Ican 2025 Advanced Audit And Assurance Question 5

To establish Godman Philip International High School and turn it to a world class institution, the Chief Operating Officer (COO) requires your services as an assurance service provider to report on five projected financial information obtained from professional services firms. Some of the details provided to the professional service firms include: Background Information Godman Philip International High School is a proposed co-educational institution to be set up in one of the oil rich state capitals in the country. It is expected to be a boarding school for boys and girls. The students are expected to resume studies the next academic session, after obtaining approval from the government of the chosen state. Basis for the prospective financial information The financial information will be used to raise capital to finance operations of the school and address other issues. The projection is expected to be part of a long term strategy to establish a world class institution with clear and achievable targets. The report to be obtained should be suitable to help in planning pre-operating budget and assess when the school will become profitable enough to give good returns to investors without compromising quality of education provided to the students, and expected facilities in the school. The financial information should be adequate to convince interested investors and lenders of the likely growth potential of the institution. Minimum content of the prospective financial information Interested professional service firms will be expected to submit for review prospective financial information for the first four (4) years of business on likely: (i) startup expenses; (ii) payroll costs; (iii) revenue forecast; (iv) operating expenses; (v) cash flow statements; (vi) income statements; (vii) statement of financial position; (v) break-even analysis; (vi) financial ratios; (vii) amortisation and depreciation in the business; and (viii) likely risks. Professional services firms The professional firms should be able to do a robust documentation of identified issues and should demonstrate ability to perform any outsourced service, like preparation of books of account or internal audit service (if required) after commencement. The proposal should state expected fee, the profile of the firm and staff complement especially, if services are required for any of the outsourced services. Submission The prospective financial information should be submitted on or before close of work on December 31, 2024. Only shortlisted professional service firm would be invited for presentation and interview. Assurance engagement Your audit and assurance firm has been engaged to provide an assurance service to Godman Philip International, wherein you will report to the Chief Operating Officer (COO) after performing necessary procedures on the submissions of five professional service firms that submitted prospective financial information to the Chief Operating Officer (COO).