Gary Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in advanced cost management and enterprise performance and risk management systems. He is the founder of Analytics-Based Performance Management LLC, an advisory firm located in Cary, North Carolina at www.garycokins.com.

He began his career in industry with a Fortune 100 company in CFO and operations roles. He then worked 15 years in consulting with Deloitte, KPMG, and EDS. From 1997 until recently Gary was a Principal Consultant with SAS, a leading provider of enterprise performance management and business analytics and intelligence software.

His two most recent books Performance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1). Mr. Cokins can be contacted at gcokins@garycokins.com .

 

 

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How Can We Deal with Misleading Management Accounting Data?

By Gary Cokins, Founder and CEO: Analytics-Based Performance Management LLC

A paradox which continues to puzzle me is how chief financial officers (CFOs) and controllers can be aware that their managerial accounting data is flawed and misleading, yet not take action to do anything about it.

Now, I’m not referring to the financial accounting data used for external reporting; that information passes strict audits. I’m referring to the managerial accounting used internally for analysis and decisions. For this data, there is no governmental regulatory agency enforcing rules, so the CFO can apply any accounting practice or cost allocation method that he or she likes.

Perils of poor navigation equipment

Perhaps some CFOs and controllers are simply lazy. They do not want to do any extra work or have two sets of books with potentially confusing product and service-line cost numbers. This counterintuitive phenomenon can be described this way:

Imagine that several centuries ago there was a navigator who served on a wooden sailing ship that regularly sailed through dangerous waters. It was the navigator’s job to make sure the captain safely and efficiently sailed the ship from one point to another. In the performance of his duties, the navigator relied on a set of sophisticated instruments. Without the effective functioning of these instruments, it would be impossible for him to chart the ship’s safest and most efficient course.

One day the navigator realized that one of his most important instruments was calibrated incorrectly. As a result, he provided the captain inaccurate navigational information. No one but the navigator knew of this calibration problem, and the navigator decided not to inform the captain. He was afraid that the captain would blame him for not detecting the problem sooner and then require him to find a way to report the measurements more accurately. That would require a lot of work.

As a result, the navigator always made sure he slept near a lifeboat so that if the erroneous navigational information led to a disaster, he wouldn’t go down with the ship.  Eventually, the ship hit a reef that the captain believed to be miles away. The ship was lost, the cargo was lost, and many sailors lost their lives.  The navigator, always in close proximity to the lifeboats, survived the sinking and later became the navigator on another ship.

Perils of poor managerial accounting

Can a similar story be told in today’s times? Centuries later, there was a management accountant who worked for a company in which a great deal of money was invested. It was this management accountant’s job to provide information on how the company had performed.

One day the management accountant realized that the calculations and practices on which the cost system was based were incorrect. It did not reflect the economic realities of the company. The input data was correct, but the reported information was flawed. A broadly averaged cost allocation factor was used with no causal relationship to the outputs being costed. As a result, the current and forward-looking information he provided to support the president’s decision making was incorrect. No one but the management accountant knew this problem existed. He decided not to inform the president. He was afraid that the president would blame him for not detecting the problem sooner and then require him to go through the agonizing effort of developing and implementing a new, more accurate and relevant cost system using activity based costing (ABC) principles. That would require a lot of work. Wouldn’t it?

Meanwhile, the management accountant always made sure he kept his network with other professionals intact in case he had to find another position. Not surprisingly, the president’s poorly informed pricing, investment, and other decisions led the company into bankruptcy. The company went out of business, the owners lost their investment, creditors incurred financial losses, and many hard-working employees lost their jobs. However, the management accountant easily found a job at another company.

The accountant as a bad navigator

Why do so many accountants behave so irresponsibly? The list of answers is long. Some believe the costing error is not that big. Some think that extra administrative effort required to collect and calculate the new information will not offset the benefits of better decision making. Some think costs don’t matter because the focus should be on sales growth. Whatever reasons are cited, accountants’ resistance to change is based less on ignorance and more on misconceptions about what determines and influences accurate costing. 

Today commercial ABC software and their associated analytics have dramatically reduced the effort to report good managerial accounting information, and the benefits are widely heralded. Furthermore, the preferred ABC implementation method is rapid prototyping with iteratively scaled modeling, which has destroyed myths about implementing ABC as being too complicated and lengthy. An ABC system can be implemented in a few weeks, not months. 

Reasonably accurate cost and profit information is one of the pillars of performance management’s portfolio of integrated methodologies. Accountants unwilling to adopt logical costing methods, and managers who tolerate the perpetuation of flawed reporting, should change their ways. Stay on the ship or get off the ship before real damage is done.

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Exceptional EPM/CPM Systems are an Exception

By Gary Cokins, Founder and CEO: Analytics-Based Performance Management LLC

Quite naturally, many organizations over-rate the quality of their enterprise and corporate performance management (EPM/CPM) practices and systems. In reality, they lack in being comprehensive and how integrated they are. For example, when you ask executives how well they measure and report either costs or non-financial performance measures, most proudly boast that they are very good. Again, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score them as “needs much improvement.”

Every organization cannot be above average!

What makes exceptionally good EPM/CPM systems exceptional?

Let’s not attempt to be a sociologist or psychologist and explain the incongruities between executives boasting superiority while anonymously answered surveys reveal inferiority.  Rather let’s simply describe the full vision of an effective EPM/CPM system that organizations should aspire to possess.

First, we need to clarify some terminology and related confusion. EPM/CPM is not solely a system or a process. It is instead the integration of multiple managerial methods – and most of them have been around for decades arguably even before there were computers. EPM/CPM is also not just a CFO initiative with a bunch of scorecard and dashboard dials. It is much broader. Its purpose is not about monitoring the dials but rather moving the dials.

What makes for exceptionally good EPM/CPM is that its multiple managerial methods are not only individually effective, but they are also seamlessly integrated and embedded with analytics of all flavors. Examples of analytics are segmentation, clustering, regression, and correlation analysis.      

EPM/CPM is like musical instruments in an orchestra

I like to think of the various EPM/CPM methods as an analogy of musical instruments in an orchestra. An orchestra’s conductor does not raise their baton to the strings, woodwinds, percussion, and brass and say, “Now everyone plays loud.” They seek balance and guide the symphony composer’s fluctuations in harmony, rhythm and tone. 

Here are my six main groupings of the EPM/CPM methods – its musical instrument sections:

  • Strategic planning and execution – This is where a strategy map and its associated balanced scorecard fits in. Together they serve to translate the executive team’s strategy into navigation aids necessary for the organization to fulfill its vision and mission. The executives’ role is to set the strategic direction to answer the question “Where do we want to go?” Through the use of correctly defined key performance indicators (KPIs) with targets then the employees’ priorities, actions, projects, and processes are aligned with the executives’ formulated strategy.
  • Cost visibility and driver behavior – For commercial companies, this is where profitability analysis fits in for products, standard services, channels, and customers. For public sector government organizations this is where understanding how processes consume resource expense in the delivery of services and report the costs, including the per-unit cost, of their services. Activity-based costing (ABC) principles model cause-and-effect relationships based on business and cost drivers. This involves progressive, not traditional, managerial accounting such as ABC rather than broadly averaged cost factors without causal relationships.    
  • Customer Management Performance – This is where powerful marketing and sales methods are applied to retain, grow, win-back, and acquire profitable, not unprofitable, customers. The tools are often referenced as customer relationship management (CRM) software applications. But the CRM data is merely a foundation. Analytical tools, supported by software, that leverage CRM data can further identify actions that will create more profit lift from customers. These actions simultaneously shift customers from not only being satisfied to being loyal supporters. 
  • Forecasting, planning, and predictive analytics – Data mining typically examine historical data “through the rear-view mirror.” This EPM/CPM group directs attention forward to look at the road through the windshield. The benefit of more accurate forecasts is to reduce uncertainty. Forecasts for the future volume and mix quantities of customer purchased products and services are core independent variables.  Based on those forecasts that so many dependent variables have relationships with, therefore process-related costs derived from the resource expenses can be calculated and managed. Examples of dependent variables are the future headcount workforce and spending levels. CFOs increasingly look to driver-based budgeting and rolling financial forecasts grounded in ABC principles using this group. 
  • Enterprise risk management (ERM) – This cannot be omitted from the main group of EPM/CPM. ERM serves as a brake to the potentially unbridled gas pedal that EPM/CPM methods are designed to step hard on. Risk mitigation projects and insurance requires spending which reduces profits and also steers expenses from resources the executive team would prefer to earn larger compensation bonuses.  So it takes discipline to ensure adequate attention is placed on appropriate risk management practices.
  • Process improvement – This is where lean management and Six Sigma quality initiatives fit in. Their purpose is to remove waste and streamline processes to accelerate and reduce cycle-times. They create productivity and efficiency improvements.

EPM/CPM as integrated suite of improvement methods

CFOs often view financial planning and analysis (FP&A) as synonymous with EPM/CPM. It is better to view FP&A as a subset. And although better cost management and process improvements are noble goals, an organization cannot reduce its costs forever to achieve long-term prosperity.

The important message here is that EPM/CPM is not just about the CFO’s organization; but it is also the integration of all the often silo-ed functions like marketing, operations, sales, and strategy. Look again at the six main EPM/CPM groups I listed above. Imagine if the information produced and analyzed in each of them were to be seamlessly integrated. Imagine if they are each embedded with analytics – especially predictive analytics. Then powerful decision support is provided for insight, foresight, and actions. That is the full vision of EPM/CPM to which we should aim to aspire in order to achieve the best possible performance.    

Today exceptional EPM/CPM systems are an exception despite what many executives proclaim. If we all work hard and smart enough, in the future they will be standard practices. 

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Movie Sequel – “Accountant Pirates of the Caribbean”

By Gary Cokins, Founder and CEO: Analytics-Based Performance Management LLC

FP&A Tags: 

Please forgive me for my persistent rant and criticism against accountants who budget poorly or continue to calculate the substantial and growing high indirect and shared costs originating from resource expenses such as salaries, supplies, power, information technologies, and travel. I cannot seem to hold back my frustration. 

When I observe managerial accounting practices and methods that ignore driver-based budgeting principles or simply allocate indirect and shared expenses typically as large combined “pool” using a single broad-brushed cost allocation base (e.g., number of units produced, sales amounts, direct labor input hours, head count, square feet/meters), I do not know if I should laugh or cry!

An excellent reference for best budgeting practices is this “Budgeting Best Practice e-book” written by Alan Whitehouse, Chief Solution Architect with TrueSky Inc. It is at:

http://www.truesky.com/budgeting-best-practices-ebook  

Accountants as pirates

The cost allocation methods just described violate what should now be well known by accountants as the “causality principle.” Expenses should not be “allocated” implying using any convenient base denominator in the calculation that converts 100% of the expenses into 100% of costs. Expenses should be “assigned and traced” in proportion to how the expenses are consumed. This means that the various work activity costs that belong to end-to-end and cross-department processes should be disaggregated and re-assigned using a quantity or volume metric that reflects the consumption rate.

Now at this point, some readers of this article have stopped reading and gone off to do other things like process journal entries and admire how elegant their debit and credit T-accounts look. Many of them suspect they are going to hear another heralding of the virtues of activity-based costing (ABC). That's fine. Let me write to the rest of you.

First, what were pirates and what is piracy? A definition for piracy is an act of robbery typically at sea but also applicable on land. It refers to raids across land borders. Can I use a pirate analogy for misguided accountants? I believe I can if you allow me to use some imagination. 

When accountants mis-allocate calculating past period historical costs (e.g. product costing), the result is simultaneously over- and under-costing compared to the economic reality because re-assigning expenses and costs is a zero-sum-error calculation. Are the accountants “robbing” anyone? Yes. At one level they are acting like Robin Hood taking from some (i.e., product costs) to give to others. At a more personal level, they are “robbing” managers and employee teams from having reasonable cost accuracy from which to draw insights for decisions such as product, service-line, channel, and customer rationalization. Accurate reported output costs and profit margins lead to a better understanding for determining how much and what types of resources to use to maximize the organization’s mission to stockholders (commercial companies) and stakeholders (in the government public sector).

What about “raids across land borders?” If you continue with this piracy analogy, one can substitute the borders of the organization chart with land borders. We all acknowledge that organizational silos exist at some level despite the Lean and Six Sigma quality management community’s pursuit to eradicate the self-serving behavior of and organization’s departments. When accountants focus on departmental cost center reporting of actual versus budget spending, they make managers either happy or sad, but rarely any smarter. Managers rarely see or sufficiently understand the cross-departmental costs of activities. And the reported costs of the products and service-lines that consume these expenses are flawed and misleading due to non-causal broad-brushed averaging earlier described.

Unethical or irresponsible? Shame on versus shaming accountants

I recently posted a question in the website discussion group of one of the professional accounting institutes. Based on this institute’s definition of code of ethics, which now has higher interest based on financial scandals like Enron, I asked if accountants are behaving unethically or just irresponsibly when they basically and most likely knowingly miscalculate output costs. There was a range of responses including several who defended accountants as simply just “doing their job” and that the total costs do perfectly reconcile without error. (Now there is an auditor’s mentality. Correct in the whole, and everywhere incorrect in the parts.)

What about my behavior in writing this article? Am I placing shame on accountants or shaming them. There is a difference. Shame exists when one admits they have a committed act and therefore are dishonorable. Shaming is an assault on the worth of an individual. Shame results in the accused diminished self-esteem and at the extreme to be dismissed and banished from the organization they were a member of – a harsh penalty. 

If I am shaming an accountant for their lack of caring to provide their managers and workforce with reliably valid information for decision making, if they already have low self-esteem then I might cause them to have an irreversible downward spiral. I certainly do not want that to happen. But I will maintain my position and assign shame to those accountants who themselves know who they are. They know they are admittedly using misallocating cost calculations that violate costing’s causality principle. It is a principle. The causality principle is not a law like they can be handed a traffic ticket from a policeman.  

Why does any of this matter?

Why am I standing my ground and persistent? Management accounting has an imminent important task ahead. Most commercial companies are shifting from being product-centric to customer-centric for a whole host of reasons including that customers now view most suppliers as selling commodities. This means a supplier’s competitive edge will come from offering differentiated services to increasingly granular micro-segmented types of customers. It is no longer about just increasing market share and growing sales. It is about growing profitable sales. If accountants do not have mastery on tracing expenses to channels and customers they place their company at peril and risk.

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The Many FP&A Rooms of the Organization Mansion

By Gary Cokins,  Founder of Analytics-Based Performance Management

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in advanced cost management and enterprise performance and risk management systems. He is the founder of Analytics-Based Performance Management LLC, an advisory firm located in Cary, North Carolina at www.garycokins.com .

He began his career in industry with a Fortune 100 company in CFO and operations roles. He then worked 15 years in consulting with Deloitte, KPMG, and EDS. From 1997 until recently Gary was a Principal Consultant with SAS, a leading provider of enterprise performance management and business analytics and intelligence software.

His two most recent books Performance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1). Mr. Cokins can be contacted at gcokins@garycokins.com .

LinkedIn account: www.linkedin.com/pub/gary-cokins/0/15a/949

 

The organization mansion has many rooms.

Business schools tend to divide their curriculum between hard quantitative-oriented courses, such as operations management and finance; and soft behavioral courses, such as change management, ethics and leadership. The former relies on a run-by-the-numbers MBA-like management approach. The latter recognizes that people and human behavior matter most. This separation of the curriculum is like chambers in a mansion.

In one set of chambers are managers who apply the quantitative approach of Newtonian mechanical thinking. They see the world and everything in it as a big machine. This approach speaks in terms of production, power, efficiency and control, where employees are hired to be used and periodically replaced, somewhat as if they were disposable robots. Some “data scientists” work in these rooms.

In contrast, in another set of chambers are managers who apply the behavioral approach. They view an organization as a living organism that is ever-changing and responding to its environment. This Darwinian way of thinking speaks in terms of evolution, continuous learning, natural responding and adapting to changing conditions.* 

Different rooms for different functions

Regardless of the use of the Newtonian or Darwinian managerial style, specific rooms in the mansion are dedicated to functions such as developing new products, marketing to acquire new customers, or fulfilling customer orders by delivering products and services. We often refer to these functional rooms as silos. Sub-optimization typically exists among the rooms. Managers operate their rooms to their own liking. In the old days, each room had its own fireplace, so the room’s comfort level was individually controlled. When the mansion was refitted with central heating and air conditioning, the managers were increasingly forced to compromise and agree. Most managers were not happy with the new arrangement.

In today’s organization mansion, there is an increasing need to understand how one’s room affects another. For example, managers in the production room have grown to like a minimalist décor with low inventory clutter so that they can quickly assemble parts or documents or creates apps in reaction to widely varying tastes of customers. In a neighboring room, sales managers like tall stacks of products so that they never miss a sales opportunity due to a shortage. A growing problem in the mansion is that these managers’ methods, goals, and incentives increasingly affect each other.

Teamwork and collaboration is the ideal way to live in the organization mansion. But despite all the encouragement from scholars and media, good teamwork is tricky to attain. Success comes only to those teams of people who place their own self-serving interests below the more important needs of their organization. The mansion is more important than its rooms.

As Patrick Lencioni describes in his book The Five Dysfunctions of a Team**, one problem in team behavior cascades into another that collectively escalates to degrade any organization’s performance. For example, when different managers secretly tamper with the mansion’s central thermostat, they are exhibiting an absence of trust in each other. Rather than confront one another, managers typically prefer to avoid conflict. Instead of debating what will work best for all, they resort to secret discussions with a few other “room” managers. Once someone, often an executive, inserts authority and resets the thermostat, the adverse consequence is a lack of commitment to it by others because no one listened to their opinions. 

The breakdown in teamwork then gets worse. Because of the lack of commitment and buy-in to choices made by others, room managers avoid accepting accountability for the conditions (i.e., their performance) of their own rooms. They begin locally adjusting things to offset what they don’t like, and they pay less attention to the mansion as a whole. They revert to putting their individual needs above the collective goals of the functional team they work with and of the organization as a whole. Total enterprise performance does not improve and may possibly decline.  

The FP&A chambers

My belief is there are some rooms, perhaps just closets, where managers see usefulness in blending the characteristics of the Newtonian and Darwinian styles. They also believe in teamwork and collaboration. The trick to general management is integrating and balancing the quantitative and behavioral approaches – and truly behaving as a team. These managers of the closet rooms are the ones who understand the full vision of FP&A that I frequently write about to be the seamless integration of multiple managerial methods. 

FP&A methods include strategy execution with a strategy map and its companion balanced scorecard (KPIs) and operational dashboards (PIs); enterprise risk management (ERM); driver-based budgets and rolling financial forecasts; product / service / channel / customer profitability analysis (using activity-based costing [ABC] principles); lean and Six Sigma quality management for operational improvement; and resource capacity planning.   

An FP&A mansion empowers executives, managers, and employees

Command-and-control style managers who prefer to leverage their workers’ muscles but not their brains run into trouble. Ultimately, things get done through people, not via the computers or machines that are simply conduits for arriving at results. Most employees are not thrilled by being micro-managed. The good performers are people and teams who manage themselves and positively collaborate with others, as long as they are given some direction and timely feedback. The C-suite executive team creates value by communicating their strategic direction by answering, “Where do we want to go?” They produce results by leveraging people who focus on identifying projects or processes to improve follow the path from the executives answering “How will we get there?” The potential capabilities of people may arguably be the most wasted asset of an organization.

In an FP&A mansion, each chamber is furnished strategy maps that set the direction from the executive team. Each room is further provided information and analysis tools, heavy with predictive analysis, so its employees can determine ways to achieve the executive’s strategy. Balanced scorecard dashboards are in each room for feedback so that everyone knows how they are doing on what is important. The mansion has a single enterprise-wide information platform rather than many disparate out-of-sync data sources. People are empowered with near real-time information to quickly make decisions because they increasingly lack time to seek answers from higher-level executives. By behaving as a good team and collectively collaborating, managers in this mansion don’t just manage performance – they improve performance.

The FP&A mansion has many IT-enabled rooms, but its managers are all on the same team. 

FOOTNOTES

* Stephan H. Haeckel, Adaptive Enterprise: Creating and Leading Sense and Respond Organizations. (Boston: Harvard Business School Press, 1999).

* * Patrick Lencioni, The Five Dysfunctions of a Team. (San Francisco: Jossey-Bass, 2002).

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From Bean Counter to Bean Grower – the Sequel

By Gary Cokins,  Founder of Analytics-Based Performance Management

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in advanced cost management and enterprise performance and risk management systems. He is the founder of Analytics-Based Performance Management LLC, an advisory firm located in Cary, North Carolina at www.garycokins.com .

He began his career in industry with a Fortune 100 company in CFO and operations roles. He then worked 15 years in consulting with Deloitte, KPMG, and EDS. From 1997 until recently Gary was a Principal Consultant with SAS, a leading provider of enterprise performance management and business analytics and intelligence software.

His two most recent books Performance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1). Mr. Cokins can be contacted at gcokins@garycokins.com .

LinkedIn account: www.linkedin.com/pub/gary-cokins/0/15a/949

 

Growing If Hollywood can make sequels to movies, why can’t I? This article is my sequel to my previously published “Can Accountants Grow the Beans Too?” article posted this past January, 2019.

Here is an edited excerpt to an e-mail to me from an accountant I have known for years. His name will remain anonymous for his own protection.

I left my job with Xxxxx in 2009.  Most of the VPs there did not understand strategy execution or managerial accounting. A few others and I tried to spread the word for about two years. It was just always a struggle to get buy-in for strategy execution, a balanced scorecard, dashboards or driver-based budgeting and rolling financial forecasts. Our guys weren’t really interested in profitability modeling or using any activity-based costing. I tried to do one driver-based budgeting project but their accounting software could not handle it. It is sad.

What can be said after reading his note? My intent is not to alienate some readers or exhibit the inflammatory and uncivil rhetoric and language we have been reading about the media and politicians in the USA. I simply want to illustrate (again) that the field of accounting will eventually need to deal with its problem of denial.

Accountants’ problem of denial

By denial I mean the false belief that accounting’s main purpose is to collect the data, validate the data, and report the data. It is so much more. The accounting profession must shift its emphasis to be more customer-centric. This is similar in industry to how suppliers now often are viewed by customers as a commodity. In response suppliers are expected to offer ideas and innovation to customers to differentiate themselves.

Simply replace “users” with “customers” and “suppliers” with “accountants” in those last sentences. You will then understand what I mean. Inevitably accountants will need to embrace FP&A and business analytics. To sum up, external financial accounting is about valuation primarily for government regulatory agencies and the investment community. In contrast, internal management accounting is about creating value to be used by managers and employee teams to make better decisions.

Bean counter or bean grower?

Decision Maker versus Decision Leader

Here are some new terms. A “decision maker” is one who has the ultimate responsibility for a decision. This contrasts with a “decision leader” as someone who ensures the quality and capability of decision making for all employees. The darkest time is before the dawn.

FP&A specialists and management accountants are well-positioned for a “decision leader” role because they already have much governance and oversight responsibilities. Further, they are the closest role of an economist for most organizations.

Expanding on this “decision leader” concept, one of its roles is to prevent or eliminate biases in thinking. Two examples are:

  • Interpreting information (or selectively searching for specific evidence) in a self-serving way solely to confirm, and not to refute, one’s preconceptions.
  • Favoring alternatives that perpetuate the status quo.

Another “decision leader” role is to prevent dysfunctional managerial methods and incentives. This includes assuming that external financial accounting conventions result in economic data appropriate for decision making. It does not. Applying traditional standard costing for GAAP may be acceptable, but activity-based costing (ABC) principles, which typically apply to organizations with repetitive processes, should be used for internal managerial accounting, reporting and analysis.

Other examples of dysfunctional methods and practices are treating depreciation expense as a period expense (and not ignoring it as a sunk cost during analysis) and excluding the cost of capital from cost calculations.

The main message theme I am making is that decisions are often viewed as an event – a discrete choice occurring at a single point in time. Decisions should be viewed as an ongoing and repeating process.

So, repeating myself, bean counter or bean grower?

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Author's Articles

April 9, 2019

Business schools tend to divide their curriculum between hard quantitative-oriented courses, such as operations management and finance; and soft behavioral courses, such as change management, ethics and leadership. This separation of the curriculum is like chambers in a mansion.

February 13, 2019

This article is my sequel to my previously published “Can Accountants Grow the Beans Too?” article posted this past January, 2019.

January 22, 2019

Despite some advances in the application of new costing techniques such as activity-based costing, are management accountants and FP&A professionals adequately satisfying the needs of managers and employee teams for decision-based cost information?

November 28, 2018
FP&A Tags:

Ever notice how the personalities and dispositions of animals often resemble humans’? An organization’s pursuit of adopting FP&A involves personalities of all types. How are they like the creatures that populate our planet? Here is a zoology of analogous types of employees that you might recognize. 

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