The IIA released its Three Lines Model in July 2020 as an update to the highly-regarded Three Lines of Defence Model promulgated in 2013. Many practitioners either love it or hate it, while others (including this author) vacillate between the two states.
In our previous Salient Point (Issue 3), we discussed how a company could go about preparing a cash flow forecast. Such a forecast, as mentioned in that article, could be helpful to improve the company’s cash flow visibility under uncertain times. Additionally, cash flow forecast could be used to determine the value of the business using the discounted cash flow (“DCF”) method. Such a valuation could be used for, amongst other things, fund-raising, impairment assessment and/or reporting to stakeholders.
Businesses currently find themselves in unchartered waters as the Covid-19 pandemic situation continues to persist. Even historically profitable businesses are not spared as supply chains globally are disrupted and the future looks bleak. In particular, small and medium enterprises (“SMEs”) have been hit hard. The SBF-Experian SME Index^, which tracks business sentiment specifically for SMEs in Singapore for the next six months, fell from 50.4 in Jan 2020 to 48.3 in April 2020, reaching an all-time low since the establishment of the index in 2009*. To navigate uncertain times, it is crucial for SMEs to review their existing business plans and cash flow forecasts which may be obsolete given the disruption caused by Covid-19.