Broaden financial accounting to provide professional records management

20^th century records management is usually confused with financial accounting

Today’s 20^th century management organizes and manages the enterprise, and does not organize or manage the enterprise business. Since the business is not organized and managed, today’s corporations cannot maintain reliable and accurate business records. This is caused by several unsolvable 20^th century management problems:

• The business is not organized, so the business can not be managed, and records cannot be kept on economic output value created in result entities, capital invested in capital solution entities, and costs of capital consumed in performance entities that are not defined as complete and integral sets
• Financial accounting was developed to control actual and accrued cash transactions, which is today supported by the banking system and is generally automated
• Financial management and accounting manage money separate from other tangible facility capital preventing professional facility capital management
• Accounting keeps only a partial financial portion of needed facility records
• Nevertheless, financial accounting often is confused as meeting records management needs, discouraging full enterprise-level facility records management
• Accounting does not keep records on the business, but keeps records against a artificially-contrived chart of accounts structure that is laid over the business
• Accounting records only part of the business cycle from cash received until cash spent, but does not record the value received for cash spent, costs incurred to add value, and the value provided for cash received
• Accounting records expenditures against activities and centers and does not record expenditures or costs against the value created in results
• Accounting records only a portion of capital worth for tangible assets, since much other capital developed is not recorded as specific assets, or is labeled as “intangible assets” to contain “unknown worth” and produce “unknown costs”
• Accounting is an administrative function with the objective adhering to principles and producing proscribed statements, rather than facility records management to improve records capital and increase worth by providing solutions to increase result value-added across the enterprise
• Accounting information cannot be related directly to the cost incurred and value created in the business, hampering business management and good corporate governance
• Since accounting limits non-financial records, additional records tend to be kept by organizations and individuals, so that many business transactions, documents, imaging, archiving, etc are not managed as record capital
• With the fast growth in emails, document imaging, file transfers, etc. more records are coming in and going out of the enterprise, without proper records management or retention
• There is no frame of reference to accurately reference or index financial or non-financial records to the actual business
• Records are not managed as information capital to professionally provide the information capital solutions needed to produce results at all levels of business management

This records management problem is difficult to address due to conventions adhered to by the accounting and auditing industry and the development of accountants to keep 20^th century financial records, rather than professionally managing enterprise record capital for 21^st century business management. Now many enterprises are setting up records management units and solutions separate from accounting, which only adds on another set of expenses and problems.

21^st century business management manages and records the actual business for transparent corporate management

Rule No. 4 of the ten rules of 21^st century business management is: Keep accurate financial and non-financial records on full business operations and development. 21^st century business management does not need proscribed financial statements reporting contrived accounts. 21^st century business management needs complete, accurate, and timely financial and non-financial records of the actual and strategic business and information on progress of operations and capital development to implement the strategy. Records must be maintained specific to all business initiatives, decisions, and activity.

21^st century business management organizes and manages the business as one integrated business structure and records business data against the structure for capital investments in specific solutions, solutions utilized in business performance, and results produced from business performance. The current business structure is professionally maintained as business organization capital to accurately represent the actual business. The strategic business structure and period plans from the current to strategic business are maintained as management strategy capital. Facility records are maintained against the business structures with no updates or changes to the structures. The current and strategic business structure are intended to be used as the account structure. Business definitions and transactions can be recorded by any flexible financial and statistical general ledger system.

The complete business is recorded through six basic business data entities (economic output in results, capital investments defined as specific solutions to amortize each investment, performance domains where a solution is utilized to produce a result and generate business performance transactions, enterprises, business descriptors, and time periods). Performance transactions record the utilization of capital to produce results in domains, defined by a specific result and a specific solution utilized, to know cost-effectiveness of performance and value-quality of results. Records are updated by performance transactions to record the performance cost showing the reduced worth for each capital solution utilized, the value created in the volume of results produced, the total cost of producing a result in the total performance costs of all solutions utilized, and the result value-added in the result value less the total performance cost. Costs cannot be absorbed by activity or center. Costs can only be absorbed in the value or the result produced by the cost incurred. Clear and transparent records are maintained on all results produced, all capital solution investments utilized, and the performance of solutions to produce results.

Records are managed as facility capital for comprehensive financial and non-financial documentation of the business. Records are also managed as tangible information capital for delivery of solutions produced from records, as needed by the business to produce other results. By recording and managing specific data entities that comprise the business, corporations can manage the transition from today’s value to planned strategic value, rather than relying on corporate governance through regulation.

Performance management and result management are separate to verify and optimize the business

21^st century business management produces transparent and comparable records of what actually happens in the business. All capital utilization is managed in the performance dimension against results managed in the result dimension to authorize and verify costs, manage value, and optimize the business. All performance costs are justified by result value created.

Results are detailed as material, products, orders, service result, etc. Result group, customer, product or service line, quality, etc are attributes of the particular result. Capital solutions are detailed as cash, supplies, employees, assets, etc. Object of expenditure, capital category and class, capacity, support responsibility, etc are attributes of the particular solution. Performance is the utilization of a solution to produce a result. Costs, effectiveness, uncertainty, attributed result value-added, etc are attributes of a particular performance domain.

All results have a customer who wants the result produced, or else the result is not produced. Result values are set with the customer who receives the result to exceed the cost of producing the result. The total value of results in the chain that produces a final customer result cannot exceed the value of the customer result. All expenditures or capital solution costs are against a result value that builds up to revenue and income results. The result value-added builds up to the enterprise profit result. Non-financial records are maintained for performance expectations and result goals, performance effectiveness and result quality, performance capacity utilization and result volumes, etc.

Capital is recorded to manage positive or negative (liability) capital worth, recorded directly or assessed from attributed result value-added planned over the remaining solution life, and investment capital worth from the investment costs for capital in development. The worth of all capital and enterprise worth is known. Total business worth in the capability to add value to results over a payback period at the cost of capital is calculated to reconcile total capital worth.

Enterprises are recorded to know all financial and non-financial business interactions with related business units, suppliers, partners, solution providers, and customers. Business descriptors are managed to summarize records by the attributes of results, capital solutions, and enterprises for such entities as industry, product group, position, customer category, etc.

The business is managed by time period in the management dimension to manage result goals and performance expectations for actual result value, performance costs, and capital worth. Performance expectations can be set to plan or budget costs of solutions by result sets. Durations can be established for project result plans and budgets can be established for project capital solutions. 21^st century business management simplifies financial record keeping and improves financial and non-financial control.

Management capital management has business planning and control responsibilities

Management strategy capital defines the strategic business structure and provides solutions to keep strategic value creation on track to protect shareholder and stakeholder value. Management tactics capital provides professional capital performance assessment and result evaluation to ensure the accuracy and timeliness of enterprise records related to actual business transactions. Management intelligence capital analyzes complete facility records against the competitive environment to extract management information to broaden management accounting.

Facility record solutions are accessed or reported as information capital

Facility records are tangible information capital. Professional facility records management is required to handle the growth of records related to business initiatives and decisions in emails and computer files created and received throughout the business. All information related to business activity must be referenced to a business entity, such as a specific result, capital solution, enterprise, etc and indexed as part of the business. Professional records management streamlines facility records as part of the business information base; integrates record solutions with managed business data, human knowledge, and management intelligence to produce specific results; provides compliance reporting solutions, and manages record safekeeping and retention.

Enterprise record capital solutions are information capital related to the planned, current, or historic business. Financial and non-financial record solutions are comparable across enterprises and are presented clearly for regulatory bodies to examine.

Business management enables accounting to broaden to professional records management

21^st century business management does not attempt to change accounting, but provides facility records capital to keep accurate financial and non-financial records on the business to enable 21^st century business management. Accountants and the accounting and auditing industries continue maintaining 20^th century accounts until they recognize a unique opportunity to broaden their horizons to meet the needs for professional records management as a key part of 21^st century business management. The accounting profession can eliminate the need for separate record management units and solutions, and be part of the solution to the information complexity and information capital management problems that are only aggravated, and can never be solved, by 20^th century management used today.

Result-performance Management (R-pM) provides the knowledge and procedures for actual business management and reporting

Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual business. Forward-looking enterprises are now using R-pM guidance to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20^th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21^st century management conventions, definitions, and standards. Management consultants who base 21^st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. Business management knowledge and the Business Management Toolkit are available and supported today at result-performance-management.com.

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