limitations of conventional accounting (140517)
DESCRIPTION
Conventional accounting is very powerful. It is at the center of the management information systems used by every well managed company on the planet. Yet conventional accounting has its limitations. This series of slides describes these limitations.TRANSCRIPT
03:56 PM
www.truevaluemetrics.org
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
The Limitations of Conventional Accounting
@truevaluemetric
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
Conventional accounting is organization centric; It is only about money transactions; It is about impact of transactions on profit; and● It is about how profit impacts stock price.
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
Conventional accounting is organization centric; It is only about money transactions; It is about impact of transactions on profit; and It is about how profit impacts stock price.
Decision are based on ROI … return on investment
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
Conventional accounting is organization centric; It is only about money transactions; It is about impact of transactions on profit; and It is about how profit impacts stock price.
Decision are based on ROI … return on investment
EXTERNALITIES ARE IGNORED
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
A big part of conventional accounting has beenturned over to 'gaming' the accounts so that taxes are minimized.
This is a problem which has resulted in almostall government entities on the planet being short of money to do what they ought to bedoing.
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Conventional government accounting is 'cash based' accounting.
This is a system that is far less rigorous thatthe 'accrual based' accounting that is used for private sector businesses.
This system facilitates poor performance, and worse, makes corruption way more difficult toidentify and stop.
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
The ignored EXTERNALITIES are big and many:
Impact on PEOPLE
Impact on COMMUNITY / PLACE
Impact on PLANET Resource depletion Environmental degradation
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
The ignored EXTERNALITIES are big and many:
Impact on PEOPLE
Impact on COMMUNITY / PLACE
Impact on PLANET Resource depletion Environmental degradation
There is also IMPACT that is associated with PRODUCT
This flows all the way through the supply chain, through use and into the post use waste chain.
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction
But PRODUCT has a history through the supply chain that is part of the 'trucost' of the productwhich should be brought into account: People impact … good and bad; Taxes paid … or not paid; Raw materials consumed: Impact on resource depletion; Impact associated with energy consumed; Impact on environmental degradation; Resources applied to pro-good initiatives; Profits earned.
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction
But PRODUCT has a history through the supply chain that is part of the 'trucost' of the productwhich should be brought into account: People impact … good and bad; Taxes paid … or not paid; Raw materials consumed: Impact on resource depletion; Impact associated with energy consumed; Impact on environmental degradation; Resources applied to pro-good initiatives; Profits earned.
03:56 PM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
May 2014
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