Glossary & Notecards

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Week 0 · Finance AI Foundation18 terms

Adversarial check: Having a fresh AI instance review a draft as an external skeptic would, checking every factual claim cold. Its findings become the human-review agenda.
Agentic tool: An AI tool that works across a whole folder or environment rather than a single chat message, ingesting files and producing finished deliverables.
Assumptions ledger: A written record of every assumption behind a number, so a reviewer can trace and challenge each one rather than accepting a total on faith.
Deterministic split: The habit of separating a workflow's deterministic parts from its non-deterministic parts, so AI builds the machinery for the former and performs only the latter.
Deterministic work: Work with one correct output for a given input, such as an amortization schedule or a reconciliation. The reliable move is to have AI build the formula or code, which then runs deterministically.
Folder as context: Briefing an agentic tool with a clean folder: the inputs you normally receive, one example of the output you expect, and nothing else.
Hallucination: A confident but false output, such as an invented citation or figure. It is the reason every source and number is verified before anything ships.
Human review checklist: The five-point close on any AI-assisted deliverable: verify every source, own every conclusion, strip AI writing patterns, trace every number, and reconcile.
Jagged frontier: The uneven boundary of a model's competence. Inside it, output is strong; just beyond it, output can be confidently wrong, so an expert still chooses the destination.
Minimum context principle: Give a tool exactly what the task needs and leave the rest out. Oversupplying context tends to lower quality and raises data-governance risk.
Model tier: The capability level of a model, from an economy tier for high-volume well-defined tasks to a premium tier for complex, ambiguous, or judgment-heavy work.
Multi-model orchestration: Having models from different vendors review each other's work, so triangulation surfaces blind spots that no single model reveals about itself.
Non-deterministic work: Work with many acceptable outputs, such as a memo, a summary, or a narrative. Language models fit this well because they are non-deterministic by construction.
Prompt injection: A security risk in which untrusted content in a file or page manipulates an agent into unintended actions. Curating and scoping the folder is a defense.
Red lines: The bright-line limits on AI use: what data cannot go in, which tool tier is allowed, what needs escalation, and what the audit trail must capture.
Red-lines check: A short gate run before a workflow starts, confirming the right data is going into the right tool with scoped access and approvals in place.
Skill: A packaged set of prompts, instructions, and connectors that encodes a repeatable workflow so an expert process can be run on demand.
Three-anchor journey: Framing a task as where you are (current materials), where you are going (a concrete end state, ideally a worked example), and how to get there (process, tool, and model).

Week 1 · Close & Reporting6 terms

Close-ready: Output finished to the standard a controller would send onward: reconciled, materiality-screened, correctly toned, and free of invented drivers.
Flux commentary: The written explanation of why financial line items changed period over period, expected to name real drivers and tie to the underlying numbers.
Materiality threshold: The size below which a variance is not worth explaining. It keeps commentary focused on the drivers that matter rather than on immaterial noise.
Tie-out: Confirming that every figure in a narrative traces back to a source number, so the commentary reconciles rather than merely sounds plausible.
Trial balance: A listing of every general-ledger account with its balance, where total debits equal total credits. The starting input for close and flux work.
Variance: The difference between two figures, such as current period versus prior period or actual versus budget, usually shown in both dollars and percent.

Week 2 · Variance & Driver Trees7 terms

Alternative hypothesis: A competing explanation for an observed result, offered alongside the primary one to guard against a confidently wrong single story.
Decision-quality layer: The step that turns an explanation into a recommendation by adding alternative hypotheses and the evidence that would distinguish them.
Driver tree: A structured breakdown of a result into the underlying drivers that moved it, such as splitting a revenue change into price, volume, mix, and cost effects.
Falsifiable: Framed so that specific evidence could confirm or rule it out. A hypothesis you cannot test is not decision-useful.
Mix effect: The part of a change caused by a shift in the proportion of higher- or lower-value items sold, separate from total volume.
Price variance: The part of a revenue change caused by a change in price, measured as the price change times the actual volume.
Volume variance: The part of a revenue change caused by a change in units sold, measured as the volume change times the budgeted price.

Week 3 · Research & Benchmarking5 terms

Comparability caveat: A flag that a metric is not directly comparable across companies because of a definition or disclosure difference, so it should be noted rather than estimated.
Extract-verify-cite: A durable research pattern: extract figures from sources, verify each one resolves, and cite it, so no number is unsupported.
Fact versus inference: The discipline of tagging every claim as either a fact (traceable to a cited source) or an inference (reasoned, and labeled as such).
Peer set: The group of comparable companies chosen as the basis for a benchmark, selected for similarity in business model, size, or sector.
R&D intensity: Research and development expense divided by revenue, a benchmark of how much of the top line is reinvested in development.

Week 4 · Working Capital & Cash6 terms

13-week cash forecast: A rolling short-term forecast of weekly cash inflows and outflows, used to see the near-term low point and manage liquidity.
AP aging: A breakdown of accounts payable by how soon each balance is due, used to estimate the timing of disbursements.
AR aging: A breakdown of accounts receivable by how overdue each balance is, used to estimate the timing of collections.
Liquidity lever: A specific action that changes near-term cash, such as accelerating collections or delaying a discretionary payment.
Minimum cash: The lowest cash balance a forecast reaches, and the level a treasurer works to protect with levers and actions.
Trough week: The week in a cash forecast with the lowest ending balance, the point liquidity is tightest.

Week 5 · Cost & Spend Analytics5 terms

Addressable spend: The portion of total spend that a given savings lever could realistically act on, the base for an opportunity estimate.
Assumptions ledger: A written record of every assumption behind a number, so each savings figure can be traced and challenged.
Opportunity sizing: Estimating the savings a lever could produce, tied to explicit assumptions rather than an external benchmark.
Spend cube: A structured view of third-party spend by vendor and category, the starting data for cost-takeout analysis.
Tail spend: The many small, fragmented purchases spread across numerous vendors, where consolidation savings often live.

Week 6 · Anomaly Detection6 terms

Audit trail: A record of what was tested, the thresholds used, the findings, and the disposition of each, so a review can be reperformed.
Disposition: The proposed next step for a flagged entry, such as investigate, reclassify, or confirm with the vendor.
Duplicate payment: The same vendor and amount appearing more than once, a common accounts-payable error that exception testing flags.
Exception-based testing: Reviewing a data set by applying rules that surface only the entries needing attention, rather than reading every line.
False positive: A clean entry that a test flags incorrectly. Minimizing false positives keeps an exception report trustworthy.
Round-dollar entry: An amount posted in exact whole thousands, which can signal an estimate or a manual entry worth reviewing.

Week 7 · Technical Memos5 terms

Draft-critique-revise: A durable pattern in which a draft is produced, then adversarially critiqued, then revised, rather than accepted on the first pass.
Issue spotting: Identifying the accounting question a fact pattern raises before reaching for guidance.
Issues memo: A short technical accounting memo that states the issue, maps it to the guidance, reaches a supported position, and addresses the alternative.
Over-time recognition: Recognizing revenue as performance occurs, permitted when specific criteria are met, such as an asset with no alternative use plus an enforceable right to payment.
Right to payment: An enforceable right to be paid for work completed to date, including a reasonable margin, if the customer cancels; one criterion for over-time recognition.

Week 8 · Contract Review5 terms

Clause extraction: Pulling the specific contract clauses that drive an accounting outcome, quoting the language verbatim rather than paraphrasing it.
Confidence rating: A high, medium, or low tag on an extracted implication, signaling to the accounting team where judgment is most needed.
Issue, not conclusion: Framing an accounting implication as a question to resolve rather than a settled treatment, so a first-pass read does not overstep the accounting team's judgment.
Performance obligation: Under ASC 606, a distinct promise in a contract to transfer a good or service, which drives how and when revenue is recognized.
Variable consideration: Contract payment that is not fixed, such as usage fees, royalties, rebates, or refunds, which must be estimated and constrained under ASC 606.

Week 9 · Valuation & Scenarios6 terms

Discounted cash flow (DCF): A valuation that projects future free cash flows and discounts them to present value at a required rate of return.
Enterprise value: The total value of a business's operations, the sum of the present values of the forecast cash flows and the terminal value.
Free cash flow: Cash a business generates after operating costs and reinvestment: net operating profit after tax plus depreciation, less capital expenditure and the change in working capital.
Sensitivity analysis: Testing how an output such as enterprise value moves as key assumptions like WACC or terminal growth change.
Terminal value: The value of cash flows beyond the explicit forecast, often estimated with the Gordon growth model as a growing perpetuity.
WACC: The weighted average cost of capital, the blended required return used to discount a firm's free cash flows.

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