From the course: Applying Managerial Accounting

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Assumptions and business rules

Assumptions and business rules

From the course: Applying Managerial Accounting

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Assumptions and business rules

- Sometimes data doesn't give us everything we need. Say you've been asked to analyze the cost versus benefits for an organization considering outsourcing its payroll function. Let's assume that by now you understand your organization's strategic intent, you have a vision of the management reports, and you may even have all the source data you need to build the model. But there's just one more step before you eagerly go running off to do the fun modeling work. And that's capturing something called assumptions and business rules. Assumptions and business rules are kind of like the missing piece of the jigsaw puzzle. When everything else has been assembled, they're the other bits of information, critical information that you need to complete your work. In the financial modeling world, business rules can be defined as say the factors that the organization believes to be true, where the cold hard data just isn't there for us.…

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