Page 27 - Finance for Non-Financial Managers

Siciliano01.qxd 2/3/2003 8:31 PM Page 8
Finance for Non-Financial Managers
8
You Don’t Get What You Don’t Ask For
Some accounting departments produce reports that they
never distribute outside their department, because no one
has ever asked for them.These reports, perhaps produced as part of a
standard computerized process or to serve a limited purpose in
Accounting, might contain information you have been trying to collect
on the back of an envelope for months. If they don’t know you want
it, they’re not likely to go looking for you when it’s printed.Ask what
kinds of reports are produced that don’t get distributed, just in case
there is a gem hidden in that file cabinet. Of course, this also applies
to reports that aren’t printed but are accessible through your comput-
er network.
actions is outlined in guidelines, or rules, called Generally
Accepted Accounting Principles (GAAP). These guidelines are
published by the accounting profession (with some gentle help
from the U.S. government). They are intended to be the founda-
tion upon which report readers can gauge a company’s
progress, compare one company or one accounting period with
another, and generally
judge the financial effec-
Generally Accepted
tiveness of its manage-
Accounting Principles
(GAAP) A set of rules, ment efforts.
conventions, standards, and proce- As we’ve seen, it does-
dures established by the Financial n’t always work out that
Accounting Standards Board for way, but that’s not neces-
reporting financial information. sarily because the rules
are flawed. The job of cre-
ating comparable accounting and reporting standards for busi-
nesses as widely varied as those operating today can be a
daunting task for the folks who set the standards. The objective
of each accounting rule is to record a transaction so that it
makes economic sense for the company and for readers of the
company’s reports. Yet to achieve that objective, accountants in
two dissimilar companies might need to record the same trans-
action differently.
We will devote a fair amount of time in this book to helping