Lean Accounting

LEAN ACCOUNTING There are some questions that address Lean Accounting: (1) is Lean Accounting a viable replacement for, complement to, and/or supplement for current and evolving management accounting approaches, (2) Does Lean Accounting have the capability to advance two of the more forward-looking roles undertaken by management accountant: decision support and enterprise optimization (van de Merwe, Thomson)? Lean Accounting is the process of deriving monetary management information that is based on lean principals (van de Merwe, Thomson). This approach has a number of distinctive traits--the management accountant is required to gain and understanding of Lean thinking, principals, and practices, and a manufacturing shop floor emphasis requires that those from service industries dig deeper before being comfortable (van de Merwe, Thomson). There are four aspects of the case for evaluating that is to be presented: (1) LA assertions as stated in the literature, (2) understanding the implications of these assertions, (3) questioning the operations-centric views of LA, and, (4) evaluating LA's decision support capabilities (van de Merwe, Thomson). Three assertions can justify closer scrutiny in LA: (1) Accounting is the problem?, (2) all conversion costs are fixed, and, (3) claims for support of external reporting (van de Merwe, Thomson). If accounting is the problem, LA uses the weak straw person as a target basis for action-full absorption standard costing (van de Merwe, Thomson). If all conversion costs are fixed, the simple solutions to management accounting considers material costs as the cost relevant to a host of decisions (van de Merwe, Thomson). If LA can transform external reporting, this applies that it has the ability to transform traditional accounting as it aspires to transform management accounting (van de Merwe, Thomson). WORK CITED Anton van der Merwe, & Jeffrey Thomson. (2007). The Lowdown on Lean Accounting. Strategic Finance, 88(8), 26-33. Retrieved December 3, 2010, from ABI/INFORM Global.