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HEAD TEACHER DEVELOPMENT PROGRAM –

FINANCIAL MANAGEMENTAdditional Information

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Today's Outcomes Basic Bookkeeping

Financial Section

Budgeting and Control

Monitoring Progress

Questions???

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Basic Bookkeeping

The bookkeeping system is a tool that enables management to analyse how the section is performing.

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Basic Bookkeeping

/ Is the business making a profit? / What is the level of expenditure? / Are some courses doing better then others? / Are expenses being kept under control? / Are there any areas which require urgent attention?

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Financial Statements

/ The financial statements prepared for most businesses are the Balance Sheet and the Income Statement.

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Balance sheet

/ The Balance Sheet lists your Assets and your Liabilities. The difference between the two equals your owner's equity.

/ OE = A - L

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Balance sheet

/ The items in your Balance Sheet are arranged under the following classifications.

/ Current Assets / Non-Current Assets/ Current Liabilities/ Non-Current Liabilities/ Owner's Equity

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Income Statement

/ The Income Statement is a list of all your business income less all business expenses, to arrive at a net profit or loss for the period.

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Profit and loss statements

2006 2005IncomeIncome from State GovernmentState Funds 77,597,860 74,422,023 Resoucres received free of charge 1,946,443 1,456,127

Total Income from State Government 79,544,303 75,878,150

RevenueFee for service 6,212,773 6,066,795 Student fees and charges 7,920,320 7,081,859 Interest revenue 295,625 446,644 Other revenue 959,475 771,165

Total other Income not from State Government 15,388,193 14,366,463

Total Income 94,932,496 90,244,613

Cost of ServicesExpensesEmployee benefits expense 60,250,179 56,989,330 Supplies and services 17,990,893 15,348,019 Depreceiation 5,649,580 5,195,056 Finance costs 44,810 28,421 Grant and subsidies 1,501,399 1,400,283 other expenses 6,143,071 5,061,214

Total Costs of Services 91,579,932 84,022,323

SURPLUS/DEFECIT FOR PERIOD 3,352,564 6,222,290

Swan TAFEINCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMEBER 2006

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The financial section

/ Source of finance

/ Liquidity

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The Financial Section

/ Finance is the lifeblood of a business. A good understanding of how money flows into and out TAFE is the key to success.

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Sources of Finance

/ What is the major source of finance at TAFE?

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Liquidity

/ Cash is the freest flowing asset of all. It flows like liquid - that’s why cash is used as a measure of liquidity. All businesses need access to cash.

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Liquidity

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Liquidity

/ Why is it important to know if there might be a cash deficit in any particular month?

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Liquidity JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN TOTAL

INFLOW (Receipts)Student fees and charges 9000 9000 9000 9000 11000 11000 5000 9000 9000 9000 9000 9000 108000interst received 6000 0 0 0 0 0 0 0 0 0 0 0 6000GST Collected 900 900 900 900 1100 1100 500 900 900 900 900 900 10800Money from loan 33000 0 0 0 0 0 0 0 0 0 0 0 33000

TOTAL INFLOWS 48900 9900 9900 9900 12100 12100 5500 9900 9900 9900 9900 9900 157800

OUTFLOWS (Payments) JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN

Employee Benefits 120 120 120 120 160 160 60 120 120 120 120 120 1460Supply and services 110 50 50 50 50 50 50 50 50 50 50 50 660Grnats and subsidies 1000 300 300 300 300 300 300 300 300 300 300 300 4300GST Payments 840 24 24 24 24 24 24 24 24 24 24 24 1104Other payments 158 0 0 120 0 0 100 0 0 120 0 0 498Insurance 1420 0 0 0 0 0 1420 0 0 0 0 1420 4260Lease equipment 100 100 100 100 100 100 100 100 100 100 100 100 1200Licences 90 0 0 0 0 250 0 0 0 0 0 0 340Loan interest 1015 931 846 762 677 592 508 423 338 254 169 85 6600Loan repayments 82 164 246 328 410 492 574 656 738 821 903 986 6400Memberships 210 0 0 0 0 210 0 0 0 0 0 0 420Phones - mobile 50 50 50 50 80 80 30 50 50 50 50 50 640Phones/fax - business 260 110 110 110 110 110 60 110 110 110 110 110 1420Plant & equipment 8600 60 60 60 60 60 60 60 60 60 60 200 9400Post & stationery 208 8 8 8 10 10 6 8 8 8 8 8 298Repairs & maintenance 50 50 50 50 50 50 50 50 50 50 50 50 600Vehicle costs - fuel & maintenance 210 210 550 210 550 490 160 210 210 210 210 210 3430Vehicle costs - insurance/registration 800 0 0 0 0 0 0 0 0 0 0 0 800Vehicle purchase/lease 28000 0 0 0 0 0 0 0 0 0 0 28000Wages 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000Workers Compensation 900 0 0 0 0 0 0 0 0 0 0 0 900TOTAL CASH OUTFLOWS 48223 6177 6514 6292 6581 6978 7502 6161 6158 6277 6154 7713 120730OPENING BANK BALANCE 0 677 4400 7786 11394 16913 22035 20033 23772 27514 31137 34883Monthly surplus/deficit 677 3723 3386 3608 5519 5122 -2002 3739 3742 3623 3746 2187CLOSING BANK BALANCE 677 4400 7786 11394 16913 22035 20033 23772 27514 31137 34883 37070

BUSINESS CASHFLOW FORECAST

Australian National Training Authority (ANTA) 2003. All rights reserved

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Budgeting and Control

/ Operational plans are developed as a framework for running your section. A budget is one of the operational plans in your area.

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Budgeting and Control

/ Budgets are often used as performance standards or targets for head teachers and management to work towards. Budgets can be very effective planning and control mechanisms, provided they are prepared prior to the period to which they relate and are regularly monitored.

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Operating budgets

/ Budgeting in TAFE must satisfy a number of objectivise:/ 1. The Annual Budget/ 2. The Authorised Budget/ 3. The Forecast/ 4. To provide means of projecting the likely financial year and update these when required.

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Types of Operating budgets

/ The sales budget.

/ The purchasing budget.

/ The human resources budget.

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Operating budgets

/ In large organisations like TAFE, these budgets would most probably be prepared on a departmental basis.

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The sales budget

/ These estimates are based on sales forecasting which is concerned with identifying sales demand and any likely impacts such as seasonality, etc.

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The sales budget

/ The sales budget would include estimates of:

/ sales volume / prices / selling & marketing expenses

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The human resources budget

/ In this budget you would estimate the costs associated with employing and maintaining staff.

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The purchasing budget

/ The purchasing budget includes all types of purchases within TAFE. Most expenses here would be classified as administration expenses.

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The purchasing budget

/ What is a purchasing agreement ?

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Monitoring progress

/ There are some simple ways to check the progress of your section. Cost activity, profitability, liquidity and debt levels are easy to calculate and good business managers do this on a regular basis. Through TAFE this is done through the Buddy system.

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Monitoring progress

/ In practice, a business plan refers to the types of measures expected to be used and may quote previous figures as evidence of past performance.

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Monitoring progress

/ One simple tip: KEEP YOUR RECORDS UP-TO-DATE! Accurate, easy to read records of business income and expenses are necessary for measurements that can be used to monitor progress.

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Monitoring progress

/ An income statement and a balance sheet are the records from which these measurements are made.

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