3. Finance and Budgeting

3.1 Financial Statements

3.1.1 Identify and explain the purpose of the major types of financial statements
3.1.2 Explain the differences in financial statements used by manufacturing, retail/distribution, service and not-for-profit organizations
3.1.3 Explain conceptually how financial statements are derived

3.2 Accounting & Budgeting

3.2.1 Explain the differences between cash and accrual accounting, and identify when each is appropriate
3.2.2 Explain the “matching” principle and its application in accounting
3.2.3 Explain depreciation in relation to the “matching” principle, and identify and explain the different ways of calculating depreciation expense
3.2.4 Explain the difference between cost and profit centres and identify those centres for a typical business
3.2.5 Identify different inputs to the budgeting process and various methods of developing budgetary numbers
3.2.6 Prepare an overview of the budget development process
3.2.7 Create a budget at the departmental, divisional or enterprise level

3.3 Monitoring & Evaluation

3.3.1 Identify and explain common financial ratios
3.3.2 Calculate common ratios for a sample or actual set of financial statements
3.3.3 Identify sources of comparable information for ratio analysis
3.3.4 Interpret a set of calculated ratios
3.3.5 Explain and prepare a simple (single product/service) break-even analysis
3.3.6 Explain the use of variance analysis
3.3.7 Prepare a variance analysis using both budget and prior-period figures

3.4 Reporting & Accountability

3.4.1 Identify and explain the differences between the information needs of shareholders, employees, and the public
3.4.2 Identify and explain the reporting requirements of regulators
3.4.3 Explain the methods through which management is financially accountable to stakeholders
3.4.4 Explain the roles of the Audit, Finance and Compensation Committees of the Board

3.5 Audit

3.5.1 Explain the purpose and use of an audit
3.5.2 Provide an overview of the audit process
3.5.3 Explain the role of management, the Board and Board Committees in an audit