Continuous Accounting - Aditya Yadav


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Continuous Accounting - Aditya Yadav

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Continuous Accounting - Aditya Yadav

  1. 1. “Running an Agile Fortune 500 Company”Aditya Yadav,*
  2. 2. **A Typical Global Company*Fortune 500/1000*200 Divisions*40 Countries*25000 Employees
  3. 3. @ Acme Inc.*
  4. 4. **Original Question “We are a GlobalOrganization and Our Senior Managers spend 6months in a year on Planning & Budgeting. Is itpossible to Fix this? If yes then how?”*The Correct Question - “There are a lot ofissues involved here but if we start from theFirst Principles the solution could be verysimple conceptually. The right question is toquestion our Assumptions and Articulate ourPurpose. Allow me to show you.”
  5. 5. And The Philosophy Behind The Answer*
  6. 6. ** Both budgeting and accounting are fiscal systems or processes that involve planning,allocating, and disbursing of monetary resources.* This results in an interrelationship and a need for coordination between these twofiscal disciplines.* Generally, budgeting is regarded more in terms of planning and enacting a fiscal plan.* However, these planning and enactment processes are dependent upon the accountingof past-year and current-year expenditures, revenues, transfers and prior yearadjustments.* And Accounting focuses on the recording, classifying, and interpreting of financialtransactions* Accounting systems provide data for the budget process* As well as monitoring budgeted resources for the duration of the life of appropriations* The budget contains a complete plan and itemized statement of all proposedexpenditures... and of all estimated revenues, for the ensuing fiscal year, togetherwith a comparison, as to each item of revenues and expenditures, with the actualrevenues and expenditures for the last completed fiscal year, the estimated revenuesand expenditures for the existing fiscal year, and the budgeted revenue andexpenditures for the next fiscal year…
  7. 7. ** 1 month before the Quarter or Year gets over “Managers” spend an enormous amountof time and effort to “Just tweak a few things” to make the numbers look attractive toInvestors* Auditors spend an “enormous time and effort!!!” making sure another Enron doesn’thappen ;-)* 1 month after the Quarter or Year gets over The World gets to see the Numbers andhow we performed and we give projections, Wall Street and Analysts swing into action…* Senior Managers take the last year’s numbers make some projections in the air 1 yeardown and spend a few months planning and budgeting (shouldn’t we be spending moretime running our business?)* Our Mid Managers use something called Cost/Managerial Accounting to run the show onthe ground…* A lot of businesses’ Focus exclusively on the Purpose and Direction and leave it toFinance to make sure nothing is going drastically wrong on that front… “Yeah lets getthe customers and market share… the profits will come later…”* Professor Ram Charan says Managers need Business Acumen to run companiessuccessfully. They need to know how their business makes money, where it is spentetc. etc. and that such principles are valid across all businesses
  8. 8. ** If everyone’s happy why change things? What happened now?* Well! We just designed General Ledger Systems that can reliably do 10-200+million entries per day if not 100x that if needed* Specialists designed and implemented Double Entry Book Keeping. But nowgeneralists that work across Software, Finance & Accounting, GeneralManagement, Legal… came along and figured out they could solve a lot ofproblems if they fixed this* And everyone realized that Accounting was the base on which everythingelse is built, so to fix anything we have to start with fixing accounting…* Some people fancy Kaplan Norton’s Scorecards but a lot of other peoplerealized that the best way to manage an organization was using Individualand Aggregate Realtime Continuous Trends* And that Accounting was slow, delayed and still periodic at best.* And it was becoming difficult to Manage an organization using Trendswithout Continuous Accounting, Budgeting, Planning, Allocations…
  9. 9. ** Continuous Accounting would enable* Continuous Planning & Targets(???)* Continuous Forecasting & Actual Burn Rate* Continuous Budgeting & Allocations* Realtime Management by Trends* Increased Transparency* Performance Management & Better Performance* Easier Auditing – Watch out for Changes and Reversals first in the least, the nonsense of tweaking numbers willbecome very difficult with Realtime Trends being Publically Available.* Being Ethical will become easier and being Unethical will become a little bit harder. If you are not doing this youhave a lot to hide…* Iterative and Incremental Execution will get reinforced* Interplay between Management and Leadership will be smoother* Interplay between By Design Strategies and Emergent Strategies will be smoother* Continuous Feedback for anyone who cares* Immense Automation, on demand Report generation, public Report (Not Book Entry Data) API’s & Ratios & TrendDashboards* Reasonably Automated Consolidated Report Generation* Prof. Ram Charan’s concept of Business Acumen will become more prevalent across Managers which will be nice…* And Finally Business Agility…
  10. 10. *Aditya!!!