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TVA p3 DRAFT C2

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TVA-PRESENTATION-DRAFT-B ... This is a working draft of a presentation being prepared to promote the True Value Accounting initiative. This version will most likely change substantially before it is used.

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TVA p3 DRAFT C2

  1. 1. WORKING DRAFT - C File: TVA-p3-DRAFT-C-160420.odp Peter Burgess (c) All rights reserved TRUE VALUE ACCOUNTING
  2. 2. BE THE CHANGE "BE THE CHANGE THAT YOU WISH TO SEE IN THE WORLD" - GANDHI featuring talks on ART + SCIENCE + INTEGRITY + FOCUS TRUE VALUE ACCOUNTING
  3. 3. TRUE VALUE ACCOUNTING Peter Drucker, a well known management guru famously said: “You can't manage what you don't measure”
  4. 4. Complex system … competing agendas TRUE VALUE ACCOUNTING
  5. 5. THIS IS A COMPLEX AND CHAOTIC SYSTEM TRUE VALUE ACCOUNTING
  6. 6. WHAT ARE THE RIGHT THINGS TO MEASURE? TRUE VALUE ACCOUNTING
  7. 7. … AND WHAT UNITS OF MEASURE TO USE? TRUE VALUE ACCOUNTING
  8. 8. … AND WHERE TO MEASURE ? TRUE VALUE ACCOUNTING
  9. 9. I WILL ANCHOR MY REMARKS AROUND THE LETTER P TRUE VALUE ACCOUNTING
  10. 10. PROFIT TRUE VALUE ACCOUNTING
  11. 11. PROFIT, PEOPLE, PLANET TRUE VALUE ACCOUNTING
  12. 12. PEOPLE, POVERTY, PROSPERITY TRUE VALUE ACCOUNTING
  13. 13. PROGRESS, PERFORMANCE TRUE VALUE ACCOUNTING
  14. 14. PRODUCTIVITY, PAYROLL, PROFIT TRUE VALUE ACCOUNTING
  15. 15. PLACE, PLANET, POLLUTION TRUE VALUE ACCOUNTING
  16. 16. PRODUCTS, PROFITS, PEOPLE, POLLUTION TRUE VALUE ACCOUNTING
  17. 17. PRODUCTS, PROCESS, PAYROLL, PEOPLE TRUE VALUE ACCOUNTING
  18. 18. PLASTICS, PACKAGING, POLLUTION TRUE VALUE ACCOUNTING
  19. 19. PROMOTION, PUBLICITY, PUBLIC RELATIONS TRUE VALUE ACCOUNTING
  20. 20. Complex system … competing agendas TRUE VALUE ACCOUNTING
  21. 21. PROBLEMS WITH MEASURES TRUE VALUE ACCOUNTING
  22. 22. MONEY TRUE VALUE ACCOUNTING
  23. 23. MONEY AS A UNIT OF MEASURE TRUE VALUE ACCOUNTING
  24. 24. TRUE VALUE ACCOUNTING
  25. 25. THE VARIABLE QUANTITY OF MONEY TRUE VALUE ACCOUNTING
  26. 26. MULTI DIMENSION IMPACT ACCOUNTING COMPONENTS OF US MONEY SUPPLY
  27. 27. BANKERS AND THEIR DECISIONS ABOUT MONEY TRUE VALUE ACCOUNTING
  28. 28. MULTI DIMENSION IMPACT ACCOUNTING US FEDERAL RESERVE ASSETS
  29. 29. CORPORATE PROFIT TRUE VALUE ACCOUNTING
  30. 30. TRUE VALUE ACCOUNTING
  31. 31. STOCK MARKET PRICES TRUE VALUE ACCOUNTING
  32. 32. GDP GROSS DOMESTIC PRODUCT TRUE VALUE ACCOUNTING
  33. 33. GDP GROWTH SIMPLY WRONG FOR ALL SORTS OF REASONS TRUE VALUE ACCOUNTING
  34. 34. TRUE VALUE ACCOUNTING
  35. 35. GDP, GPI, GNH, OTHERS TRUE VALUE ACCOUNTING
  36. 36. PROBLEMS WITH PURPOSE TRUE VALUE ACCOUNTING
  37. 37. Complex system … competing agendas TRUE VALUE ACCOUNTING
  38. 38. FINANCIAL WEALTH HAS BEEN EXTRACTED FROM NATURAL CAPITAL BY THE LABOR OF PEOPLE TRUE VALUE ACCOUNTING
  39. 39. … BUT NOT EASILY IDENTIFIED USING THE PREVAILING MAIN METRICS. TRUE VALUE ACCOUNTING
  40. 40. WHAT ABOUT QUALITY OF LIFE FOR PEOPLE TRUE VALUE ACCOUNTING
  41. 41. TRUE VALUE ACCOUNTING
  42. 42. WHAT ABOUT THE SUSTAINABILITY OF THE PLANET TRUE VALUE ACCOUNTING
  43. 43. TRUE VALUE ACCOUNTING
  44. 44. TRUE VALUE ACCOUNTING
  45. 45. A GOOD SYSTEM OF METRICS CAN BE SUMMARIZED FOR AGGREGATE ANALYSIS … AND DRILLED DOWN TO A LEVEL WHERE GOOD SMALL DECISIONS CAN BE MADE. TRUE VALUE ACCOUNTING
  46. 46. A GOOD SYSTEM OF METRICS MUST WORK FOR ALL THE PERSPECTIVES TRUE VALUE ACCOUNTING
  47. 47. PERSPECTIVE TRUE VALUE ACCOUNTING
  48. 48. Complex system … competing agendas TRUE VALUE ACCOUNTING
  49. 49. THIS SYSTEM COMPRISES: ● THE PEOPLE SEGMENT ●MAN BUILT CAPITAL ● THE PLANET SEGMENT TRUE VALUE ACCOUNTING
  50. 50. MAN BUILT CAPITAL (MBC) ●FINANCIAL CAPITAL; ●PHYSICAL CAPITAL; ●KNOWLEDGE CAPITAL; ●INSTITUTIONAL CAPITAL; TRUE VALUE ACCOUNTING
  51. 51. MAN BUILT CAPITAL (MBC) SHOULD BE IMPROVING QUALITY OF LIFE WITHOUT DEGRADING THE PLANET TRUE VALUE ACCOUNTING
  52. 52. THE HISTORY IS VERY MUCH DIFFERENT … TRUE VALUE ACCOUNTING
  53. 53. YELLOW: The PEOPLE piece … Human Capital (HC) DIRTY BROWN: The ECONOMIC piece … Man Built Capital (MBC) GREEN: NATURE, ENVIRONMENT … Natural Capital (NC) COLOR KEY TRUE VALUE ACCOUNTING
  54. 54. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  55. 55. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  56. 56. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  57. 57. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  58. 58. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  59. 59. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  60. 60. AN EXISTENTIAL RISK … A TRAJECTORY TO DISASTER TRUE VALUE ACCOUNTING
  61. 61. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  62. 62. PEOPLE progressing MBC* efficient PLANET healthy * MBC … Man Built Capital TRUE VALUE ACCOUNTING
  63. 63. STATE and FLOW TRUE VALUE ACCOUNTING
  64. 64. STEADY STATE TRUE VALUE ACCOUNTING
  65. 65. POSITIVE PROGRESS TRUE VALUE ACCOUNTING
  66. 66. DETERIORATION OF STATE TRUE VALUE ACCOUNTING
  67. 67. PROGRESS IS CHANGE IN STATE TRUE VALUE ACCOUNTING
  68. 68. Period 1 2 3 4 5 6 7 8 9 10 11 12 HC MBC NC TRUE VALUE ACCOUNTING HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC
  69. 69. Period 1 2 3 4 5 6 7 8 9 10 11 12 HC MBC NC TRUE VALUE ACCOUNTING HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC HC MBC NC
  70. 70. PRODUCTIVITY, PROFITS AND PAYROLL TRUE VALUE ACCOUNTING
  71. 71. MULTI DIMENSION IMPACT ACCOUNTING
  72. 72. PRODUCTIVITY, PROFITS AND POLLUTION TRUE VALUE ACCOUNTING
  73. 73. POLLUTION: Plastics, Solid waste, Greenhouse Gases, SO2, NOX, Particulates, Water toxins, acidity, Land degradation. TRUE VALUE ACCOUNTING
  74. 74. MULTI DIMENSION IMPACT ACCOUNTING
  75. 75. TRIPLE BOTTOM LINE TRUE VALUE ACCOUNTING
  76. 76. PROFITS, PEOPLE, PLANET TRUE VALUE ACCOUNTING
  77. 77. METRICS DOMINATED BY THE BUSINESS PERSPECTIVE TRUE VALUE ACCOUNTING
  78. 78. PROFITS AND STOCK PRICES (INVESTOR WEALTH) TRUE VALUE ACCOUNTING
  79. 79. RETHINKING PROGRESS AND PERFORMANCE TRUE VALUE ACCOUNTING
  80. 80. TECHNOLOGY AND PRODUCTIVITY TRUE VALUE ACCOUNTING
  81. 81. MAN BUILT CAPITAL TRUE VALUE ACCOUNTING
  82. 82. Complex system … competing agendas TRUE VALUE ACCOUNTING
  83. 83. BETTER MANAGEMENT METRICS TRUE VALUE ACCOUNTING
  84. 84. Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  85. 85. Fundamentals of the Socio-Enviro-Economic System Human Capital Man Built Capital Natural Capital Hum an Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  86. 86. Fundamentals of the Socio-Enviro-Economic System Human Capital Man Built Capital Natural Capital TRUE VALUE ACCOUNTING
  87. 87. Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital Man Built Capital Natural Capital Human Capital Split out Financial Capital from other components of Man Built Capital TRUE VALUE ACCOUNTING
  88. 88. Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital SunSun Man Built Capital Natural Capital Sun Human Capital Add Sun … the source of all energy Split out Financial Capital from other components of Man Built Capital TRUE VALUE ACCOUNTING
  89. 89. Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital SunSun Financial Capital Human Capital Man Built Capital Natural Capital SunSunSun Man Built Capital Natural Capital Sun Human Capital Add Sun … the source of all energy Split out Financial Capital from other components of Man Built Capital Reorder because Financial Capital metrics exist TRUE VALUE ACCOUNTING
  90. 90. PERFORMANCE TRUE VALUE ACCOUNTING
  91. 91. PERSPECTIVE MATTERS TRUE VALUE ACCOUNTING
  92. 92. PRODUCT and PROCESS TRUE VALUE ACCOUNTING
  93. 93. IMPACT ACCOUNTING Moving from Financial to Impact Accounting STATE BOP … ACTIVITY ACCOUNTING … STATE EOP TRUE VALUE ACCOUNTING
  94. 94. Moving from Financial to Impact Accounting STATE BOP … ACTIVITY ACCOUNTING … STATE EOP ● Financial accounting; ● P&L and Balance Sheets (BOP and EOP); ● Financial accounting plus GOOD impacts; ● Financial accounting minus BAD impacts; ● Financial accounting with BOTH impacts; ● Bringing in IMPACTS on externalities; ● Expanding the REPORTING ENVELOPE; ● Accounting for IMPACT on ALL capitals. TRUE VALUE ACCOUNTING
  95. 95. FINANCIAL ACCOUNTS Financial Accounts describe Economic Activity REVENUES Products Sold X Price Products Bought X Price Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit TRUE VALUE ACCOUNTING
  96. 96. FINANCIAL ACCOUNTS OF AN ENTERPRISE Financial Accounts describe Economic Activity REVENUES Products Sold X Price Products Bought X Price Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit Cash Current Assets Fixed Assets Intangible Assets TOTAL ASSETS Current Liabilities Long Term Debt Owners' Equity Cash Current Assets Fixed Assets Intangible Assets TOTAL ASSETS Current Liabilities Long Term Debt Owners' Equity Balance Sheet BOP Balance Sheet EOP TRUE VALUE ACCOUNTING
  97. 97. FINANCIAL ACCOUNTS ADD positive impact not accounted for REVENUES Products Sold X Price Products Bought X Price Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit REVENUES Products Sold X Price VALUE to buyer Equals HUMAN CAPITAL ADD Wages and benefits What value to employee? Pro-good expenditures What value to society? Taxation What value to society? POSITIVE IMPACT NOT ACCOUNTED FOR TRUE VALUE ACCOUNTING
  98. 98. FINANCIAL ACCOUNTS DEDUCT negative impact not accounted for REVENUES Products Sold X Price Products Bought X Price Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit For products and energy bought and this process Free use of the commons and public services & infrastructure Degradation of land Water scarcity and degradation Air pollution: Impact on people Air pollution: Impact on climate Air pollution: Impact on people Solid waste Resource depletion Environmental Degradation Negative impact TRUE VALUE ACCOUNTING
  99. 99. FINANCIAL ACCOUNTS ACCOUNTING FOR EVERYTHING REVENUES Products Sold X Price Products Bought X Price Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation Profit REVENUES Products Sold X Price VALUE to buyer Equals HUMAN CAPITAL ADD Wages and benefits What value to employee? Pro-good expenditures What value to society? Taxation What value to society? For products and energy bought and this process Free use of the commons and public services & infrastructure Degradation of land Water scarcity and degradation Air pollution: Impact on people Air pollution: Impact on climate Air pollution: Impact on people Solid waste Resource depletion Environmental Degradation POSITIVE IMPACT NOT ACCOUNTED FOR Negative impact TRUE VALUE ACCOUNTING
  100. 100. Financial Accounts describe Financial Impact Financial Costs Financial Profit Financial Revenues Financial Balance Sheet BOP Financial Balance Sheet EOP Impact Accounts reflect Externalities Balance Sheet Changes Impact on Institutions Impact on People Impact on Society Impact on Physical Impact on Knowledge Impact on Resources Impact on Environment Impact on EcoSystem Balance Sheet Changes Balance Sheet Changes Balance Sheet Changes TRUE VALUE ACCOUNTING
  101. 101. Financial Accounts describe Financial Impact Impact Accounts reflect Externalities Impact on Institutions Impact on People Impact on Society Impact on Physical Impact on Knowledge Impact on Resources Impact on Environment Impact on EcoSystem Balance Sheet Changes Balance Sheet Changes Balance Sheet Changes TRUE VALUE ACCOUNTING Financial Accounts describe Financial Impact Financial Costs Financial Profit Financial Revenues Financial Balance Sheet BOP Financial Balance Sheet EOP Impact Accounts reflect Externalities Balance Sheet Changes
  102. 102. Sun BOP EOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun Financial Accounts describe Financial Impact Impact Accounts reflect Externalities Impact on Institutions Impact on People Impact on Society Impact on Physical Impact on Knowledge Impact on Resources Impact on Environment Impact on EcoSystem Balance Sheet Changes Balance Sheet Changes Balance Sheet Changes TRUE VALUE ACCOUNTING Financial Accounts describe Financial Impact Financial Costs Financial Profit Financial Revenues Financial Balance Sheet BOP Financial Balance Sheet EOP Impact Accounts reflect Externalities Balance Sheet Changes
  103. 103. TRUE VALUE ACCOUNTING TRUE VALUE ACCOUNTING
  104. 104. TVA MODIFIES PROFIT REPORTING TRUE VALUE ACCOUNTING
  105. 105. PRIORITIES TRUE VALUE ACCOUNTING
  106. 106. TVA APPLIES TO PLACE WHERE PEOPLE LIVE TRUE VALUE ACCOUNTING
  107. 107. TVA APPLIES TO PROCESSES THAT COMPANIES USE TRUE VALUE ACCOUNTING
  108. 108. TVA APPLIES TO PRODUCTS THAT PEOPLE USE TRUE VALUE ACCOUNTING
  109. 109. TVA APPLIES EVERYWHERE TRUE VALUE ACCOUNTING
  110. 110. TVA APPLIES TO EVERYTHING TRUE VALUE ACCOUNTING
  111. 111. PEOPLE ARE THE PROBLEM TRUE VALUE ACCOUNTING
  112. 112. PEOPLE ARE THE SOLUTION TRUE VALUE ACCOUNTING
  113. 113. PEOPLE ARE RESPONSIBLE FOR ALL THE DECISIONS THAT GET MADE TRUE VALUE ACCOUNTING
  114. 114. PEOPLE ARE RESPONSIBLE FOR ALL THE PRODUCTS THAT ARE BOUGHT … OR NOT TRUE VALUE ACCOUNTING
  115. 115. PEOPLE WASTE TOO MUCH TRUE VALUE ACCOUNTING
  116. 116. PEOPLE EAT FOODS THAT ARE UNHEALTHY TRUE VALUE ACCOUNTING
  117. 117. PEOPLE DRINK DRINKS THAT ARE UNHEALTHY TRUE VALUE ACCOUNTING
  118. 118. TOO MANY PEOPLE CONSUME TOO MUCH ALCOHOL TRUE VALUE ACCOUNTING
  119. 119. TOO MANY PEOPLE SMOKE TOO MUCH TRUE VALUE ACCOUNTING
  120. 120. TOO MANY PEOPLE USE PAIN KILLERS EXCESSIVELY TRUE VALUE ACCOUNTING
  121. 121. PEOPLE BUY CLOTHES MADE FROM TEXTILES THAT ARE UNSUSTAINABLE TRUE VALUE ACCOUNTING
  122. 122. PEOPLE BUY CLOTHES MADE IN ANTI-SOCIAL WAYS TRUE VALUE ACCOUNTING
  123. 123. PEOPLE DON'T EXERCISE ENOUGH TRUE VALUE ACCOUNTING
  124. 124. TOO MANY PEOPLE LIVE IN BUILDINGS THAT ARE INEFFICIENT TRUE VALUE ACCOUNTING
  125. 125. TOO MANY PEOPLE DRIVE CARS AND PICKUPS THAT ARE INEFFICIENT TRUE VALUE ACCOUNTING
  126. 126. PARENTING ONE OF THE MOST IMPORTANT THINGS THAT PEOPLE DO TRUE VALUE ACCOUNTING
  127. 127. TRUE VALUE ACCOUNTING
  128. 128. PROBLEM ONE-ON-ONE CARING JOBS ARE SOME OF THE MOST VALUABLE, YET THE LOWEST PAID TRUE VALUE ACCOUNTING
  129. 129. PROBLEM IN THE PREVAILING SYSTEM, SHORT TERM PROFIT POTENTIAL IS VALUED … LONG TERM IMPACTS ARE NOT TRUE VALUE ACCOUNTING
  130. 130. PROBLEM IN THE PREVAILING SYSTEM, SHORT TERM PROFIT POTENTIAL IS VALUED … LONG TERM IMPACTS ARE NOT TRUE VALUE ACCOUNTING
  131. 131. PROBLEM EXISTENTIAL RISKS ARE IGNORED UNTIL THEY IMPACT PROFITS TRUE VALUE ACCOUNTING
  132. 132. PROBLEM FUTURE PROFITS HAVE A MARKET VALUE, BUT THERE IS NO MARKET MECHANISM FOR EXISTENTIAL RISKS TRUE VALUE ACCOUNTING
  133. 133. METRICS HAVE TO BE RELEVANT AT THE PERSON LEVEL TRUE VALUE ACCOUNTING
  134. 134. EFFECTIVE METRICS ENABLE INCENTIVES FOR GOOD DECISIONS AND CONSTRUCTIVE BEHAVIOR TRUE VALUE ACCOUNTING
  135. 135. EFFECTIVE METRICS OPTIMIZE OUTCOMES FOR QUALITY OF LIFE, ENVIRONMENT AND FINANCIAL CAPITAL TRUE VALUE ACCOUNTING
  136. 136. EVERY PRODUCT IS PROFILED WITH ITS TRUE COST AND TRUE VALUE TRUE VALUE ACCOUNTING
  137. 137. EVERY PRODUCT IS PROFILED WITH ITS TRUE COST AND TRUE VALUE TRUE VALUE ACCOUNTING
  138. 138. EVERY PROCESS IS PROFILED WITH ITS TRUE COST AND TRUE VALUE TRUE VALUE ACCOUNTING
  139. 139. EVERY COMPANY IS PROFILED WITH ITS TRUE COST AND TRUE VALUE TRUE VALUE ACCOUNTING
  140. 140. EVERY PLACE IS PROFILED WITH ITS TRUE COST AND TRUE VALUE TRUE VALUE ACCOUNTING
  141. 141. Complex system … competing agendas TRUE VALUE ACCOUNTING
  142. 142. REMINDER This slideset is A WORK-IN-PROGRESS. It will be upgraded periodically. It is part of a series of more than 100 slidesets. Navigation to these is available here: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3 More about the True Value Metrics initiative is at: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav FEEDBACK is welcome. Please email to Peter Burgess … peterbnyc@gmail.com … with a catchy phrase in the subject line so that it gets attention, and please identify the specific slideset(s) or webpage involved. TRUE VALUE ACCOUNTING
  143. 143. THANK YOU Some links and contact information: Email Peter Burgess … peterbnyc@gmail.com Peter Burgess LinkedIn profile https://www.linkedin.com/in/peterburgess1 Link to TrueValueMetrics.org website http://www.truevaluemetrics.org/ Link to navigation to other resources: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav#1 TRUE VALUE ACCOUNTING

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