Steven Sinofsky

[Mike Maples] spent many years watching people fight to move expenses to other teams, claim revenue for their own team, or even fight against the price of shared corporate services. This “allocation” dynamic is extreme “finance gymnastics” that grows exponentially complex as the business cross-dependencies grow. Ultimately the meaning of P&Ls derived from allocations becomes the undoing of most rational thought in an organization — hiring, investing, … [ Read more ]

Steven Sinofsky

Going back to the history of accounting, a P&L is a tool used by executives to inform decisions around resource and capital allocation, pricing, etc. In a large organization, it is very difficult to assign revenue and costs to a specific unit within a company and even more difficult to offer true span of control or accountability to a unit leader. The creation of P&Ls … [ Read more ]

Charles Horngren

Decision-making is the ultimate reason why accountants and finance people exist. The way to judge the quality of an accounting or performance management system is to determine whether it is spurring quality decision-making.

Christopher Bartlett

Accounting is about understanding and interpreting and getting behind the numbers, and how you use the numbers to really understand the business. Management is all about complexity and diversity and dynamism.

Class In Session

Steve Player speaks to legendary costing professor Dr. Charles Horngren of Stanford University, whose market-leading textbook, Cost Accounting: A Managerial Emphasis (first issued in 1962 and now in its 13th edition from Prentice Hall), has been used to train more CFOs and other finance executives than any other. In this rapidly changing world, Dr. Horngren provides sage advice on what remains timeless and important in … [ Read more ]

ABC: The Next Generation

Many companies that look into changing their costing systems find that they are making mistakes, both large and small, that stem from the systemic failure of their cost-accounting systems to deliver actionable economic intelligence that they can use to optimize production, planning, and sales incentive systems (to name three of the most important areas for improvement). If your company makes anything, and particularly if you … [ Read more ]

Building a Better Income Statement

If neither companies nor investors find GAAP reported earnings useful, it’s clearly time for a new approach.

Fred Reichheld and Rob Markey

If a hard asset like a machine is somehow impaired, a CFO must reflect the asset’s lower value on the books. The same applies to a contract or piece of software. If customers, on the other hand, suddenly decide they hate doing business with your company, this asset is clearly impaired—but the CFO may not even know about it until too late. And even if … [ Read more ]

“Fidel,” Sam Mendes, and Phil Jackson

There are many things you can do to avoid failing as a manager. You can set clear expectations. You can highlight the underlying purpose of people’s work. You can correct people when they do something wrong. And you can praise people when they do something right. If you do all these things often and well, you will not fail as a manager.

However, neither will you … [ Read more ]

Of CEOs and Accounting

It’s not that big of a stretch to say that many CEOs – too many, perhaps – would rather learn how to hit a three wood than move up the knowledge curve on accounting. But just like you can’t ask your caddy or anyone else to hit a three wood for you, you cannot – or at least should not – ask your CFO to … [ Read more ]

12 Ways Your Financial Statements Tell Lenders the Wrong Story

Your financial statements may not make the bestseller list, but they do tell an intriguing story—at least to a banker. Unfortunately, the tale they tell may be misleading. Since finance is no place for fiction, you need to make sure your statements tell the truth, the whole truth, and nothing but the truth.

To do that, the first thing you need to know is that … [ Read more ]

Peter Drucker

After 40 years of preaching, we have convinced everybody that cash flow is more important than profit. (Everybody except Wall Street, and Wall Street will never learn that lesson. There are no slower learners than securities analysts. I can testify to that; I was one. So they and the companies they promote still run into credit crunches, which kill about four of every 10 new … [ Read more ]

Want to Really Know How a Stock is Doing? Don’t Just Look at the Company’s Bottom Line

Skittish investors will not be surprised to learn that the bottom line of a company’s income statement fails to tell the whole story. New research by Jan Barton, an associate professor of accounting at Emory University’s Goizueta Business School, suggests that subtotals near the center of the income statement, such as operating income, have a much stronger association with contemporaneous stock returns than do the … [ Read more ]

The Real Value of Intangibles

There is no accepted standard for appraising the worth of nonphysical assets like brands, human capital, and managerial expertise. Yet these are the essence of 21st-century business.

Fair-Value Revolution

Historical cost accounting is fading as Corporate America marches into a new era.

Are ‘Mark-to-market’ Accounting Rules on the Mark?

Mark-to-market accounting rules require toxic assets to be carried on companies’ books at fire-sale prices, based on recent trades of similar assets for far less than they would command in normal times. Many big banks say the crisis has been made worse by these rules. Not everyone agrees.

Just-in-Time Accounting: How to Decrease Cost and Increase Efficiency

If you’re looking for a way to increase accounting department efficiency and cut costs, start by reading this remarkable new hands-on guide and learn how to:

* Reduce transaction-related work and allow employees to focus on profit-increasing activities
* Eliminate redundancy and waste
* Apply the latest technologies to your accounting process
[ Read more ]

A New Vision for Accounting

Robert Herz and FASB are preparing a radical new format for financial statements.