Lean accounting aims to support lean transformation through timely and understandable financial reporting that eliminates waste. It uses lean tools like value stream mapping to streamline accounting processes and provide accurate information to motivate continuous improvement. Lean accounting focuses on measuring customer value and uses performance metrics and visual tools to communicate financial information clearly to support decision making. The goal is to strengthen internal controls while planning budgets and investments from a lean perspective to increase customer value and profitability.

1. LEAN ACCOUNTING

2. Traditional Accounting Considered as Anti-Lean
Traditional
measurement
• Large, complex, huge amounts of non-value
work, leads to high inventory level
• Don’t have good way to identify lean
improvements in company, rather often show
that bad things happening when implementing
lean change
Financial Report
Very few people understand reports from
accounting system, yet decision to be
made on it
Standard Costing Leads to poor decision making

3. Vision for Lean Accounting
Measurement
- Provide accurate, timely and
understandable information to motivate
lean transformation
- Support lean culture by motivating
investment in people, and empowering
continuous improvement at every level of
organization
- Use lean tools to eliminate waste from
accounting process
Financial Report
- Fully comply with GAAP
- Simple, people can understand
Value Stream
Costing
- Increase customer value, growth,
profitability and cash flow

4. Lean Accounting Principles, Practices, and Tools
• Lean & Simple Business Accounting
• Accounting Processes that support the Lean transformation
• Clear & timely communication of information
• Planning from a lean prospective
• Strengthen internal accounting control

5. Lean & Simple Business Accounting
• The tools of lean must be rigorously applied to our
accounting, control and measurement process so that waste
is relentlessly driven out
• Tools used :
- value stream maps
- kaizen
- PDCA (Plan-Do-Check-Act)

7. Accounting Process that Supports Lean Transformation
• Lean accounting focus on measuring and understanding the
value created for customers, and uses this information to
enhance customer relationships, product design, product
pricing and lean improvement
• Tools used :
- Performance measurement
- Continuous improvement
- Value stream costing
- Target costing

8. Clear & Timely Communication of Information
• Lean accounting provides financial reports that are readily
understandable to anyone, i.e. in plain english and easy to
use
• Tools used :
- Visual management
- Box Score for decision making

10. Planning & Budgeting from Lean Prospective
Hoshin Policy Deployment
• From Hoshin Kanri ! a method for ensuring that strategic goals of company are
communicated throughout the company and drive progress and action at every
level of the company (from top management to shop floor)
• People required to achieve the results and very much involved in the planning and
goal-setting for their own areas of responsibility
Sales, Operations, and Financial Planning (SOFP)
• A formal & rigorous planning process completed for each value stream
• The financial planning outcome of SOFP is to update budgets each month and
thereby largely eliminates the wasteful annual budgeting choreography most
companies engage in
Investment in People
Successful lean organisations radically change their culture to make the training,
involvement, and empowerment of their people of paramount importance

11. Planning & Budgeting from Lean Prospective
Financial Impact of Lean Improvement
• Lean accounting tools are used to understand how the changes taking place in the
value stream will affect the operational performance, the financial performance,
and also how the capacity usage changes within the value stream
• One of the most difficult changes when beginning process of lean transformation
is to stop thinking about production improvements in terms of short-term cost
reductions (this will limit the progress company can make with lean
manufacturing and other lean initiatives)
• Change our question from “How large a cost will we save?” into “How can we use
our newly created capacity to increase customer value and make more money?”
Capital Planning
• When approaching a major decision relating to the purchase of capital
equipment, a lean organisation will perform a 3P (Production - Preparation -
Process)

13. Strengthen Internal Accounting Control
• It is essential that Lean Accounting enhance the accounting controls, and doesn’t weaken
them
• A primary tool to ensure that Lean Accounting changes are made prudently is the
Transaction Elimination Matrix
• Using Transaction Elimination Matrix we can determine what Lean methods must be in
place to enable us to eliminate traditional, transaction-based process, without
jeopardising financial (or operational) control
• Lean manufacturing always leads to substantial inventory reductions —> inventories are
low and in good control, thus inventories valuation become much less complex
Conclusion :
➤ Lean Accounting is itself lean, low-waste,, and visual, and frees up finance and
accounting people’s time; so they can become actively involved in lean change instead
of being merely “bean counters”
➤ Companies using Lean Accounting have better information for decision making, have
simple and timely reports that are clearly understood by everyone in the company