Predictive Accounting: Driver-Based Budgeting and Rolling Financial Forecasts

Date: Thursday, August 15, 2019
Instructor: Gary Cokins
Begin Time:  12:00pm Pacific Time
1:00pm Mountain Time
2:00pm Central Time
3:00pm Eastern Time
CPE Credit:  2 hours for CPAs

This presentation involves the shift from historical reporting to predictive costing such as rolling financial forecasts, what-if analysis, and marginal cost analysis (e.g., pricing). The annual budgeting process is being criticized as obsolete soon after it is published, prone to gamesmanship, cumbersome to consolidate cost center spreadsheets, not being volume sensitive, and disconnected from the strategy. The challenge is how to resolve these deficiencies.

Today organizations are shifting to rolling financial forecasts, but these projections may include similarly flawed assumptions that produce the same sarcasm about the annual budgeting process. What is the solution to these poor budgeting and rolling financial forecast methods? Entrepreneurs know the age-old adage, “You need to spend money to make money.” Excessively tightening the belt on an organization’s spending can jeopardize its success. Rather than evaluating where costs can be cut, it is more prudent to change views and ask where and how the organization should wisely spend money to increase its long-term, sustained value. This involves planning for future expenses, but the annual budgeting and rolling financial forecast process has deficiencies. Four components of the enterprise performance management (EPM) framework can be drawn on to resolve these limitations.

Organizations with a formal strategy-execution process dramatically outperform organizations without formal processes. Building a core competency in strategy execution creates a competitive advantage for commercial organizations and increases value for constituents of public sector organizations. You can learn to manage strategy. It is important to include and protect planned spending for strategic and risk projects in budgets and rolling financial forecasts. Those projects lead to long-term, sustainable value creation.

Who Should Attend
CFOs, Financial officers and controllers, Managerial and cost accountants, Financial and business analysts, Budget managers, Strategic planners, Marketing and sales managers, Supply chain analysts, CIO and information technology staff.

Topics Covered

  • The shift from historical reporting to predictive costing
  • What is the solution to these poor budgeting and rolling financial forecast methods?
  • How to use a strategy map, a risk management matrix, capital projects, and activity-based costing principles.
  • Financial forecasting utilizing enterprise performance management (EPM) framework
  • Good predictive analytics
  • Deficiencies with the traditional annual budget
  • Unit-level consumption rates with forecasts to project operational expenses
  • Strategic and risk mitigation projects in expense projections.
  • "Predictive accounting" for driver- rolling financial forecasts, what-if analysis, and outsourcing decisions
  • How to shift from bottom-up cost center consolidations to top down modeling.

Learning Objectives

  • Recognize the deficiencies with the traditional annual budget
  • Apply unit-level consumption rates with forecasts to project operational expenses
  • Identify strategic and risk mitigation projects in expense projections
  • Apply "predictive accounting" for driver- rolling financial forecasts, what-if analysis, and outsourcing decisions
  • Recognize how to shift from bottom-up cost center consolidations to top down modeling

Level
Overview

Instructional Method
Group: Internet-based

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
None

Advance Preparation
None

Registration Options
Individual
Group
*Note: 3 or more qualifies for discounted Group Participant Fee
Fees
Regular Fee $100
Group Participant Fee $77

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