Does everyone use cash basis for budget to actual, or accrual? I'm not sure if I have to make something that can be converted into accrual. I'm not using ARGUS, but I would need to have a 10-year proforma DCF.
AM I crazy in thinking that accrual wouldn't make sense?
Budget should be done with accrual basis. Depending on your asset type, but there shouldn't be much difference between accrual and cash basis for most of your items imo.
The only items you should be big differences in are lump sum payments e.g. property taxes, insurance, capex which you would straight line it over the year in accrual basis.
Budgets should be done on an accrual basis, if your filing entity files on an accrual basis. It should be done on a cash basis if the filing entity files on a cash basis.
I go back and forth. For budgeting, accrual for sure. But if I'm examining variances throughout the year, I use cash. May be unique to affordable housing, but we end up with a lot of arrears and a lot of bad debt expense at year end, so it's not like we can just assume those dollars will eventually flow through.
I guess in general, it doesn't make sense to do a budget to "actual" analysis if you're not going to use the actual cash numbers you're receiving, right? If you're gonna go on an accrual basis you may as well not even bother
Yeah, this is kinda where I am in my thinking. clearly for variance purposes accrual to cash wouldn't make sense, a straight-line projection against a seasonal expense. Does AM do this at your company, finance or portfolio management?
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