The Accounting Problem

Accounting does not record
the actual business
Due to 20th century
management problem number
one, the business is not
organized. Therefore, accounts
are not maintained on the
business, but are maintained
against a chart of accounts laid
over the business. Some aspects
of accounting, like double-entry
bookkeeping and accruals are
useful, and basic reports are
necessary. But, historic
accounting prevents
comprehensive financial and
non-financial record capital
management, thus becoming
major problem in 20th century
enterprise management.
Accounting is equated with
record keeping but does not
keep full enterprise records
One problem is that accounting
is equated with record keeping.
The modern enterprise must
maintain records capital on
business reality for the full
business cycle including financial,
statistical, qualitative,
documentation, and imaged
records. All records involve
money and protection of
enterprise assets. But, accounting
restricts itself to conventional
financial records. kept in
accordance with accounting
principles and external audit
requirements, that may distort
the business accuracy. Many
important management records
are not kept, or are kept by
organization units and individuals
and not managed as enterprise
capital of worth to produce
result value. Records relate to
the organization, account,
performance management,
business process, or other
structure laid over the business
and do not not relate to the
business.
Accounting does not maintain
full financial records
Financial records that should be
kept are not kept, because
accounting only records the part
of the business cycle from the
point money is received as cash
or accruals up to the point that
money is invested or spent. The
input result value received for
money invested or spent, the
performance cost in
transforming input results to
output results, the value added
in the transformation, and the
value provided for money
received is on the dark side of
accounting, where few financial
records are kept. Accounts are
kept against contrived entities
like centers, activities, and objects
and do not relate to manageable
business entities.
Other financial records that
should be kept on much high-
worth capital are not kept. The
capital is not managed and much
is labeled “intangible”, allowing
accounting to ignore it and not
account for its worth as a part of
enterprise worth or the cost of
utilizing the capital as a part of
enterprise performance costs.
Accounting has not addressed
many on-going 20th century
financial record problems
Many unsolvable financial record
problems like intangible assets,
unknown costs, unsubstantiated
value, distorted capital worth,
unknown returns on capital
investments, insufficient and
inaccurate management
information, and ill-informed
corporate governance are
outgrowths of 20th century
accounting. These problems can
be eliminated by professionally
managing the financial records
of the business.
Yet these problems continue,
despite the enormous sums
spent to strengthen accounting
and auditing and to impose
more stringent and costly
reporting requirements on
corporations.