Chief financial officers (CFOs) could produce inadequate forecasts because they are basing their work on outdated information, it has been claimed.
Speaking to Accountancy magazine, Fiona McDermott, head of forecasting at KPMG, warned that basing predictions on annual budgets is not good practice, as the data contained in them rapidly becomes out of date.
She said: "Going through the audit season we found that because there's less cash available… many of our audit clients simply don't have a forecast in place that allows them to perform stress testing."
A survey of CFOs conducted by KPMG found that while half of them think they should be updating their forecasts on a monthly basis, only 37 per cent are actually doing this.
Charles Tilley, chief executive of the Chartered Institute of Management Accountants, recently suggested that all large UK firms stress test their business strategies.
According to Mr Tilley, this will help them identify any possible problems before they occur.
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