Control over the financial condition of the enterprise and analysis of the results of its activities in real time
The condition of the company and the results of its activities are reflected in the financial statements, known to us as the balance sheet, income statement and cash flow statement. In professional circles they are called the "triad of reports."
The triad of reports is compiled after the end of the reporting period (year, semester, quarter, month), and significant efforts are expended on this. After the triad of reports is ready, all interested persons will find out the actual state of the enterprise and can make an analysis of the performance results for the past period. And this is a common practice.
In the modern world, it is possible to monitor the state and results only once at the end of the reporting period. Everyone has repeatedly heard on television phrases like: "Intel published unexpectedly good annual reports, and its shares grew by eight percent." Until that moment, everyone could only guess what state Intel was in. And in a small and medium business this situation can occur: he defined a strategy, worked with full efficiency, then received reports and shed tears. The condition worsened throughout the year because the results were negative. In most cases, financial reporting for a small business is simply not affordable. And there, in general, holistic monitoring and analysis is impossible.
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And this is all happening today in the age of information technology and computer technology. A logical question: why having a computer technology capable of producing millions of computational operations per second, we can get a triad of reports only after the reporting period has passed, which means we cannot monitor the state of the enterprise and the results of its activity in real time?
And the reason lies in the basic principle of accounting. Values in the triad of reports are expressed in some monetary unit. It is called the account or reference currency. Only in this way and nothing else. Accordingly, when entering data into the account, they should be recalculated into this single accounting currency. But the relative value of the elements of the state of the enterprise to this accounting currency is constantly changing (exchange rates, stock quotes, the cost of land, real estate, equipment, goods, etc.). In order for the triad of reports to reflect the actual status and results, it is necessary to make the difference in value when changing the relative value to the accounting currency as additional business transactions. More professionally, it sounds like this: accrue exchange rate corrections and revaluations.
In the case of stock quotes, this need already excludes the ability to monitor the state and results on a real-time basis, since it is impossible to record every change in quotes by introducing additional operations, at least in practice. So, the triad of reports will reflect an incorrect state and results.
In fact, the frequent introduction of exchange rate adjustments and revaluations gives rise to another problem. After this action it is necessary to close the previous period from the changes. For example. The accountant made a mistake and entered 100,000 dollars instead of 100,000. The dollar / ruble exchange rate has changed, in which we keep our records. The program will charge a $ 100 exchange rate adjustment. Then an accountant’s mistake was discovered, but in order to allow a digit to be changed, you must first remove the charged amendment, then change the digit and then charge the amendment again. And there are thousands of such moments. The increasing complexity of the program to a level in order to take this all into account makes it so complex that we can only dream of its really correct work.
In the second half of the last century, the Russian accountant Yezersky was determined to create an opportunity to monitor the success of the enterprise in real time. He created a form of accounting, which he called the "Triple Russian Accounting". The works of Yezersky were recognized worldwide. He tried to achieve results using paper to take into account, and achieved a good deal.
In this article, I'm just trying to expose a really existing problem and not trying to find some of its solutions. It seems to me that a lot can change in financial management, whether this problem is really solved. A very large part of the existing financial management is based on the described limitations. And as an owner of enterprises for many years, I think that financially interested persons would give a lot for the opportunity to control enterprises and the results of its activities in real time.
The paradox is that IT ishniki will change this world, but they need to understand how accounting really works, and what can be changed in it, and not be led by conservative accountants.
The triad of reports is compiled after the end of the reporting period (year, semester, quarter, month), and significant efforts are expended on this. After the triad of reports is ready, all interested persons will find out the actual state of the enterprise and can make an analysis of the performance results for the past period. And this is a common practice.
In the modern world, it is possible to monitor the state and results only once at the end of the reporting period. Everyone has repeatedly heard on television phrases like: "Intel published unexpectedly good annual reports, and its shares grew by eight percent." Until that moment, everyone could only guess what state Intel was in. And in a small and medium business this situation can occur: he defined a strategy, worked with full efficiency, then received reports and shed tears. The condition worsened throughout the year because the results were negative. In most cases, financial reporting for a small business is simply not affordable. And there, in general, holistic monitoring and analysis is impossible.
')
And this is all happening today in the age of information technology and computer technology. A logical question: why having a computer technology capable of producing millions of computational operations per second, we can get a triad of reports only after the reporting period has passed, which means we cannot monitor the state of the enterprise and the results of its activity in real time?
What is the reason?
And the reason lies in the basic principle of accounting. Values in the triad of reports are expressed in some monetary unit. It is called the account or reference currency. Only in this way and nothing else. Accordingly, when entering data into the account, they should be recalculated into this single accounting currency. But the relative value of the elements of the state of the enterprise to this accounting currency is constantly changing (exchange rates, stock quotes, the cost of land, real estate, equipment, goods, etc.). In order for the triad of reports to reflect the actual status and results, it is necessary to make the difference in value when changing the relative value to the accounting currency as additional business transactions. More professionally, it sounds like this: accrue exchange rate corrections and revaluations.
In the case of stock quotes, this need already excludes the ability to monitor the state and results on a real-time basis, since it is impossible to record every change in quotes by introducing additional operations, at least in practice. So, the triad of reports will reflect an incorrect state and results.
In fact, the frequent introduction of exchange rate adjustments and revaluations gives rise to another problem. After this action it is necessary to close the previous period from the changes. For example. The accountant made a mistake and entered 100,000 dollars instead of 100,000. The dollar / ruble exchange rate has changed, in which we keep our records. The program will charge a $ 100 exchange rate adjustment. Then an accountant’s mistake was discovered, but in order to allow a digit to be changed, you must first remove the charged amendment, then change the digit and then charge the amendment again. And there are thousands of such moments. The increasing complexity of the program to a level in order to take this all into account makes it so complex that we can only dream of its really correct work.
In the second half of the last century, the Russian accountant Yezersky was determined to create an opportunity to monitor the success of the enterprise in real time. He created a form of accounting, which he called the "Triple Russian Accounting". The works of Yezersky were recognized worldwide. He tried to achieve results using paper to take into account, and achieved a good deal.
In this article, I'm just trying to expose a really existing problem and not trying to find some of its solutions. It seems to me that a lot can change in financial management, whether this problem is really solved. A very large part of the existing financial management is based on the described limitations. And as an owner of enterprises for many years, I think that financially interested persons would give a lot for the opportunity to control enterprises and the results of its activities in real time.
The paradox is that IT ishniki will change this world, but they need to understand how accounting really works, and what can be changed in it, and not be led by conservative accountants.
Source: https://habr.com/ru/post/117910/
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