TABLE OF CONTENTS Having your cake and eating it too is a tough mountain to climb. Over my career, I have seen relevance lost and to some extent seen it partially regained. Based on this experience, I believe there is a way to enhance the accounting impact significantly that will improve the way organizations measure and manage. My hypothesis centers on offering the best of three worlds by applying throughput accounting, activity-based management, and a balanced scorecard approach. This creates a value-based approach to measuring, monitoring, and executing strategy. Profit-focused accounting provides a new model for applying these concepts and utilizing these tools.
In Chapter 1, the rise in productivity was correlated with the decline of the relevancy of a centuries-old accounting model. Changes have occurred at a blurred rate of speed, yet the same old accounting traditions still permeate the thinking of many accountants and senior management of companies. We have seen some earlier documented initiatives, but the breakthrough still has not been made allowing organizations to feel they have the answer.
Accounting records history and generally accepted accounting principles (GAAP) drive the rules for recording transactions. They set the rules for matching revenue and expenses and categorizing what is an asset and what is a liability. Even with new technology, the books must be closed in order for financial statements to be issued monthly, quarterly, and annually. The process is too slow, and investors and managers alike too frequently look at revenue and earnings on a...
