Audit of Financial Plan The business plan of any company should contain all aspects in detail including the

very important financial plan. The financial plan must necessarily have all the financial statements, which must show where the business will be in the beginning and where it plans to be in the future. The information provided gives a good idea about how much funds will be required in financing the project and lets all the investors understand if putting in their money in this plan is a good use of money or not. The financial plan of Jollys Java and Bakery contains the amount of capital it needs to have to start the business (showing the current need of the company), the analysis of breaking even, profit and loss statement of the first three years, Cash Flow statements for 3 years, Balance-Sheet and the business ratios. Goals and Objectives: clear goals and the objectives of the financial plan should be stated in the beginning that mention what the business is aiming at, what are their priorities and also the time they would take to achieve them. Problem Identification: identifying and mentioning the various problems related to finance should be analyzed and mentioned regarding the various costs and taxes as advised by the financial planner or any other advisors. Pro-Forma: this is the part where all the information regarding the lump sum that is required to start up the business is required. Mainly written by the tax attorney or one of the accountants to give a overall view of the requirements of the business. This is one of the most important parts of the financial plan. JJB shows the amount of money required to start up the business along with the amount they are going to borrow from SBA. They should mention the reasons for this requirement and from where do they expect to raise such amount. It is very important to understand from where all JJB plans to raise the funds so that all investors know about the same. Also, the Pro-Forma along with the start-up cost outlines of JJB should include the fixtures and equipments purchase, the benefits sought for the employees and their salaries, the cost of utility/ lease cost and finally the cost of insurance, expenses in getting the permit and license cost. Also, the JJB Pro-Forma should have included the earnings that they have estimated to have in first 5 years. Assumptions: all the assumptions that have been taken into account while estimating the financial plan and data should be clearly mentioned to reduce and any confusion that might occur. Assumptions regarding inflation, growth of the business, etc. should be mentioned.

Break-even Analysis: the break- even plan shows the composition of the sales returns and costs. JJB break even analysis should have contained the systematic approximation of the variable cost of every month before it breaks even. JJB says that they will break even in the 4th month, hence, the approximation of variable cost should have been mentioned as variable cost unlike fixed cost keeps on fluctuating from every month to month. Also the variable cost is of two types, namely, direct and indirect. JJB business plan should have mentioned the approximate direct and indirect cost that would be

incurred every month before the break even. Direct cost in terms of production process like raw materials and wages should have been mentioned and indirect cost in terms of equipment maintenance, etc. should have been mentioned. Balance-Sheet: the balance sheet should also be approximated for five years to give a good idea of the proposal to the investors. The categories in the balance sheet should be sub divided into the heading like cash in hand, accounts receivable, inventory, equipment, etc. to give a more detailed idea. The balance sheet of JJB is very concise and is very broad. Also, the net worth is very important that has been already mentioned by the JJB plan. Cash Flow: Keeping in mind that a good plan should have a five year approximation of the income statements and balance sheet, the cash flows statements should also be approximated for five years. Along with the analysis of the cash receipts and payments made, an approximation of the number of days that will be taken by the business to collect the accounts receivables should be given. After mentioning the different expenses, JJB should mention the time as to how often they will be required to pay. The information related to having trade credit and the time frame they will have to pay back their suppliers should be mentioned. Along with the five year long term plan, a short term, one year, detailed plan of the cash flow should be given mentioning the operations during the different months. Income Statement: the income statement of the company is mainly to show how much net profit or loss the business is expecting to make. JJBs plan shows the profit it is going to make only in the first three years. And ideal plan should show the 5 year analysis so that the investors have an idea about what level of financial activity the business will be dealing in and expecting what profit in a longer period of five years. The statement should also clearly mention the expenses on the raw materials, capital and the inventory costs. The probability of running out of finances at the different levels when expenses occur should be analyzed by JJB and mentioned. Business Ratios: all the relevant ratios have been mentioned in the plan. The most important ratios are the debt ratios that need to be shown. Also, the ratios should be calculated for five years for a better plan. Risk Management: this part should include the list and the analysis of all the risks that might occur and their management practice. The current risks should be analyzed, along with the liability in case of loss, casualty, medical help, etc. Special Needs: a statement showing the finance required for some special needs at a future point of time should also be shown regarding the retirement planning of some employees, skill development training, etc. Recommendations: A list of recommendations should also be prepared to address the various problems that might occur in future that have been identified relating to the objectives and the goals of the business and also the actions that will bee needed to taken to compensate any problems.

Schedule of Implementation: a schedule should be made in the end to show the priority of the actions that have to be implemented with respect to the implementation of the recommendations including the people who will be responsible, their actions and time frame.