Audit and economical analysis

Estimating the reliability of project indicators and shortcomings in forecasting
The effectiveness of entrepreneurial activity is assessed not only by the amount of benefits received, but also by the increase in the value (market prices) of the business, with the strengths of the key elements of future development.

The borrower should know that the offer to return the money at any given time is real, that investors have the opportunity to receive dividends to the funds invested, and that goods suppliers will not be interrupted in long-term relationships.The lender may define it by making statistical and financial forecasts, based on which the applicant may offer the actual repayment term and the other details, such as the amount of monthly payments to repay the principal amount of debt.

Typically, a businessman who wishes to borrow money, financial and statistical forecasts, to ensure that the project exceeds the cost associated with the project, as well as the lender's creditworthiness and the amount of money borrowed, it is required to evaluate whether it will be able to succeed.

Sometimes it happens that entrepreneurship is intensely moving, but the results show that it is not profitable. What indicates this? First of all, it indicates that the expenses have not been controlled, the market is insufficient, and the marketing has not been settled properly.

To determine whether the entity has sufficient cash to cover its liabilities, the lender must carefully consider the cash flow projection.It is also important that the lender does not direct the money needed to replenish capital.

Through planning and forecasting, we can predict the scale, financial position, outcome, and cash flow of current production.

An entrepreneur who has set up an accounting system that suits his business can always see how it has developed since its inception.However, the entrepreneur must make sure that he will be able to pay all the compulsory payments in the future (paying out wages, repaying materials, interest, repayment to a supplier or bank and so on).The figures obtained from the Reporting System are particularly useful when creating a seasonal business prediction.

The audited statement of financial performance is a cash flow plan.As you can see from the name, this plan shows the cash flows of the business.Cash flow plans are also credited to the cash held on the bank account.Cash flows generally comes from sales of goods, products and services.It also includes cash withdrawal from bank loans, sales of old equipment, repayment of overpaid taxes.

The outflow of business goes mainly to remuneration, reimbursement of production costs and payment of fixed capital costs.An entrepreneur with a marketing plan at hand looks at the anticipated capital turnover and the expenses for the production or purchase of goods.

Monthly cash flow plan is an instrument of valuation of entering and going out flows of expected financial resources for an entrepreneur within a month.This will help the entrepreneur to overcome the situation being left without money.

The most important problem with the reliability of predictive indicators is timely, accurate and obtained complete information.

Another key impediment in the forecast is the failure or inability to implement a budgeting practice at enterprises.That is, there is no practice of reporting the financial statements and the accounting estimates made by enterprises.

One of the main disadvantages in predicting financial statements is that uncertainty in taxation and long-term payments.

One of the major disadvantages in forecasting and budgeting is the need to create management accountability in enterprises and to improve them.

One of the major shortcomings in the financial reporting data is that the confidentiality of the information is insufficient to obtain information from users, and the limited use of external resources.

Insufficient or not sophisticated accounting software are among the main disadvantages in the industry of budgeting and forecasting.