Conventional accounting is very powerful. It is at the center of the management information systems used by every well managed company on the planet. Yet conventional accounting has its limitations. This series of slides describes these limitations.

1. 04:17 AM
peterbnyc@gmail.com
www.truevaluemetrics.org
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
The Limitations of
Conventional Accounting
@truevaluemetric

2. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)

Conventional accounting is organization centric;

It is only about money transactions;

It is about impact of transactions on profit; and
●
It is about how profit impacts stock price.
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting

3. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)

Conventional accounting is organization centric;

It is only about money transactions;

It is about impact of transactions on profit; and

It is about how profit impacts stock price.
Decision are based on ROI … return on investment
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting

4. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)

Conventional accounting is organization centric;

It is only about money transactions;

It is about impact of transactions on profit; and

It is about how profit impacts stock price.
Decision are based on ROI … return on investment
EXTERNALITIES ARE IGNORED
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting

5. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
A big part of conventional accounting has been
turned over to 'gaming' the accounts so that
taxes are minimized.
This is a problem which has resulted in almost
all government entities on the planet being
short of money to do what they ought to be
doing.

6. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Conventional government accounting is
'cash based' accounting.
This is a system that is far less rigorous that
the 'accrual based' accounting that is used
for private sector businesses.
This system facilitates poor performance, and
worse, makes corruption way more difficult to
identify and stop.

7. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
The ignored EXTERNALITIES are big and many:

Impact on PEOPLE

Impact on COMMUNITY / PLACE

Impact on PLANET

Resource depletion

Environmental degradation

8. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
The ignored EXTERNALITIES are big and many:

Impact on PEOPLE

Impact on COMMUNITY / PLACE

Impact on PLANET

Resource depletion

Environmental degradation
There is also IMPACT that is associated with
PRODUCT
This flows all the way through the supply chain,
through use and into the post use waste chain.

9. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction

10. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction
But PRODUCT has a history through the supply
chain that is part of the 'trucost' of the product
which should be brought into account:

People impact … good and bad;

Taxes paid … or not paid;

Raw materials consumed:

Impact on resource depletion;

Impact associated with energy consumed;

Impact on environmental degradation;

Resources applied to pro-good initiatives;

Profits earned.

11. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Limitations-of-Conventional-Accounting-140517.odp
Limitations of Conventional Accounting
Product cost is only about the money transaction
But PRODUCT has a history through the supply
chain that is part of the 'trucost' of the product
which should be brought into account:

People impact … good and bad;

Taxes paid … or not paid;

Raw materials consumed:

Impact on resource depletion;

Impact associated with energy consumed;

Impact on environmental degradation;

Resources applied to pro-good initiatives;

Profits earned.

12. 04:17 AM
MULTI DIMENSION IMPACT ACCOUNTING (MDIA)
May 2014
QUESTIONS? FEEDBACK?
peterbnyc@gmail.com
www.truevaluemetrics.org
@truevaluemetric