Predictive Accounting

Day 1

The need for a forward-looking financial management system

Predictive accounting concepts
Use of process data to provide objective and verifiable forward-looking information
A Process Performance Statement

Gaining a competitive advantage with predictive accounting


What is your anticipated upcoming performance?
What are your desired process outcomes?
How close is your actual performance to targeted outcomes?
How much value are your processes creating?
What limits your value creation potential?
How stable are your processes?
Is your process capacity well matched to future requirements?

Translate your strategic plan into a format that can be deployed to the predictive accounting system


Your financial management process will never truly reflect your corporate strategy until you are able to translate your strategic data into a consistent framework that can then be incorporated into your management process. Explore how to effectively bring together the qualitative and quantitative information from your market intelligence into your predictive accounting framework.


Creating strategic outcome statements;
Creating customer market segments;
Customizing outcome statements to market segments;
Building product features from customer market segments.

Day 2

Create a process framework


This module presents a template for creating a process framework that is the foundation of a state-of-the-art management system. The template uses a spreadsheet to define macro processes and activities for every organizational unit. The spreadsheet traces cost from the general ledger to the activities to create a process standard.


Define the organization s macro processes;
Define the activities for a selected organizational unit;
Define the activity outputs;
Trace GL cost to activities;
Calculate a standard process unit cost.

Incorporate performance measures into the predictive accounting process


Learn how to seamlessly link your performance measurement system with strategy and the financial management system. Explore how to identify performance targets from the outcome statement.


Linking performance measures to outcome statements;
Aligning the Balance Scorecard with a performance based budget;
Linking financial budgets to performance measures;
Evaluating alternative cost and performance budgets.

Day 3


Implement a performance based budgeting process to link to strategic plans


This module will provide an introduction to the concept of linking a budget to strategy to enhance performance. The performance based budgeting process will be transformed from a number crunching exercise to a business alignment and transformation process.


Assess your current budgeting process effectiveness by benchmarking your budget effectiveness to international standards;
An overview of performance based budgeting;
An overview of a process framework that links the budget, strategic planning, performance measures and target costs.

Integrate key cost and performance indicators into a performance based budget


Set cost and performance targets and apply a budget-directed continuous improvement program to achieve targeted performance.


Setting performance targets using a Target Costing methodology;
Creating a continuous improvement program from a performance based budget.

Ensure continuous alignment of your long-term strategic plan with your short-term budget cycle


With a strategic plan generally being five to ten years, and a budget being a yearly exercise, it is common to lose sight of the big picture thus compromising the strategic thrust of the budget. Examine how to ensure continuous alignment of short and long term objectives to ensure that the two plans remain synchronized.


Balancing short-term results while achieving long-term strategic objectives;
Rolling budgets;
Dynamic budgeting contrasted with static budgeting

Create a dynamic budgeting framework that can adapt to external factors to improve budget achievement


Changes to the external business environment affect your budget projections. Budgets need to be dynamic and adapt to changes in critical external forces with minimal impact on projected budgeted performance.


Adapting a performance based budget to critical changes in the business environment;
Identifying, quantifying and minimizing budget sensitivity to key events
Integrate ISO and SPC to strengthen internal controls and stabilize process performance.
Day 4

Measuring value creation


What is value creation
Accounting for value a process approach
Measuring and reporting intangibles
How organizations create value
Creating future value

Process variation and cause-and-effect analysis


Process variation analysis
Root cause analysis
Use of Statistical Process Control (SPC)

Day 5


Implementation steps


A six step approach to implementing a predictive accounting system
Assembling an implementation team
Setting up an executive management team
Steps for operating the predictive accounting system


Tracking actual workload
Earned value reporting
Use of SPC
Line management reporting
Executive management reporting

Achieve management buy in and drive your budget through effective change management


Using an advanced budgeting process to achieve a sustainable competitive advantage requires organizational buy in. Experts estimate that 50 to 80 percent of the companies that attempt to adopt a new management process are not successful. This is generally due to a lack of consideration of how the new system is implemented and the organization s culture. This module will cover proven strategies to successfully integrate the performance budgeting framework into your unique business structure. It covers key change management considerations of implementing a performance based budget.


Introducing multi-dimensional thinking into an organization;
A phased budgeting implementation;
Executing the budgeting framework seamlessly into your organization s budgeting process;
Ensuring statutory compliance with process controls;
Earned value reporting;
What will performance based budgeting look like?