enterprise profitability and the linkages of resource
expenses to customers.
As shown in trend No. 3 and Figure 4 in Part 1, there
are three broad categories of accounting: (1) tax accounting,
(2) external financial accounting for regulatory compliance
and investors, and (3) management accounting.
Each calculates different costs of outputs or products.
Progressive accounting functions recognize that they can
use two or more management accounting methods.
Another trend is a more intelligent way of evaluating
which level and type of costing sophistication are
required. Under some conditions, an organization may
not even need to aspire to advanced methods like
resource consumption accounting (RCA) or throughput
accounting, the costing method that’s a companion to
theory of constraints (TOC) advocates. A useful document
to assess the question “Is the climb worth the higher
view?” is my report published by the International Federation
of Accountants (IFAC) titled “Evaluating the
Costing Journey: A Costing Levels Continuum Maturity
Framework 2.0.” (You can download it at www.ifac.org/
publications-resources/evaluating-costing-journeycosting-
levels-continuum-maturity-framework-20.)
Figure 2 displays a multiple-stages maturity staircase that
organizations can use to judge if the extra benefits from
better accuracy and visibility of costs exceed the incremental
administrative effort to collect, validate, and
report the information.
Trend No. 5 demonstrates that the more progressive
CFOs and their management accounting staff are considering
the various needs of different types of managers in
their organization.
enterprise profitability and the linkages of resourceexpenses to customers.As shown in trend No. 3 and Figure 4 in Part 1, thereare three broad categories of accounting: (1) tax accounting,(2) external financial accounting for regulatory complianceand investors, and (3) management accounting.Each calculates different costs of outputs or products.Progressive accounting functions recognize that they canuse two or more management accounting methods.Another trend is a more intelligent way of evaluatingwhich level and type of costing sophistication arerequired. Under some conditions, an organization maynot even need to aspire to advanced methods likeresource consumption accounting (RCA) or throughputaccounting, the costing method that’s a companion totheory of constraints (TOC) advocates. A useful documentto assess the question “Is the climb worth the higherview?” is my report published by the International Federationof Accountants (IFAC) titled “Evaluating theCosting Journey: A Costing Levels Continuum MaturityFramework 2.0.” (You can download it at www.ifac.org/publications-resources/evaluating-costing-journeycosting-levels-continuum-maturity-framework-20.)Figure 2 displays a multiple-stages maturity staircase thatorganizations can use to judge if the extra benefits frombetter accuracy and visibility of costs exceed the incrementaladministrative effort to collect, validate, andreport the information.
Trend No. 5 demonstrates that the more progressive
CFOs and their management accounting staff are considering
the various needs of different types of managers in
their organization.
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