auditing

Prepare a professional memo making a recommendation to the Elder Board. The memo should include an opening
paragraph that states the objective of the problem and includes the alternatives available, followed by information that
explains your recommendation and why you selected that course of action. Be sure to provide supporting
documentation of the quantitative and qualitative factors that led to your decision. Your memo should address the
following seven questions. Your memo, including any professionally formatted Excel tables, should be approximately
ten pages, typed, single-spaced, Times New Roman, 11pt font.
1. What are the similarities between the mission of a church and the mission of a for-profit business? What are
the differences? How is the successful achievement of an organization’s mission measured in a for-profit
entity and a NFP entity? What might be some qualitative and quantitative measures?
2. As organizations grow they face new challenges, particularly when operations expand to more than one
location. Discuss several potential challenges of “decentralization” as they relate to Hometown Community
Church.
3. The Elder Board outlined three options that are available to alleviate the problem. Identify and describe
other options that could be considered by the Board.
4. Using Excel, prepare a one-year cash flow analysis of HCC’s current annual operating cash flows before
considering any of the options presented by the elders. Include an analysis of the estimated annual cash
inflows, outflows, and net cash flow. Present data in total and per attendee. Determine the breakeven point
and margin of safety (in number of attendees).
5. Provide a cash flow analysis, similar to the analysis of the current year prepared in the prior question, for
each of the three alternatives for the coming five years. For each option, determine how many people must
attend in order to breakeven for all five years, in addition to the margin of safety (in attendees) for each year
based on projections.
6. Calculate the net present value (NPV) of each option. In order to cover the cost of debt, the operating costs,
and the projected growth, assume an 8 percent discount rate for Options 1 and 2. Option 3 introduces a
new methodology for conducting the sermons and includes more permanent costs of fixed assets;
therefore, a 10 percent discount rate is appropriate for Option 3. In addition, for each option determine the
smallest yearly attendance growth that will make the option viable.
7. What additional types of information, including qualitative measures, would you need in order to assess the
validity and appropriateness of each of the three options? What additional questions need to be answered
in order to make an assessment?

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