Handbook of Process-Based Accounting.Special to Journal of Accountancy from CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. 2Biz Globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation , new technologies and the Internet are pushing accountants into looking forward, rather than back--into a new paradigm New Paradigm In the investing world, a totally new way of doing things that has a huge effect on business. Notes: The word "paradigm" is defined as a pattern or model, and it has been used in science to refer to a theoretical framework. of prediction, rather than historical report. The problem, of course, is how to do that. James A. Brimson's new "Handbook of Process-Based Accounting" may have some of the answers. Brimson suggests that by analyzing information about a company's processes and applying it to statistical probability
"Statistical probability" is a term sometimes used informally as a synonym for frequency probability, which identifies probability with relative frequency over a long series of events or the we can predict, with sufficient accuracy, a company's performance. "A lot of the work done in the process area has potential for solving or at least mitigating some of the problems we've been having with traditional accounting," Brimson says. "This book is an attempt to get accounting to be more forward-looking by using processes." The burgeoning use of unregulated and unstandardized pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. reports proves capital markets need more predictive information, Brimson asserts. But pro formas are no more than junk food junk food n. Any of various prepackaged snack foods high in calories but low in nutritional value. junk food to a voracious market--temporarily satisfying, but unhealthy. They are a quick fix, not a solution. It would be far better, Brimson says, to develop standardized vocabulary and metrics for the corporate processes that yield earnings. If we can see process as a pipeline, we can look at what goes in and how it flows to predict what will come out at the other end. "The idea is to close the books at the beginning of the coming month rather than at the end of the past month," Brimson said. "Through statistical probability, we can predict what to expect. At that point, the advantage is that you will be able to take proactive action to prevent problems from occurring." The Handbook of Process-Based Accounting: Leveraging Processes to Predict Results By James A. Brimson, published by the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). . To get more information about buying the book, or to chat about Brimson's ideas, write: brimson@cpa2biz.com. More business reporting resources online at www.cpa2biz.com/braa. Toll-free (888) 777-7077. |
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