CMI Level 5 Unit 520 Assignment Example

CMI Unit 520 Managing Finance Assignment Example

CMI unit 520 Managing Finance aims at equipping learners with financial management skills. As a manager you will be required to demonstrate financial acumen.  This course will equip students with practical knowledge and insights on how to source for finance, managing and prudentially utilizing it in running of the organization.

What you’ll learn

Money is the blood that fuels operations in an organization. There is need for managers to understand how to manage finance even when an organization has a functional finance department. So, what will you learn in CMI unit 520 managing finance

  1. Understand how finance interacts and impacts other departments in an organization
  2. How overall financial goals of an organization influence decisions made across the organization
  3. Be able to distinguish between management and financial accounting and data used in preparation of different financial reports
  4. Be able to overcome regulations and bottlenecks when managing finances
  5. Understand the budget making process  and how to develop an effective budget
  6. How to monitor a budget, correcting anomalies and disclosing budgetary issues.

Are you preparing for your CMI assessment and looking for CMI 520 assessment example to understand how to answer questions? then you need to read our CMI unit 520 managing finance assignment example.

Task 1

  • Write a report entitled: Managing finance within an organisational context

A.C. 1.1 Analyse the relationship between the financial function and other functional areas within organisations

Finance is one of the most critical units within an organization that plays a crucial role in acquiring, utilizing, and managing funds and links closely with other functional areas such as operations, marketing, information technology, and human resources. In production, the department closely works with the operations unit to ensure efficient utilization of company resources and economical production by determining the cost of producing goods or providing services.

On the other hand, the finance unit offers valuable data to the marketing department to determine the return on investment for various marketing initiatives (IMM Graduate School of Marketing, 2019). In addition, the financial function depends on the IT department for secure financial data storage and advice on technology investments that align with organizational financial goals. While in human resources management, the unit collaborates with the human resources unit to determine compensation and other benefits and advise on organizational performance and profitability.

A.C. 1.2 Examine the impact of financial objectives on decision making within organisations

Financial objectives outline the goals and target an organization seeks to achieve, significantly affecting decision-making. It guides managers when making decisions in strategic planning or for day-to-day operations. These objectives provide a framework for assessing the costs and benefits of various alternatives in selecting suitable strategies for expenses, revenue, and profitability, helping managers make informed decisions (Gomera, 2018). The other way financial objectives impact decision-making is by determining resource allocation.

For instance, when an organization faces competing goals for limited resources, financial objectives help managers to identify projects and initiatives with greater rates of return and invest resources in them first. In addition, financial objectives are used by managers to set a direction and an organizational culture. When communicated to employees, they become aware of what they are expected to do to achieve organizational success. Hence, it guides them in making relevant decisions to support organizational objectives.

A.C. 1.3 Differentiate between management accounting and financial accounting

Management accounting and financial accounting are key branches of accounting that complement each other but with distinct purposes. While management accounting focuses on providing financial reporting to internal stakeholders, such as managers, through operational reports, financial accounting provides critical financial information to external stakeholders, such as regulators, through financial statements.

The other key difference is that managerial accounting reports on operations, particularly areas causing problems and ways to fix them. In contrast, financial accounting focuses on the profitability or efficiency of a business. In addition, management accounting is future-oriented as it reports on predictions of future trends and guides firms to decide on their current operations. On the other hand, financial management is historical and reports on past financial transactions or events that give an organization’s financial position. Investors rely on this to see the best-performing companies and guides in making investment decisions (University of North Dakota, 2020). 

A.C. 1.4 Analyse the impact of organisational and regulatory frameworks on an organisation’s approach to financial management

An organization’s approach to financial management is greatly influenced by its organizational and regulatory frameworks. These practices require organization compliance with the various laws and regulations that encourage sound financial practices. In addition, they provide guidelines that regulate how organizations manage their finances. Thus, organizations must develop robust financial management systems to comply with various laws and regulations, such as tax laws and reporting requirements, and to avoid legal and financial consequences (Gai, 2021).

Additionally, these frameworks facilitate risk management in managing finances. Organizational frameworks provide internal controls that regulate the utilization and management of financial resources to avoid fraud or misappropriation of funds. Furthermore, organizations are required by regulatory frameworks to keep accurate and transparent financial records and to report their financial performance to stakeholders. To give stakeholders timely and accurate financial information, an organization’s financial management strategy should ensure that it maintains proper financial records and applies sound accounting principles.

A.C. 1.5 Analyse the challenges organisations face accessing finance

For business growth and expansion, it needs to have sufficient funding. However, acquiring the funds to meet its goals and objectives is challenging for many organizations today. One of the challenges that organizations face in obtaining financing is a lack of collateral. Many lenders demand collateral in terms of property or equipment to mitigate the risk associated with lending. Thus, organizations with insufficient or no collateral, such as startups or small businesses, face many challenges in acquiring a loan. The other challenge organizations experience is limited credit history. Lenders mainly rely on credit ratings and history to determine a loan’s risk. Thus, funding organizations with no credit history or a low credit score becomes hard. Moreover, regulatory barriers may make it more difficult for organizations to receive funding. The government enacts various regulations to safeguard consumers and guarantee ethical business activities. However, these regulations can make it hard for businesses to get financing, especially if they introduce high compliance costs.

A.C. 2.1 Differentiate between budget setting and financial forecasting

Budget setting and financial forecasting are valuable tools used in financial planning and have different purposes. The budget setting involves the development of a concrete plan of how an organization will use its funds over a defined period, typically a year. The plan helps determine the organization’s objectives and goals, expenditures, and allocate resources appropriately. In addition, the budget establishes expenditure limits, offers a framework for making decisions, and acts as a tool for performance evaluation.

In contrast, financial forecasting involves predictions of future economic events using past financial information and current and future financial projections (Financial Forecasting in the Budget Preparation Process, n.d.). Financial forecasting is critical in determining the costs and revenue an organization anticipates meeting or generating in the future. It also assists organizations in identifying potential problems and opportunities and formulating plans for accomplishing them.

A.C. 2.2 Evaluate budget setting approaches used by organisations

The budget setting helps an organization to allocate resources effectively and control its expenditures. Organizations use a variety of budgeting approaches, and the best one for a given company is determined by its goals, size, and complexity. One of the commonly used approaches is activity-based budgeting. The approach distributes funds per the projects or activities of the organization. It targets the precise tasks that the business must complete to accomplish its goals and allocates resources accordingly. The strategy helps the organization prioritize spending while ensuring resources are given to the most critical projects.

 An organization can also consider utilizing an incremental approach in its budget setting. The approach involves utilizing previous year budget and making a few adjustments. It assumes that current year budget matches the previous year but with some slight changes. Zero-based budgeting is the other budget-setting approach. The approach is an alternative to incremental budgeting that starts over every year. The organization begins the budgeting process with zero dollars and justifies each expense instead of utilizing the prior year’s budget as a baseline (Ibrahim, 2019). The strategy ensures that resources are directed to the most successful and efficient programs while encouraging a critical review of the organization’s operations and initiatives.

Task 2

  • Write a report for: Managing and setting a budget
  • Formulate a budget with written justification

A.C. 2.3 Formulate and justify a budget for an area of management responsibility

Budget for an area of management responsibility

The marketing office of Starbucks is required to prepare annual budget before the beginning of each financial year. In the financial year 2023/24, the marketing office anticipates to meet the following expenses in fixed assets and operations expenses:

Item (s)RateCost
General office supplies$70/mo x 12 mo.$840
Laptop Computer$800$800
Postage&35/mo. X12 mo.$420


  1. Office supplies and postage are require for general operation of the office
  2. The laptop computer is needed for marketing officer work and presentations during meetings as the officer reports difficulties with the existing desktop computer. IT department has also assessed the desktop computer and reported it low functionality capability in comparison to the tasks and duties of the office.
  3. The projector is required for presentations and outreach workshops.
  4. All costs were based on retail price at the time this application was made. 

A.C. 2.4 Analyse the factors that impact on budget management

To ensure an organization’s financial goals are met, it must manage its budget to efficiently plan, control, and monitor its financial resources. Various internal and external factors impact budget management. An organization’s size, structure, and culture are internal factors that influence budget management. The resources an organization has available to allocate to its budget depend on its size. Large organizations have more resources but complex financial operations that may make budget management hard. The structure of a company also affects its budget management. For instance, an organization with a decentralized structure may have challenges with resource allocation due to conflicts in financial priorities among its departments. In addition, the culture of an organization can also have an impact on budget management. An organization’s operations may suffer due to excessive budget cuts from a culture that favors cost-cutting (Feng, 2019).

The economic climate, governmental regulations, and competitiveness are external factors that impact budget management. The economic climate can significantly impact an organization’s budget. For instance, economic recessions may lead to lower revenue and more pressure on companies to cut their budgets. Government regulations also impact how organizations allocate their resources. For instance, changes in tax policies determine how much an organization allocates for taxes or other mandatory requirements affecting its overall budget. Finally, competition determines how much an organization gives to marketing and advertising. In a highly competitive market, organizations allocate more resources for marketing which may deprive available resources to commit to other operations.

A.C. 2.5 Specify corrective actions to be taken in response to budgetary variance

Budgetary variations arise when the projected and actual amounts spent in a budget category differ. A budget variance can be favorable (when real revenue exceeds expected) or unfavorable (when actual spending exceeds budgeted) (Chen, 2019). In either case, various corrective actions can be taken to correct the variance. One way to address a budgetary variance is by identifying the root cause of the variance. In understanding areas requiring attention, it is important to identify the source of discrepancy by comparing actual and expected expenses. Once the grounds for the variance are known, an organization can consider adjusting the budget. If unanticipated occurrences are identified as the causes of the variance, the budget may need to be adjusted to reflect the new reality. It can be accomplished by increasing or decreasing the allocation of the particular category.

On the other hand, an organization can consider reducing spending in the impacted category if the discrepancy results from excessive spending. It can be done by lowering non-essential spending, renegotiating contracts, or seeking cheaper options. Finally, an organization can choose to correct budgetary variances by increasing revenue. If the variance arises from decreased revenue, an organization can consider raising its revenue generation by attracting new customers or introducing new products or services. 

A.C. 2.6 Discuss reporting procedures for authorising corrective actions to a budget

Authorizing for corrective actions is essential in ensuring that corrective measures to budgetary variances are carried out properly and efficiently and thus the need for a reporting procedure. A smooth budgetary variation reporting procedure includes:

  1. Identification of budgetary variations: Determining the precise problem that needs to be fixed is the first stage in authorizing corrective actions to a budget. This could be a deviation from the budget, an unforeseen cost, or a shortage in revenue.
  2. Selection of appropriate correction action: Once the problem has been identified, the next is figuring out what needs to be done to fix it. This can entail cutting costs in specific areas, increasing revenue through new products or marketing activities, or transferring more resources to particular category.
  3. Create a corrective action plan: Following the selection of the corrective action, a plan outlining the procedures required to carry it out should be created.
  4. Getting approval: It is important before putting the corrective action plan into action to consult with right stakeholders for approval.
  5. Execution and monitoring: As soon as the corrective action plan has been authorized and put into practice, it is crucial to track progress and report on outcomes.

Adjusting: As necessary, modify the corrective action plan if the outcomes expected are not being obtained.


Chen, J. (2019). Budget Variance. Investopedia, 1–7. Retrieved from

Feng, P. (2019). Research on the Performance Budget Management Model of Colleges and Universities in China. 2019 5th International Conference on Economics, Management and Humanities Science (ECOMHS 2019), (Ecomhs), 404–410.

Financial Forecasting in the Budget Preparation Process. (n.d.). Financial Forecasting in the Budget Preparation Process. Retrieved April 13, 2023, from

Gai, P., Kemp, M., Sánchez Serrano, A., & Schnabel, I. (2021). Regulatory Complexity and the Quest for Robust Regulation. SSRN Electronic Journal.

Gomera, S., Chinyamurindi, W. T., & Mishi, S. (2018). Relationship between strategic planning and financial performance: The case of small, micro-and medium-scale businesses in the Buffalo City Metropolitan. South African Journal of Economic and Management Sciences, 21(1).

Ibrahim, M. (2019). Designing zero-based budgeting for public organizations. Problems and Perspectives in Management, 17(2), 323–333.

M., & IMM Graduate School of Marketing. (2019, September 24). The Relationship between marketing and finance. IMM Graduate School. Retrieved April 14, 2023, from

University of North Dakota. (2020, September 17). Financial Accounting vs. Managerial Accounting: A Comparison. University of North Dakota Online. Retrieved April 12, 2023, from

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