Program Support Notes by:
Belinda Taylor BBus, Grad Dip Ed
(Sec)
Produced by:
VEA Pty Ltd
Commissioning Editor:
Sandra Frerichs B.Ed, M.Ed.
Executive Producer:
Simon Garner B.Ed, Dip
Management
© Video Education America Pty Ltd 2010
Reproducing these support notes
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Financial Management and the
Planning Cycle
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2
For Teachers
Introduction
This program provides an informative glimpse into real life financial planning and management that takes place within large organizations today. An overview of the key roles and responsibilities of people in the finance department is provided, and the financial planning cycle is explained clearly, using supporting examples from KPMG staff who work in this area.
Timeline
00:00:00 Introduction
00:00:32 The role of financial management 00:03:00 The objective of financial management 00:06:51 Planning cycle – part 1 getting stared 00:09:15 Planning cycle – part 2 on the move 00:11:27 Planning cycle – part 3 keeping check 00:14:59 Credits
00:15:29 End program
Related Titles
Management Styles Explained The PR Function
Small Business Management Series – Starting Up Effective Communication in Business
Environmental Sustainability in Business – A Case Study
Recommended Resources
http://www.asx.com.au/Australian Stock Exchange website. This is good to look at the annual reports and websites of publicly listed companies, all of which should have CFO’s and be large organizations.
http://www.business.vic.gov.au/BUSVIC/HOMEPAGE/pc=HOME
Starting and Managing a small business. Whilst it’s a small business website, it’s good on the importance of managing finance in easy to understand language.
http://www.cpaaustralia.com.au/cps/rde/xchg Certified Practicing Accountants
Student Worksheet
Initiate Prior Learning
1. Define the following terms:a) Budget _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) Business Plan _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) Liquidity _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ d) Cash Flow _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ e) Working Capital _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
4 f) Financial controls
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
2. Research Task: The people behind financial planning and management
Using accounting based websites such as http://www.cpaaustralia.com.au Certified Practicing Accountants or employment based websites such as www.seek.com.au complete the following table:
Position What does their role involve? Salary?
Chief Financial Officer (CFO)
Management Accountant
Tax Accountant
Financial controller
Internal auditor
Finance/business analyst
3. In your opinion, what is involved in good financial planning? How does good financial planning contribute to business success?
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
Active Viewing Guide
1. Financial management is multi faceted. It involves:
• P______________________
• F______________________
• A______________________ and E______________________
• Legal, regulatory issues
2. Who is responsible for the overall financial management of a business?
_________________________________________________________________________________
3. What duties do accountants and analysts focus on?
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
4. What does good financial management look like? Identify five key objectives.
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
5. Why does a business need excellent financial management as far as cash flows?
_________________________________________________________________________________ _________________________________________________________________________________
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6. Plans for financial growth should be reasonable and s______________________. 7. What is liquidity?
_________________________________________________________________________________ _________________________________________________________________________________
8. What is Return on Capital?
_________________________________________________________________________________ _________________________________________________________________________________
9. What must happen before a business can plan for the financial management cycle?
_________________________________________________________________________________ _________________________________________________________________________________
10. Once the financial position and business plan has been finalized and developed then a ______________________ can be prepared.
11. According to Ben Skarrasbrek from KPMG, it can be a problem if you pay your accounts payable too…?
_________________________________________________________________________________
12. Who uses the financial reports?
_________________________________________________________________________________ _________________________________________________________________________________
13. What role does IT play in keeping accurate records?
_________________________________________________________________________________ _________________________________________________________________________________
14. Provide an example of a financial control.
_________________________________________________________________________________ _________________________________________________________________________________
_________________________________________________________________________________ _________________________________________________________________________________
16. At the beginning of the planning cycle, a business needs to: • Understand the ______________________ financial position
• Deliver the b______________________ p______________________
• Create the ______________________
17. Fill in the missing words:
During the planning cycle, it is important for a business to ______________________ on financial performance and ______________________ financial performance.
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Extension Activities
1. Working individually or in pairs, rank the following from 1-10, in the order they should occur for successful financial planning:
Interpret financial performance Deliver the business plan Identify risk and loss
Report on financial performance Understand current financial position Create the budget
Accurate record keeping Utilize Cash Flow
Change focuses and greater efficiency Strong financial controls
2. Identifying finance problems in the business
Divide into small teams and work to solve the problem that has been identified as an area of concern regarding financial planning.
Information:
You have been selected to be a consultant on financial planning. You have found the following problems and assembled the staff to a meeting to provide possible solutions to these problems. For each of the problems, state why it is a problem and explain how it could be solved:
• Accounts Receivable is paying on average 65 days with Accounts Payable at an average of 15 days.
• The Budget has been prepared for the next 2 months only.
• One signature is required on checks. It can be anyone in the finance department. • Computer back ups are made once a month.
a) Search for an article on financial management.
Sources can be government based websites designed to help get business owners started or provide advice, mainstream newspapers / media or journals.
b) Summarize the content of the article providing either 100 words or 5 key points.
c) Write / create your own article on successful financial management. It should incorporate the material provided in the program, as well as information found in the extension activities after the program.
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Suggested Student Responses
Active Viewing Guide
1. Financial management is multi faceted. It involves: • Planning
• Forecasting
• Analysis and Evaluation • Legal, regulatory issues
2. Who is responsible for the overall financial management of a business?
CFO – Chief Finance Officer
3. What duties do accountants and analysts focus on?
Day to day operations: Accounts receivable and payable, payroll, tax and regulatory compliance, risk management, shareholder and investor information, accurate record keeping
4. What does good financial management look like? Identify five key objectives.
Meeting objectives of profitability Growth
Efficiency Liquidity
Return on capital
5. Why does a business need excellent financial management as far as cash flows?
To be able to pay suppliers and your liabilities and debts.
6. Plans for financial growth should be reasonable and sustainability
7. What is liquidity?
How quickly or effectively cash is moving to and from the business
8. What is Return on Capital?
How much profit the business makes from the money its investors have put in
9. What must happen before a business can plan for the financial management cycle?
A company must understand its immediate financial position.
10. Once the financial position and business plan has been finalized and developed then a budget
can be prepared.
11. According to Ben Skarrasbrek from KPMG, it can be a problem if you pay your accounts payable too…?
Finance controller The board
Auditors
External stakeholders
13. What role does IT play in keeping accurate records?
Backs up spreadsheets, records
14. Provide an example of a financial control.
No check is written out without the signature of the financial controller.
15. How can risks and losses be minimized?
Put risk management policy in place
16. At the beginning of the planning cycle, a business needs to: • Understand the current financial position
• Deliver the business plan • Create the budget 17. Fill in the missing words:
During the planning cycle, it is important for a business to report on financial performance and interpret financial performance.
