The video talks about the expansion of CFO and accounting role with Enterprise and Corporate performance management. Despite the confusion of each term, Gary Cokins recommends that the CFO and management accounting are in a great spot to bring the methods such as six sigma, operation methods etc. of both Enterprise and Corporate together for better synchronization.
Predictive accounting projects future financial performance using a statistical understanding of an organization’s processes (Brimson, 2013). Predictive accounting seeks to understand the future and is based on the observation that much of an organization’s work is repeatable. Predictive accounting uses process maps to understand the sequence of activities. An organization can begin the process of mapping once it gains more insight as to how, when and why events occurred. The mapping process identifies the upcoming events that will follow and these future events are then translated into predictive financial statements using resource consumption activity standards and statistical probabilities (Brimson, 2013). An example of predictive accounting is if an accounting firm warned one of its clients of working capital being tied up in debtors and inventory.
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