Project Title: Forensic Financial Analysis for Flik FX

Objective:

Flik FX, a company specializing in visual effects, seeks a detailed forensic financial analysis to ensure financial transparency and accuracy. The project aims to identify any discrepancies in past financial records, assess the company’s financial health, and provide a clear financial projection for the upcoming fiscal year. Learners will analyze historical financial data, identify trends, provide recommendations for improvements, and ensure the financial records are audit-ready. This comprehensive analysis will culminate in a final report that outlines findings, financial projections, and strategic recommendations.

Learners' Expected Tasks and Deliverables:

1. Historical Financial Data Review & Forensic Analysis:

Tasks:

• Data Collection:
• Gather all historical financial records since the inception of Flik FX, including:
• Bank statements for all business accounts (checking, savings, etc.)
• Invoices (sales, purchases, expenses)
• Expense receipts (for operational and business-related expenditures)
• Tax filings and returns for each year.
• Payroll records (wages, bonuses, and benefits) if applicable.
• Credit card statements, loan documentation, and financial agreements.
• Review and Classification of Transactions:
• Categorize all income, expenses, and business transactions into logical categories such as:
• Operational expenses (rent, utilities, etc.)
• Business development (marketing, branding, etc.)
• Cost of goods sold (materials for drone shows or fireworks displays)
• Capital expenses (equipment, vehicle purchases, etc.)
• Loans or debt repayment
• Ensure consistency and accuracy in these categories.
• Forensic Analysis of Financial Data:
• Examine the financial records for discrepancies, including:
• Unexplained transactions
• Double entries or missing entries
• Transactions that don't match supporting documentation (receipts, invoices)
• Inconsistencies between bank statements and internal records.
• Identify any potential fraud, mismanagement, or accounting errors.

Deliverables:

• A Forensic Financial Analysis Report, detailing any discrepancies, missing transactions, or unusual entries.
• A summary of findings, explaining any financial irregularities and their potential impacts.

2. Financial Trend Analysis & Health Assessment:

Tasks:

• Trend Identification and Financial Analysis:
• Review the categorized financial data to identify trends in revenue, expenses, and profitability over time.
• Use financial ratios and key metrics to assess the financial health of the business:
• Profit Margin: Profitability over the years.
• Liquidity Ratios: Short-term financial health, including current ratio and quick ratio.
• Debt Ratios: Evaluate the amount of debt the company carries relative to its assets or equity.
• Efficiency Ratios: How well the company is utilizing its assets to generate revenue (e.g., asset turnover ratio).
• Comparative Analysis:
• Compare the company’s performance with industry benchmarks or competitors to identify strengths or weaknesses in key financial areas.

Deliverables:

• A Financial Health Assessment Report, with an analysis of key financial metrics, liquidity, profitability, and debt.
• Graphs and charts to visually represent trends and financial performance over time.

3. Financial Projection for the Upcoming Fiscal Year:

Tasks:

• Revenue & Expense Forecasting:
• Based on historical data and trends, forecast expected revenue for the upcoming year, considering seasonal factors, market conditions, and business goals.
• Estimate expenses across key categories and provide projections for cost increases or savings based on past performance and anticipated changes (e.g., new equipment, staff hiring).
• Cash Flow Projection:
• Create a cash flow forecast to predict the inflow and outflow of cash over the next fiscal year. Consider timing for payments, collections, and large expenditures.
• Identify periods of potential cash shortages or surpluses and propose strategies to address them.
• Scenario Planning:
• Develop different scenarios based on factors such as increased sales, new business contracts, or potential risks (e.g., economic downturns, new competition).
• Use sensitivity analysis to assess how these variables could impact the financial performance (e.g., changes in revenue, unexpected expenses).

Deliverables:

• A Financial Projection Report for the upcoming fiscal year, detailing projected revenues, expenses, profits, and cash flow.
• Sensitivity analysis and scenario planning for various risk factors.

4. Strategic Financial Recommendations:

Tasks:

• Recommendations for Financial Improvement:
• Based on the forensic analysis and financial health assessment, identify areas where Flik FX can improve profitability or reduce costs:
• Expense reduction: Identifying and cutting unnecessary expenses.
• Operational efficiency: Streamlining operations or renegotiating contracts to reduce costs.
• Revenue enhancement: Identifying opportunities for revenue growth or diversification.
• Suggest ways to improve the company’s cash flow, such as adjusting payment terms, improving invoicing processes, or reducing uncollected receivables.
• Recommendations for Financial Controls:
• Suggest improvements to internal controls to prevent future financial discrepancies or errors.
• Provide audit-ready processes, ensuring that records are easily accessible and organized in the event of an audit.
• Recommend methods for ongoing financial monitoring and regular internal reviews to maintain financial health.

Deliverables:

• A strategic recommendations report, offering specific steps to improve profitability, reduce costs, and enhance cash flow.
• Suggestions for improving internal financial controls and audit readiness.

5. Final Walkthrough & Overview:

Tasks:

• System Walkthrough:
• Provide a final walkthrough for Flik FX’s team on how to implement the new financial system, using the reports and recommendations provided.
• Show how the company can track receipts and expenses, monitor cash flow, and maintain regular financial reporting.
• Provide training or instructions on financial forecasting and managing tax compliance.
• Audit-Readiness Assurance:
• Ensure the company’s financial records are organized and ready for potential future audits.
• Create an audit checklist to help Flik FX prepare for possible government or financial audits.

Deliverables:

• A final walkthrough presentation or guide for the team on how to implement the system and track finances.
• An audit checklist and final report on audit-readiness.

Project Outcomes and Final Deliverables:

1. Forensic Financial Analysis Report:

• A detailed forensic analysis report that highlights discrepancies, anomalies, and any discrepancies in past financial data.

2. Financial Health & Trend Analysis Report:

• A report analyzing key financial metrics (profitability, liquidity, debt management) and identifying trends.
• Graphs and charts to visualize financial trends and comparisons with industry benchmarks.

3. Financial Projection for the Upcoming Fiscal Year:

• A financial forecast covering projected revenue, expenses, and cash flow for the next fiscal year.
• A sensitivity analysis based on potential scenarios (risks, market conditions, etc.).

4. Strategic Financial Recommendations:

• A comprehensive report with actionable strategies to improve profitability, reduce costs, and enhance operational efficiency.

5. Walkthrough & Audit-Readiness Report:

• A final report providing Flik FX with the tools, strategies, and internal control systems needed to ensure financial transparency, prepare for audits, and maintain consistent financial health moving forward.