Why this is required reading for CFO's, finance & accounting:
This book is written by 2 CFO's and will assist senior executives,
particularly the CEO and CFO in understanding financial impacts of Lean,
and how it can be applied to accounting.
Accountants will benefit from the many ways they can provide a higher level of service identified here.
Lean Leaders will be better prepared to communicate with finance personnel and help them learn to see.
looking to better understand `the numbers' will have a renewed
understanding of them, the actual impact of traditional accounting
methods rooted in our businesses, and the obstructions we've rooted in
internal policy and culture, which are often treated as external.
Some of what's covered includes:
- how accounting can provide significantly more value to the business, and vastly improve how they support decision making
- open book management, which firms can leverage to promote trust and a sense of personal ownership in the business
the 'reasons' some people will struggle in the process to provide more
relevant info, and what the CFO needs to understand to move past this
- compliance with materiality, GAAP, etc.
- performance measurement, and how metrics drive behaviour
- how management by objective sub-optimizes and damages a business
- avoiding unintended consequences from metrics that aren't meaningful, and examples to determine if these exist in a firm
details how it is far less important to know the cost of making an
individual product than to manage the costs of a business as a whole
- how using traditional allocation methods leads to potentially significant distortion in calculating product cost
closing the books, and methods for firms to have real time financial
results available as soon as the month ends, and the impact when they
are not timely and arrive after
- cost planning and target costing
- impacts of variance analysis, capacity variance, and activity based costing most firms are not aware of
financial statements that communicate nothing vs. what is really
happening in the operation, how to present the same financial data
internally in a usable format, and easily introducing the relevant
format to the organization so financial information is useful to
- the product of an accountant
- allocation costs, and how managers may be tempted to make operating results look good by changing allocation methods
- how clarity in metrics ensures a firm's offering is what a customer wants, not what creates the most absorption hours
- the correct way to evaluate capital requests which accounting courses don't teach (yet)
This book is loaded; I suggest it be read twice.