Application of the unit

The unit has application to all sectors of the financial services industry.

Prerequisite units

FNSACC503A

Manage budgets and forecasts

ELEMENT

PERFORMANCE CRITERIA

1. Review data

1.1. Costs of, and returns from, assets and liabilities are analysed using standard accounting techniques to identify extent of debt and equity financing

1.2. Data is used to identify costs of different forms of capital to the organisation

1.3. Asset and liability estimates and valuation criteria are standardised and regularly adjusted in line with changes to environmental factors

2. Determine options

2.1. Long-term and short-term periods are established for the organisation by reference to strategic goals, cash flow requirements and operational objectives

2.2. Long-term financing requirements are identified and costed in line with the organisation's expected revenue returns, cash flows and asset base

2.3. Sources of financing are researched and evaluated to determine compatibility with the organisation's finance strategy

2.4. Investment analysis and financial planning requirements are identified and analysed

3. Implement strategies

3.1. Financial plans are structured to meet strategic goals and provide returns within long-term and short-term operational objectives

3.2. Short and long-term objectives for organisation's capital structure are developed in line with operational and strategic plans

3.3. Internal control procedures are established in consultation with stakeholders to support implementation and to meet possible emergencies with portfolio management techniques applied

4. Evaluate outcomes

4.1. Interrelationships between long and short-term objectives are monitored to ensure consistency of returns between operational and investment plans

4.2. Costs and returns are assessed to determine ongoing viability of strategy

4.3. Tax efficiency of financial strategy is regularly reviewed to maintain optimal returns from assets

Required skills

well-developed communication skills to:

evaluate an organisation's financial strategies, using questioning of personnel and management for confirmation

liaise with others, share information, listen and understand

use language and concepts appropriate to cultural differences

highly developed research skills for accessing and managing financial services information

well-developed literacy skills for analysingfinancial information and organisational strategies and preparing financial plans and clear written advice

numeracy skills for financial calculations and analysis, estimating and forecasting

IT skills for developing and using integrated financial systems, spreadsheets and databases and internet information

learning skills to maintain knowledge of organisational strategic best practice principles, processes and procedures

problem solving skills to identify strategy issues that have the potential to impact on organisations and to develop options to resolve these issues when they arise

organisational skills, including the ability to plan and sequence work and correctly schedule financial performance monitoring and reporting

Required knowledge

ethical considerations for compliance

financial legislation such as:

taxable transactions

reporting requirements

methods of financial evaluation

methods of storing, recording and updating financial information

principles of cost-benefit analysis and use of forecasting techniques

principles of internal control including statutory requirements

principles of risk management and budgetary control

organisational structures and lines of management authority

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

Evidence of the ability to:

use standard accounting techniques and knowledge of internal control procedures and an organisation's strategic goals

consider a range of environmental factors when reviewing financial data

determine viable financial options and implement strategic strategies

evaluate outcomes of implemented strategies.

Context of and specific resources for assessment

Assessment must ensure:

competency is demonstrated in the context of the financial services work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment

access to and the use of a range of common office equipment, technology, software and consumables

access to an integrated financial software system and data

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:

evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency

verbal or written questioning on underpinning knowledge and skills which may include formal examinations

setting and reviewing workplace projects and business simulations or scenarios

evaluating samples of work

accessing and validating third party reports.

Guidance information for assessment

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.

Standard accounting techniques may include:

deprival asset valuations

direct and indirect allocation

discounted cash flows

impact statements

internal rate of return and net present value

pay-backand break-even periods

pro rata and percentage apportionment

rates of return.

Data may include:

Australian Bureau of Statistics (ABS) economic data

budgets and forecasts

credit ratings

financial markets monitoring services

financial statements and reports

market valuations

Reserve Bank of Australia (RBA) long-term bond rates.

Assets and liabilities may include:

cash

computer software

employee liabilities such as long service leave

loans, leases, debts

plant and equipment

property investments

shares, debentures, securities

stock and account receivable.

Valuation criteria may include:

asset backing

depreciation rate

director's valuation

earning capacity

expected future profits

market estimates

past profits

purchase prices

receiver's valuation

repayment costs.

Environmental factors may include:

competitors' behaviour

consumer demand

cost of capital

economic conditions and trends

environmental sustainability consideration

external risks

factor markets

government financial policies

market share

skills shortages.

Long-term and short-term periods may include:

annual reporting

five year plans

half yearly budgets

monthly accounting

quarterly reports

tri-annual funding.

Strategic goals may include:

growth

liquidity

long-term profit

market share

short-term profit

solvency

survival.

Sources of financing may include:

'plough back'

asset sales

bank borrowing:

long-term

short-term

debentures

franchising

government equity injections

money market

new share releases

venture capital.

Short-term and long-term objectives may include:

debt retirement

dividends

periodic payments such as:

leases

loans

salaries and other employee obligations

superannuation

taxation payments.

Internal control procedures may include:

accuracy in valuations

control of cash

corporate governance requirements

decision making authorities

identification, measurement and recording of:

assets

equity

expenditure

liabilities

revenue

risk management strategies

safeguarding and insurance of assets

transparency in financial reporting.

Unit sector

Accounting

Competency field

Co-requisite units

Employability skills

This unit contains employability skills.