Are preparing consolidated forecasts causing a bit of a sweat?

20.03.23 10:07 AM By Stephanie Nightingale
Written by Johnny Kipps
Need to prepare a consolidated forecast for your group or business entity? Are you sweating, just a bit, at the thought?

Generally, preparation of a consolidated forecast is because the entity is also required to prepare annual consolidated financial statements. The consolidated forecast is the precursor to enable the Board to track progress of the group through the year allowing them to view the expected year end position with increasing certainty as the year progresses. 

And if a listed entity with regular RNS reporting requirements through the year, making statements about future results comes with contingent personal liabilities! The Board needs to have a high degree of confidence in its forecasting tools and the forecast position they produce.
Technically, consolidated financial statements combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries, offsets (eliminate) the carrying amount of the parent's investment in each subsidiary and the parent's portion of equity of each subsidiary (IFRS 3 Business Combinations explains how to account for any related goodwill) and eliminates in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full).

Image credit - AdobeStock

In order to provide accurate and meaningful forecasts including variance analysis and rolling forecasts after monthly “actuals” have been added to the forecast, the forecasting software has to be able to address:
  • Inter-company profits and losses
  • Inter-company loans
  • Consolidation journal entries
  • Elimination of minority and / or associated interests
  • Goodwill to be factored and depreciated
  • Handle multiple subsidiaries or associated companies
Sounds like a headache? It certainly is - if you try to do this in Excel!
However, using Forecast 5 you can set up your consolidated forecast and address all of these issues swiftly, accurately and with certainty. 

And board members can sleep well at night, having a high degree of confidence that the forecast year end results they have just published will turn out to be accurate!

Try this for yourself: simply download a free 21-day trial of Forecast 5 here.

Then you too can see how easy it is to prepare consolidated forecasts for your group, sort out those complicated consolidation issues and complete your consolidated forecast quickly and easily.

Take the next step and get a free 21-day trial, join us on an introductory webinar orget in touchfor more information!

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