Modification History
Not applicable.
Unit Descriptor
Unit descriptor |
This unit describes the performance outcomes, skills and knowledge required to assess financial risk and exposure, analyse financial histories and establish processes to minimise risks associated with an organisation's cash flow or assets and securities. This unit may apply to job roles subject to licensing, legislative, regulatory or certification requirements so Commonwealth, State or Territory requirements should be confirmed with the relevant body. |
Application of the Unit
Application of the unit |
The unit has application across all sectors of financial services industry and to job functions such as accountants that have responsibility for determining the organisation's exposure to financial risk. |
Licensing/Regulatory Information
Not applicable.
Pre-Requisites
Prerequisite units |
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FNSACC503A |
Manage budgets and forecasts |
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Employability Skills Information
Employability skills |
This unit contains employability skills. |
Elements and Performance Criteria Pre-Content
Elements describe the essential outcomes of a unit of competency. |
Performance criteria describe the performance needed to demonstrate achievement of the element. Where bold italicised text is used, further information is detailed in the required skills and knowledge section and the range statement. Assessment of performance is to be consistent with the evidence guide. |
Elements and Performance Criteria
ELEMENT |
PERFORMANCE CRITERIA |
1. Assess financial risk exposure |
1.1. Magnitude and volatility of organisational risks are measured to determine the extent of risk exposure and the implications for financial strategies 1.2. Key factors supporting or driving risk exposure are identified and timeframes established to monitor and improve performance 1.3. Short-term and long-term financial outcomes and projections are compared with actual cash flows using standard financial analysis techniques to determine effects on liquidity and budget adjustments |
2. Develop risk management processes |
2.1. Risk management options include assessments of alternatives, criteria for success, and estimates of long-term and short-term effects 2.2. Strategies are developed using standard financial analysis techniques to identify financial flows, trends in returns and adjustments in asset values 2.3. Financial recording systems are established to monitor and evaluate changes in market conditions and business needs using a range of data sources 2.4. Risk management strategies are developed that optimise the mix of asset structures and liabilities in operations and ensures flexibility to meet changing environments |
3. Analyse financial histories |
3.1. Financial performance is evaluated using trends and patterns that identify the magnitude and volatility of financial exposures 3.2. Long and short-term financial outcomes are compared with forecast outcomes to assess variances and parameters in performance and the reliability of financial advice 3.3. Incidents and factors increasing or diminishing financial performance are identified and analysed using standard financial analysis techniques |
4. Establish processes to minimise risks |
4.1. Recording systems to monitor financial outcomes are developed and reviewed to guide and document decision making 4.2. Inventories are maintained and established to ensure up-to-date records on the value of assets and liabilities 4.3. The contribution of organisational attitudes to risk taking is assessed and incorporated in the risk analysis process 4.4. Parameters for variances in financial outcomes are developed, reviewed and communicated to support financial decision making |
Required Skills and Knowledge
REQUIRED SKILLS AND KNOWLEDGE |
This section describes the skills and knowledge required for this unit. |
Required skills |
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Required knowledge |
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Evidence Guide
EVIDENCE GUIDE |
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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. |
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Overview of assessment |
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Critical aspects for assessment and evidence required to demonstrate competency in this unit |
Evidence of the ability to:
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Context of and specific resources for assessment |
Assessment must ensure:
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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:
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Guidance information for assessment |
Range Statement
RANGE STATEMENT |
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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. |
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Risk exposure may include: |
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Factors supporting or driving risk may include: |
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Standard financial analysis techniques may include: |
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Risk management options may include: |
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Financial recording systems may include: |
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Data sources may include: |
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Asset structures and liabilities may include: |
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Variances and parameters may include: |
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Inventories may include: |
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Organisational attitudes may include: |
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Unit Sector(s)
Unit sector |
Accounting |
Competency field
Competency field |
Co-requisite units
Co-requisite units |
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