Explain how to identify, and respond to, changes in the external environment that affect financial forecasts

Depth 1 Depth 4.1 4.1a) How the key components of financial forecasting are used, including: 4.1ai) • Projected income statement 4.1aii) • Cash budget 4.1aiii) • Projected balance sheet 4.1aiv) • Projected use of funds 4.1av) • Funding sources 4.1b) How to use past, current and projected financial conditions to forecast 4.1c) How to forecast organisational income and expenditure 2 Depth 4.2 4.2a) How to identify, and respond to, changes in the external environment that affect financial forecasts 4.2b) The quantitative methods involved in financial forecasting (eg rule of thumb, smoothing, decomposition, time series, causal) 4.2c) The qualitative methods that can be used for financial forecasting (eg market research, external and internal expert opinions, Delphi method etc) 4.2d) The types of internal activities that may prompt budget revisions 3 Depth 4.3 4.3a) How to evaluate methods of financial forecasting 4.3b) How to identify methods of forecasting that could be improved 4.3c) The ways that good forecasting practice can be captured and shared with other teams and individuals

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