There are lots of numbers in the Castaway reports, but how do you know they're right?

This is a question our customer success team fields regularly, especially from users who are working with forecasts built by someone else.

When you break it down, there are really 3 parts to this question:

  1. Is Castaway calculating correctly given the Element Properties, Working Capital Settings and Data Inputs entered into the forecast?
  2. Are the Properties and Working Capital Settings for each Element correct?
  3. Do the Data Inputs reflect what the business expects to happen in future?

Here are some quick answers:

  1. Yes. Castaway's reports are designed to always have accounting integrity. All of Castaway's calculations are based on 3-way modelling principles, meaning they follow the logic of double-entry accounting. So, the reports will be correct, based on the Element Properties, Working Capital Settings and Data Inputs
  2. Unsure. Castaway can't tell whether the Element Properties and Working Capital Settings are reasonable for the situation you are modelling. However, there are shortcut ways you can use to check for yourself whether these properties and settings are correct
  3. Unsure. Again, Castaway can't tell whether your data is correct. However, it is easy to check for yourself

A structured approach to reviewing Castaway's report numbers

When we review forecasts internally, our team follow a structured process:

  1. Review the Element Properties for each Element
  2. Review the Working Capital settings for each element
  3. Review the Reports as a 'sanity check'

Review the Properties for each Element

Review Elements individually by selecting the Element name in the Chart of Accounts within the Forecast Workspace.

Review the Working Capital settings for each Element

Each Element in Castaway provides appropriate settings for Working Capital items like the Tax Rate, Income Tax treatment and Cashflow terms (including payment terms as well as cashflow modifiers like prepayment, accrual, provision and work-in-progress settings).

There are different ways to check each of these settings. Here's how we review these settings:

Tax Rate, e.g: GST/ VAT

To check GST/ VAT values calculated by Castaway, go to Analysis > Reconciliation > Tax Reconciliation and review the report. This is a great way to spot elements that have Tax Rates incorrectly applied

To check Tax Payment settings, go to the Tax Payments element at the bottom of the Chart of Accounts in the Forecast Workspace.

Income Tax/ Corporation Tax

To check which elements are included in the calculation of Taxable Income, go to each Element and review the Tax Exempt setting for each element.

If Tax Exempt is set to 'No', it means the element is included in the calculation of Taxable Income.

To check Income Tax/ Corporation Tax lodgement, instalment and payment settings, go to the Income Tax/ Corporation Tax element around the middle of the Chart of Accounts.

Element Payment Terms

To review Payment Terms for each Element individually, double-click the Element name in the Chart of Accounts.

For a quick review of the cashflow arising from each element, use the Cashflow Report (Analysis > Report > Key Reports), or use the Trade & Other Debtors and Payables Reconciliation reports (Analysis > Reports > Reconciliation).

Cashflow from Opening/ Actual Balances

To check the cashflow arising from Opening/ Actuals debtors and creditors balances, go to the Cashflow Report (Analysis > Report > Key Reports) and expand the Sales and Costs sections. The first line in each section (General Trade Debtors and General Trade Creditors respectively) shows how Castaway expects the Opening/ Actuals Debtors and Creditors to be collected/ paid.

To review how these amounts are calculated, go to Forecast > Element Settings and scroll to the bottom of the Chart of Accounts to locate the Balance Sheet element under the System heading.

Review the Cashflow Method applied against each component.

Review other Working Capital items

To identify other Working Capital items, go to the Funds Flow Report (Analysis > Report > Key Reports) and review the Working Capital Movements section.

Double-click on items to open the Element data entry screen and review the workings

Review the reports as a sanity check

Once you are comfortable with the Element Properties and Working Capital settings for each element, it's time to review the Reports.

A quick sanity check is a great way of highlighting major issues in the numbers. Naturally, smaller issues may not be as easy to spot.

There is no 'right' order to review the Reports, but we tend to start with the Profit & Loss, then move to the Balance Sheet.