Question

With more internal and external data available, what new accounting techniques and systems emerge? How does that shift the focus from forecasting to “nowcasting”? what is the effect on the downstream value chain decisions? Discuss. at least 300 words.

Answer 1

Accounting Techniques and Systems Emerge

Accounting is to keep a systematic record of financial transactions which helps the users to understand the day to day transactions in a systematic manner so as to gain knowledge about overall business.Accounting operations, which includes transaction processing, accounts payable and receivable, and internal financial reports; external reporting, which includes statutory reporting, corporate finance, treasury and financial risk, and regulation and so on.The emerging accounting trends in recent scenario are cloud-based accounting Solutions,automation of accounting Function,outsourcing,integration of accounting with operations,transparency and objectivity,data analysis,social Media Integration,changes in accounting standards...etc.These methods and innovative emergings of accounting are using under a  company follows in reporting revenues and expenses.With the effect Information Technology (IT) and its vast changes in accounting field we are using:Computer Assisted Auditing Tools and Techniques (CAATT),Enterprise Architecture & Enterprise Application Integration,Environmental scanning,Cloud Computing and like that.

Shift the focus from forecasting to “nowcasting

Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends. Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time.Forecasting provides relevant and reliable information about the past and present events and the likely future events. This is necessary for sound planning. It gives confidence to the managers for making important decisions.But forecasting shift in to nowcasting.Nowcasting focuses on predicting the current value of observable variables,Nowcasting has long been done by economists using methods that allow to the prediction of the present, the very near future, and the estimating and forecasting of  accounts from a dynamic factor model eg.,the GDP growth of the nation.

Effect on the downstream value chain decisions

The downstream  value chain looks more closely at the customers, consumers, re-users and recyclers. The downstream value chain is generally classified as what happens once a product or service has left your door. the issues that arise downstream, the solutions often need to be enacted upstream.There are risks and opportunities at any stage of a product's or service's life cycle with the effects and issues that arise downstream.Where downstream value chain decision can lead to a win-win situation, where the supplier, incumbent manufacturers, and final product consumers all benefit from downstream value chain decision.We conclude that these effects are driven by the combined effects of spot trading and the risk attitudes of supply chain members. Specifically, the effects of downstream value chain decision are dramatically affected by the risk attitude of manufacturers.