordance with organisational procedures and policies

2.8. Complete the final budget in required format within an agreed timeframe

2.9. Inform relevant personnel of the budget and its application within the relevant area of work, including reporting and financial management responsibilities

Required skills

negotiating skills in relation to budgetary planning

Required knowledge

context and typical processes for the budget development process within a given industry context

accounting principles and practices which impact on budget preparation

budget preparation techniques, including:

information required for budget preparation

components of a budget

techniques for making budget estimates

type of supporting information required

presentation techniques/formats for budgets

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

The following evidence is critical to the judgement of competence in this unit:

understanding of the technical budget preparation process and accounting procedures that must be followed

sound analysis of the factors that impact on the budget development process

preparation of a realistic and accurate budget within the relevant workplace context.

Context of and specific resources for assessment

The assessment context must provide for:

project or work activities that allow for the development of a budget for a specific workplace context

involvement of others in the budget development process

use of industry-current technology for the budget preparation process.

Method of assessment

Assessment may incorporate a range of methods to assess performance and the application of essential underpinning knowledge, and might include:

evaluation of budgets prepared by the candidate, including comparison with actual budgetary performance

evaluation of reports prepared by the candidate detailing the processes undertaken to develop a budget

case studies and problem solving to assess application of principles of budget development to different workplace contexts

review of portfolios of evidence and third party workplace reports of on-the-job performance by the candidate.

Assessment methods should closely reflect workplace demands and the needs of particular groups (e.g. people with disabilities, and people who may have literacy or numeracy difficulties such as speakers of languages other than English, remote communities and those with interrupted schooling).

Guidance information for assessment

Assessment of this unit requires access to:

industry-current technology for budget development

sources of information on expenditure and income.

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Budgets may include:

budgets for a small business

cash

departmental

event

grant funding

project

sales

Relevant personnel involved in budget development may include:

creative personnel

funding bodies

investors

management

sponsors

technical personnel

Data required for budget preparation may include:

budget preparation guidelines

customer or supplier research

financial information from suppliers

financial proposals from stakeholders

funding body policies and procedures/limitations

management policies and procedures

performance data from previous projects/periods

Internal or external issues that could impact on budget development may include:

activity/project objectives

change in economic conditions

human resource requirements

new legislation or regulation

organisational objectives/changes in organisational objectives

price movement for different supplies

required profit margins

safety issues

scope of the project

timing of project

venue availability (for events)

Unit sector

Finance - financial management

This unit contains employability skills.