Limitations of Conventional Accounting (140517)

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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.

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Limitations of Conventional Accounting (140517)

  1. 1. 04:17 AM peterbnyc@gmail.com www.truevaluemetrics.org MULTI DIMENSION IMPACT ACCOUNTING (MDIA) The Limitations of Conventional Accounting @truevaluemetric
  2. 2. 04:17 AM 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:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp Limitations of Conventional Accounting
  3. 3. 04:17 AM 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:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp Limitations of Conventional Accounting
  4. 4. 04:17 AM 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:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp Limitations of Conventional Accounting
  5. 5. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp Limitations of Conventional Accounting A big part of conventional accounting has been turned over to 'gaming' the accounts so that taxes are minimized. This is a problem which has resulted in almost all government entities on the planet being short of money to do what they ought to be doing.
  6. 6. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-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 that the 'accrual based' accounting that is used for private sector businesses. This system facilitates poor performance, and worse, makes corruption way more difficult to identify and stop.
  7. 7. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-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
  8. 8. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-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.
  9. 9. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp Limitations of Conventional Accounting Product cost is only about the money transaction
  10. 10. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-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 product which 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.
  11. 11. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-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 product which 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.
  12. 12. 04:17 AM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) May 2014 QUESTIONS? FEEDBACK? peterbnyc@gmail.com www.truevaluemetrics.org @truevaluemetric

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