Analyzing Your Accounting Systems

Your accounting system is functionally a component of you corporate knowledge management system. Why? Because – by definition – accounting is a system for gathering, structuring, storing and reporting financial information constructed from financial data. That’s exactly why in the corporate cockpit methodology (and in this book) your accounting system have been placed right next to your corporate knowledge management system.

There is such a thing as non-financial accounting (NFA) - a system for gathering, structuring, storing and reporting non-financial (operational) information constructed from non-financial data.

However, this (very recent) area of accounting has not yet developed any generally accepted rules (accounting standards) which are a must in any accounting system. Otherwise you simply will not be able to compare two different business entities which defies the whole purpose of accounting. Essentially, NFA is still in its infancy and, therefore, will not be covered in this book.  

Therefore, in this guide, I will cover four ‘classic’ types of accounting:

·         Financial Accounting - serves informational needs of investors/owners

·         Managerial Accounting - serves informational needs of corporate managers

·         Cost Accounting – ensures accurate computation of true costs of objects and processes

·         Tax Accounting – calculating corporate tax liability – for optimization, of course