Extra Eyes

Chief Financial Officers or CFOs are in the dog house after the spectacular collapse of large US and European corporations in recent years. CFO�s have been hauled before courts to face criminal charges for falsifying financial statement.

Jeremy Hope, a financial expert who addressed CIMA members in Colombo said CFO�s are seen as the last line of defense.

Shamindra Kulamannage: What are the challenges in using forecasting for information?

Jeremy Hope: I think I have learnt over the years accountants grow up with the particular view that the more data you have in a forecast the more accurate the forecast would be.

I have realized it is not just true.

The more details you have lead to more inaccuracies. It leads to more distortion. That�s partly why more companies are now moving towards what�s known as the driver based forecasting.

What they are learning is that a small number of drivers-five, six or eight – typically sales, orders and capital expenditures- If you focus most of the time getting those �right� the better the outcome will be.

Looking at a few key drivers, it also