We are being audited and have been asked to provide forecasts by our auditors.
We have reserves of around £500k, adequate financing by the bank which is about to be renewed, and we have been trading for 19 years. We have forecast a profit to March 2020, and also to March 2021.
I have provide a cash flow forecast to March 2020 but our auditors are asking for a cash flow forecast 12 months hence (i.e. to November 2020) I am aware about looking 12 months from the signing of accounts.
Are cash flow forecasts always necessary? If I was to do one, it would take literally hours (doing it properly). My argument is that the cash flow forecast is showing that we are in a strong position at the end of March 2020 and that we are expected to be profitable again next year, even allowing for a drop in sales. Therefore, with our facility renewing, there is no problem.
I'm of the option that forecasts are next to no use and are mainly manipulated to show what everyone thinks they should show.
I'm aware auditors want their files to be as bulky as possible and there are requirements, but it just seems over the top, especially when forecasting can be so unreliable. They haven't even asked about our facility being renewed or how we would plug any gap in financing should sales drop, so it just seems like they're on autopilot, without actually accessing going concern. But it will be me that has to do copious and irrelevant work.