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Background

How the Forecast Works

How Reconciliation Works

- Introduction

- The Reconciliation Process

- Reconciliation Factors

- Input Requirements

- Income & Expenditure Account

- Balance Sheet

- Cash Flow Statement

How to use the Model

Navigating the Model

Understanding the Analysis

Case Study Analysis

Ratio Definitions

Input Definitions

Input Guidelines

Input Screens

Analysis Screens

FAQs

Index of Topics

User I.T. Requirements

FSMD / Model Answers

Reconciliation Factors

For certain variables it seems more appropriate to express the initial discrepancy between the figures from the housing association model and the CAPACITY model as a “relative reconciliation factor” eg 0.95 or 1.07. This would be where an annual incremental real growth factor is thought likely to be the reason for the difference eg rental growth. The factor would then be applied to the unflexed forecast and to any flexed forecast, thereby increasing or decreasing the initial forecast by the appropriate percentage eg -5% or +7%.

For other variables it seems more appropriate to express the initial discrepancy as an “absolute reconciliation factor” eg +58 or -1,060. This would be where an occasional step-change is most likely eg balance sheet value adjustment. This absolute amount would then be added to or subtracted from the unflexed forecast and any flexed forecasts.
The list of reconciliation factors below shows which have been designated as “relative factors” and which as “absolute factors.” This choice of relative versus absolute expression of the reconciliation factor has no differential effect on the unflexed forecasts, only on the flexed forecasts.

Table of Reconciliation Factors