Case scenario-New Fire Ltd

Completed projects have traditionally been treated as work In progress and invoices are raised once approval has been received. Once invoices have been raised, the average time it takes the customers to pay is between 30 and 60 days. The valuation of work in progress is the most difficult part of the accounting process and its accuracy (other than at the year end date) is subject to question.

The type of work undertaken is shown below: The furnace refurbishment and factory work take place mostly in the summer and Christmas breaks. Eighty per cent of the refurbishment work relies on a few major clients. These clients have furnaces throughout the EU that need at least one major refurbishment every year. These equate to ten major projects every year with six starting in the summer and four in the winter. Other clients account for five projects spread over the year.