Prepare a budget, cash flow forecast and management report

You are a Senior Accountant in Tax and Business Advisory.

Simulated workplaceAdvanced missionCAQA Ledger and Lane Financial

What is going on

Marlow and Finch Architects is a partnership of three partners with fourteen staff and revenue of about 3.1 million dollars. Job JB-26-2201 is a 2027 budget and monthly cash flow forecast due 16 October. One partner retires in March 2027 and is owed a capital payout, the partners want to hire a senior architect at about 165,000 dollars plus on-costs, and they are considering a second office in Geelong. The file holds two years of financials and the current year to August, which show fee revenue lumpy around project milestones, work in progress growing and debtor days at 58. The Tax Manager will review before the client meeting.

Vanessa Okoro, Managing Director
Subject: Marlow and Finch 2027 budget and cash flow

Marlow and Finch Architects have engaged us for their 2027 budget and cash flow forecast, job JB-26-2201, due 16 October. One partner is retiring in March and they want to know whether they can afford a new senior architect and a second office. Their last two years of financials and the current year to August are on the file. Prepare the budget, a monthly cash flow forecast with the retirement payout modelled, a short management report on margins and working capital and a recommendation on the hire. Anjali will review before the client meeting.

Your brief

Prepare the 2027 budget and a monthly cash flow forecast for Marlow and Finch Architects with the partner retirement payout modelled, and write a management report on margins, working capital and the affordability of the senior architect hire and the second office, with a clear recommendation the partners can act on.

Work through it

You do not need to do it all. Doing a few of these will show you what the work is like. Your ticks and notes stay on this device.

Review the two years of financials and the year to August, and record the revenue, cost and working capital trends and any unusual items.
Build the 2027 revenue budget from the current project pipeline and milestone timing, and the expense budget from actuals adjusted for known changes.
Model the partner retirement payout in March 2027 and the reduced partner drawings afterwards in the monthly cash flow forecast.
Model two scenarios for the senior architect hire, with and without the second office, showing the effect on monthly cash and the minimum cash balance.
Analyse gross margin by service line, work in progress and debtor days, and quantify the cash released if debtor days fall to 40.
Identify internal control weaknesses in billing and collections that explain the debtor days and recommend practical improvements.
Write the management report with charts, findings and a recommendation on the hire and the office, and update job JB-26-2201 to In review.

My notes: what did I enjoy, and what surprised me?

What someone in this role would produce

2027 budget
Monthly cash flow forecast with retirement payout and two scenarios
Working capital and margin analysis
Management report with recommendation

Printing this is a record of what you explored. It is not a certificate or a qualification.