Purchase Solution

Steps a firm could take to encourage truthful forecasting

Not what you're looking for?

Ask Custom Question

What might be some steps a firm could take to encourage managers to supply "truthful" forecasting information?

Purchase this Solution
Solution Summary

The solution discusses what might be some steps a firm could take to encourage managers to supply "truthful" forecasting information?

Solution Preview

One of the main reasons why managers are tempted to supply untruthful forecasting information is because it serves the same purpose as a padded budget. If there are shortfalls in the budget or if situations arise where additional funding is needed in certain areas, like labor or materials, above what was needed the previous year, the inflated forecast would already incorporate those possibilities and it would not appear that the manager is over on their forecast. This is a very unethical practice that unfortunately goes on in many companies of all sizes.

There are a few ways that a firm can reduce the chances that forecasts are untruthful. Many companies find that when they analyze forecasting information from each manager over a three or four year period, certain managers continually inaccurately forecast their budgets. If this trend can be noticed, individual counseling ...

Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

View More Free Quizzes
Related BrainMass Solutions

  • How is business forecasting used?

    The business can take steps to reduce these risks or alternately can take out insurance that may protect the business (Keating. W, 2009). One of the important uses of business forecasting is to estimate accurately the sales of the firm.

  • Suggestions to Avoid Forecasting Errors

    528317 Suggestions to Avoid Forecasting Errors You have received a call from the manager of a firm where you helped set up a forecasting system. The manager, Dr.

  • Steps in financial forecasting and pro forma statements

    193807 Steps in financial forecasting and pro forma statements A. Describe three ways that pro forma statements are used in financial planning. b. Explain the steps in financial forecasting. c.

  • Considerations in corporate finance

    Encourage all accountants and finance managers to be truthful about the financial reports shared with shareholders. 3. Make sure human resources does a thorough job when screening potential employees through background checks. 4.

  • Market Potential for a New Product

    Based on these criteria, what are the steps the manager of a global company will need to take in order to decide whether a foreign market is a viable market in which to introduce a new product?

  • Consider an investment in an international venture

    Disadvantages of forecasting the foreign exchange rate is that it cannot forecast the actual currency changes in country that could affect the capital structure or financial decision of a firm.

  • Explain the Steps in Financial Forecasting

    Question 12-4 What are some actions an entrenched management might take that would harm shareholders? Explain the steps in financial forecasting. 1.a. Explain the steps in financial forecasting.

  • Forecasting Payments

    This explains the steps to calculate the forecasting Payments

  • Steps to forecasting and how they apply to business methods.

    623952 Steps to forecasting and how they apply to business methods. 1) Describe in your words the eight steps to forecasting and how they apply to business methods. 2) The decomposition approach to forecasting (using trend and seasonal components)

View More Related Solutions