Management accounts are prepared where an interim view of the practice profit is needed. Often this is because of a change in the partnership that does not coincide with the practice year end, and time apportioning the profits up to the date of the change is not considered appropriate. This could be because of a permanent reduction in the number of partners, or some other major change which meant that profit was unlikely to be earned evenly over the year.

Another reason why practices require management accounts is because of a major change in the way they are working, and a desire to monitor the financial effects of the change. Some practices switching to fundholding a few years ago and more recently coming out of fundholding required quarterly management accounts to help them cope with the sudden change in cashflow that accompanied the change in status. Management accounts are not usually required to divide up the cash among the partners accurately at the end of a quarter. We have devised an alternative method to ensure that this is done fairly and in a way that keeps partners' capital accounts in balance.

Our Quarterly Allocation Statement is a fully functioning financial model based on an Excel spreadsheet, that can be easily tailored to take account of a practice's specific profit sharing arrangements. If you would like a copy of this, drop Maria an e-mail at maria.meiklejohn@condie.co.uk.