At the end of the project, the executing institution and various lenders must be given account of how the funds were used. The final account is part of the final report.
Profit and loss analysis
A profit and loss analysis compares the budgeted amounts for the various accounts and classes of accounts with actual expenditure and income.
Since a project has a limited timeframe, it usually does not require a dedicated balance sheet comparing assets and liabilities. It is sufficient to state the difference between total expenditure and income.
Surplus and deficit
Ideally, your total project revenue will correspond to your budget. This means you have neither a deficit nor a surplus. A surplus is usually less problematic than a deficit. The surplus funds could be used to extend the project or for other projects. However, this requires the written approval of all lenders. Usually, the execution institution has to compensate for a deficit. Deviations must be plausibly justified in both cases.
- You do not have time for a final assessment and its analysis because you are already working on the next project.
- The central accounting department is responsible for the profit and loss analysis and it uses a different attribution method (account plan) for each budget item than the one used in your project. A comparison is therefore impossible.
In health promotion and prevention projects there is an increasing expectation for a favourable ratio of expenditure to income. Careful budgeting, periodic reviews and a final comparison of expected and actual income and expenditure allow you to compare and optimise cost and benefit. If you know why there are deviations in individual accounts, your next project budget will be more realistic.
Do your own profit and loss analysis for your project (or have accounting do one) and learn from deviations from the budget for your next project. Once all project-relevant data have been entered at the end of the project, a modern accounting program can generate the profit and loss analysis as a report at the click of a button. If you have created timesheets, you can analyse the time spent working and evaluate it with regard to the results of your project.
- Are income and expenses in the range of the budget (including any budget changes)?
- Has working time for all activities been recorded in detail?
- Are discrepancies in terms of the budget explained and documented?
- Will the profit and loss calculation be compared to the achieved results and will it be used to assess the input benefit ratio?