Many years ago (before many of you were around) there was a book which took the business world by Storm. It was called “Accounting for Growth”. It earned the 2 writers from the FT the joy of being fired.
What they showed was how accountants made it look as though companies had grown by “creative accounting”. This included significant overvaluation of assets. Those who did this were Tottenham Hotspur AFC and Colourroll. Not heard of Colourroll? Well they went bust as a result of these fiddles.
So how do we manage for REAL growth? Don’t forget the accounts though?
Accounts were devised in an age of slow change and stable organisations. The accounting systems reflected that era and do so today.
To move forward we need to change our view about business structures – they need to be flexible. Most companies can’t handle this as their accounts systems don’t reflect the new structure. So as well as changing structures we should change the accounting to reflect the new organisation and to tell us what is happening!