Accounting – A Mirror Reflection of Business Reality?

I had a fascinating conversation this morning (you know who you are 😉) on the topic of accounting “precision”.

Accounting may seem to some just like “debits, credits and accruals” but the reality is that it is the art of attempting to “create order from chaos”.

Real business operations that drive revenue, product shipments, manufacturing, supply chain, procurement and so on, have a significant human element, even with the latest technology and AI . . .  (maybe an even more significant human element due to the latest technology and AI . . ).

We have defined processes, policies and operating procedures, but the reality of daily business operations has an element of “managed chaos” to it.

All the while, we assume that our accounting practices are capturing the full reality of actual business outcomes.

They work pretty well.

But our accounting practices and the resultant P&L and Balance Sheet are far from perfect and give only a “reflection of reality”.

They are not reality in themselves.

Now, it may sound like I have just returned from a meditation and philosophy retreat . . . 

No, just a normal week . . . 😉

But this topic is growing in importance.

Exploring the Case for “PRECISION ACCOUNTING”.  Eliminating the defects, errors and leaks in the processes that drive the P&L and Balance Sheet

They say that “The Devil is in the Detail” . . .

In the world of financial accounting, that translates to “The Devil is in the Balance Sheet” or even “The Devil is in the Sub-Ledger”!

However, appealing the P&L may look, we know the Balance Sheet determines the “health” of the business, its assets (including cash) and liabilities.

We have all heard the stories of extreme examples of Balance Sheet accounting errors that have a very public impact. 

Fortunately, whilst poor Balance Sheet hygiene is commonplace, its impact is typically less dramatic, but nonetheless a key area for necessary process improvement.  

For many, the details of reconciling the Balance Sheet is an exercise in confirming “the numbers”, but there are often overlooked nuggets of gold (cash and P&L impact) hidden there, as well as a few “basking sharks” . . .

Understanding the realities, and vagaries, of the business processes and operations that drive the P&L and Balance Sheet, is a critical element to ensure that our accounting “reflection” is as close as possible to reality!

Join us for 30 minutes on 5^th February, as we explore this topic and real-world experiences with Steve Fox, Iowa State alumnus and former Controller and Head of Global Business Services at McKesson Corp., Gateway Inc., and Thermo Fisher Inc. 

You can get details and register free of charge for this session “Exploring the Case for PRECISION ACCOUNTING” here . . . 

Or here . . . . 

Thanks for reading . . .

Accounting – A Mirror Reflection of Business Reality?