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News < Back Sarbanes Oxley : Finance Accurate Forecasting is Critical Yet Elusive Parson Consulting Study Suggests Nearly 1/3 of Companies Still Missing Forecasts
CEOs and CFOs of high growth companies gathered at Roth Capital Partner's 17th Annual Growth Stock Conference know first-hand how critical it is to prove their ability to forecast their financial results accurately and thereby to convince potential investors that they can execute on the growth strategy. Yet, accurate forecasting may remain elusive to high-growth companies, as even their more established peers have been struggling to deliver on forecasts. According to Parson Consulting's study, one of the sponsors of the Roth Capital conference, the 29.7% of S&P 500 firms missed analysts' earnings-per-share projections by at least 10 percent in the 2004 third quarter. While that's the lowest level since Parson began the quarterly study in the 2003 first quarter, it is far from the level that will reassure the investors. "Most investors and analysts will concur that a well-run company -- one with strong business and financial controls -- should be able to forecast its performance accurately despite high growth rates and the external business environment," says Bob Trine, managing director of Parson's Southern California operations. "One reason a sizable number of earnings 'misses' occur is because companies' finance functions are saddled with outdated or non-comprehensive financial-management infrastructures and cannot provide accurate information in a timely manner." Parson Consulting works with CFOs to continue to advance their financial management capabilities according to their business performance objectives, growth initiatives, and regulatory requirements. Parson's model to deploy highly experienced finance and accounting professionals to collaborate with CFO organizations have allowed the firm to maintain 93% client satisfaction and referral intent levels. "Regulations such as the Sarbanes-Oxley Act are pressuring companies to improve the speed and the transparency of their forecasting and communication of material events and financial implications to the market. By improving the quality and the accuracy of their forecasts, organizations can more easily see what interventions are required to meet their business performance targets or what key messages may be required to manage shareholder expectations if the targets are missed (or exceeded)," notes Toni Hicks, senior vice president, Practices, at Parson Consulting. Parson Consulting is a no-conflict financial management consulting firm that helps companies develop and sustain capabilities in strategic finance, accounting & finance operations, governance & risk management and corporate transactions across all industry sectors. The company focuses on realizing greater timeliness, accuracy, relevance, and accessibility of client's finance information and insight. Parson currently has more than 1,000 clients, with a third of those from the Fortune 500. Parson Consulting is headquartered in Chicago and has offices in 12 U.S. markets, including Santa Ana, Los Angeles, and San Francisco, and offices in London, Paris, and Sydney/Australia. Parson is a wholly owned subsidiary of Management Consulting Group PLC, a global consultancy listed on the London Stock Exchange. For this study, Parson examined public data for all of the available quarterly results of S&P 500 companies as of Nov. 10, 2004. Specifically, Parson focused on difference between EPS consensus estimates and actuals, using data from Thomson Financial First Call and Zacks Investment Research. 
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