Financial Forecasting Procedure | FS1000

Financial Forecasting Procedure

The Financial Forecasting Procedure helps make thoughtful and intelligent predictions regarding revenue and expenses that allow for capital planning, creating budgets, and financial management. The policy ensures that these activities align with overall company objectives and strategies, and that financial resources for operating the business are in place. This applies to the Finance and Accounting Departments. (10 pages, 1784 words)

Financial Forecasting Responsibilities:

The CFO (Chief Financial Officer) is responsible for preparing forecasted financial statements, and for preparing reports and recommendations to Top Management and the Board of Directors concerning forecasted financial statements.

Top Management from key departments such as Sales and Operations is responsible for providing the CFO with projections regarding sales and operations that are necessary for financial forecasting.

The CEO (Chief Executive Officer), Top Management, and the Board of Directors are responsible for reviewing financial forecasts and forecasted financial statements.

Financial Forecasting Definitions:

Balanced Scorecard – Analysis technique designed to translate the company’s mission statement and overall business strategy into specific, quantifiable goals and monitor the company’s performance in terms of achieving those goals.

Forecasted Financial Statements – Statements that have the format of financial statements (balance sheet, income statement, statement of cash flows), but give projections or forecasts instead of actual end-of-period figures.

United States Securities and Exchange Commission (SEC) – A government commission created by the Securities Exchange Act of 1934 to regulate securities markets (stocks, bonds, derivatives, etc.) and protect investors.

Public Company – Company that has issued securities (transferable interest representing financial value) through an initial public offering (IPO), which are traded on at least one stock exchange or over-the-counter market; also referred to as a “publicly traded company.”

Financial Forecasting Procedure Activities

• Financial Forecasting Plan
• Collecting Information for Financial Forecasts
• Creating Financial Forecasts
• Reviewing and Completing Financial Forecasts
• Financial Re-Forecasting
• Improving the Financial Forecasting Process

Financial Forecasting Procedure References

• SEC Regulation S-X, Article 11 (17 CFR 210, USA)

Financial Forecasting Procedure Forms

• Financial Forecast Checklist Form