The University of Darul Ehsan (the University) has recently bought a disused freehold factory adjacent to its campus. The University wants to expand and has received planning permission to demolish the factory and construct an engineering workshop and classrooms for teaching purposes. Rahman, the University's finance director, has prepared cash flow forecasts in respect of the expansion plans for the five years ending 31 December 2021, which are to be submitted to the University's bank in support of a loan to finance the project. Rahman has provided the following additional information about the project: Three firms have submitted tenders for the demolition and site clearance work and these are awaiting evaluation by the University. Tenders have not yet been invited for the building contract but the build cost has been estimated by the University's director of estates at RM2,500 per square meter. Landscaping works are expected to be minimal as the new building will occupy the whole of the site. The University currently has no engineering provision, therefore all equipment for the workshops and classrooms will be purchased. The whole project will be managed on behalf of the University by Chan and Co, a firm of quantity surveyors. The University is applying for a government grant to help with the building cost. The grant amounts to 40% of the building cost and is payable to the University on completion of the build. However, the grant is conditional on the workshop and classrooms being in use by 1 September 2026. To help finance the project the University is planning to sell playing fields, identified by the University's estates strategy as being surplus to requirements, to a property developer. Investment appraisals show that once completed, the project is expected to generate additional cash inflows from student fees which will be in excess of the additional running costs incurred. The University has requested that you examine and provide an assurance report on the cash flow forecasts. Required: From the information provided in the scenario, identify the key receipts and payments that you would expect to be included in the cash flow forecasts for the five years from 1 January 2021 to 31 December 2026 in respect of the expansion plans. For each receipt and payment, you should identify the specific matters you would consider when reviewing the reasonableness of the assumptions underlying that receipt or payment. 

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Following are the key inflows and outflows that arise due to the expansion plan These are an integra... View the full answer