Move Beyond 20th Century Accounting Principles to Accurate 21st Century Records Management

Need for Professional Records Management

Facility capital includes all traditional tangible capital. Facility records capital is tangible information capital in the recording and documentation of the actual business through the capital invested in and utilized by the business and economic outputs or results produced by the business.Professional facility records management goes beyond accounting to maintain financial records on the full business cycle, non-financial records, and documentation of results and performance. Professional records management also must provide extensive performance solutions, derived from records, as needed to produce other business and management results.

Records on results include all the revenue producing results like payments, sales, contracts,proposals, products, services, design, research, conceptualization, etc. Records on results include all capital support results like business change, personal capability development, knowledge creation, asset operation and maintenance, financial and other supply acquisition and utilization, record maintenance, strategy and policy development, intelligence collection, etc. Records on results include investment results like project and program results, and return on investments. Records on results include all management over time periods for operational improvement, capital development, interaction with others, and strategic value creation

Records on results include volumes produced, value created, total costs incurred, quality produced, risks incurred, symptoms identified, etc. Records on capital include all development, amortization, support responsibilities and effort, operational utilization, uncertainties, future worth, etc.

Records on performance include deployments, result exceptions, result volume, utilization costs and effectiveness, problems, etc. Records must be kept on monetary, statistical, qualitative, document, intellectual property, and imaged information produced from performance. Business media in emails, downloads, file transmissions, etc must be related to proper business data entity. This data also must be recorded, if needed, to support business transactions. The objective is to produce record-based performance solutions to enable management and others in the enterprise to leverage records to produce their results.

A new set of financial management and accounting fundamentals and principles are needed to allow complete, consistent, and accurate financial recording of the actual business in capital worth by solution in the applicable result value expected over the remaining useful life, capital investment returns by solution from applicable added result value-added over that projected with no investment, performance costs in the deterioration in solution worth or cost of maintaining the solution, result value from the customer willingness to pay within the final customer willingness to pay, and result value-added in the result value less total performance costs that should be reconciled against the profit result.

With today's technology, most records are generated automatically with effort placed on exceptions. Actual business results, capital, and performance can be set up in modern enterprise resource planning and other application systems to generate information and journal entries on results produced. Financial management and general ledger systems can be set up to process performance costs and statistics against results. Budget entries can record result goals and performance expectations by period. We should be able to take snapshots of the records to show actual business reality at any point in time. Artificial distortions for reserves, contingencies, etc should be minimized and be managed as part of the business. There should be one set of consistent, comprehensive, up-to-the- minute, accurate, and official facility capital records.

Result-performance Management (R-pM) enables 21st Century Records Management

The business is defined as "the utilization of capital of worth in performance to incur costs and produce value in results". We must keep records on the business in three parts: 1) capital of worth invested in the business, 2) the performance of the business in utilization of capital to incur costs to produce results, and 3) output results of value produced by the business. Now we have Result-performance Management (R-pM), a breakthrough to organize and manage the actual business, by managing capital resources invested in the business, capital consumed in performance solution costs to produce economic output in results, and the results of value produced by the business. R-pM keeps complete financial and non-financial records on the business by recording the performance solutions available to the business as capital records, solutions utilized to produce results as performance records, and the outputs of value produced as result records.

R-pM simplifies business recording down to six entities: capital available as performance solutions, performance in solutions utilized to produce a result, results produced, business descriptors to describe and relate attributes of the business, time periods for future planning and historical recording, and enterprises that interact with the business. Enterprises include those superior or subordinate in the business group, suppliers that provide input results, solution providers that provide solutions to maintain capital or produce enterprise results, and customers that use final results as their input results or performance solutions. Business descriptors record the attributes of results, capital, and enterprises such as industry, product group, customer segment, region, etc. Related subsidiary records are kept on certain results like products and services and certain performance solutions like assets and employees. Responsible units or managers are deployed as solutions to produce specific results. Projects are usually set up with a separate business structure to record the utilization of capital assigned in project performance to produce project results and recorded subsidiary to a project in progress investment result in the main business structure.

R-pM simplifies records management but also requires professionally produced financial and non-financial records solutions on the complete business cycle.

Rule 4 of 21st century management "Keep records on the full cycle of cost and value in operations and development"

21st Century Management Magazine at R-pM.net lists 10 rules for 21st century management. Rule No. 4 is to "keep records on the full cycle of cost and value in operations and development". The rule says to manage facility records of all results and performance for financial, statistical, and qualitative information on the full business cycle and provide complete and timely financial and non-financial record solutions to produce results.

The business invests in capital which has worth in the capability to add value to future results and loses worth and incurs costs as it is consumed, deteriorates, or becomes outdated. The business maintains capital as specific performance solutions that can be utilized by the business as assets of positive worth and liabilities of negative worth. The return on investment in performance solution acquisition, development, or improvement is provided by the added-value added to results attributable to the solution compared to the value added with no improvement. The business utilizes capital as performance solutions, which generate costs as the solution deteriorates or is consumed and is maintained as operational. The business utilizes performance solutions to produce results, which creates value and absorbs costs to provide a value-added. Multiple end-results from performance can produce a higher-level result of cumulative value, costs, and value added. This is not recorded in 20th century accounting, but it is what the actual business is doing, and is recorded precisely in 21st century management.

Records are both Facility Capital to be managed and Information Capital to be integrated and utilized

R-pM categorizes capital for professional management as:

  • Business: The organization, process, and data to produce a specific result
  • Human: People with their capability and knowledge
  • Facility: Tangible reusable equipment, consumable supplies, and records
  • Management: Strategies, tactics and intelligence used

Records are facility capital to apply record-keeping expertise to maintain records and provide record solutions. R-pM sub-divides each category into three classes as readiness capital to be prepared to produce the first result, production capital to be utilized to produce results, and information capital to deliver information and to document results and performance. Facility records are information capital to be integrated with business data, human knowledge, and management intelligence. Facility record solutions are utilized both to produce results and also to document and record results produced and performance utilized.

Professional Records Management records all financial and non-financial measures

Professional records management records all capital of worth and results of value to provide management solutions for complete financial management and control. Accounting cash and accrual records are only a part of complete financial records. Financial records are a sub-set within facility records. Professional records management also maintains non-financial records for complete facility records management. Professional records management maintains records in all computer and document media.

Records are managed through Capital Management Results

Professional Records Management manages facility records capital by producing specific records management results. With R-pM, facility records management has such responsibilities as:

  • Maintain the up-to-date and official enterprise records including documents, transaction records, computer records, imaged records, and archives
  • Maintain records on all results produced historically and planned into the future for financial and all other needed quantitative and qualitative measures
  • Maintain records on all capital utilized as performance solutions, including current "intangible assets" and record all capital worth, amortizations, and investment returns
  • Maintain records on performance in results produced to know value created and solutions utilized to know costs and value added
  • Maintain records of facility supply capital for liability solutions of negative capital worth assumed by the business to produce results and for cash supply solutions used to produce the reduced liability result and other directly paid results
  • Record the reality of the complete business cycle including financial measures for the value received from expenditures, subsequent value-added, and value provided for revenues or income received
  • Record business transactions to update results, capital, performance, time period, input result supplier, external or outsourced solution provider, and final result customer with document records such as quotations, contracts, etc and related business data media such as emails
  • Record costs of capital utilized against the value of the result produced to record value-added
  • Record, image, and archive all record capital of worth to document results and performance including internal design and documentation; intellectual property; customer, supplier, and solution provider interactions and documents; and external reporting records
  • Provide records for management accounting and analysis to derive intelligence
  • Provide record-based solutions needed to produce other enterprise results

Facility records management results produce accurate records solutions on the status of the planned and current business needed by management and the board to produce their results, by result managers for lower-level results, and by external entities authorized know about enterprise performance and results.

R-pM eliminates generally-accepted financial management and accounting problems and enables full recording of the business cycle, comprehensive cost and value records, assessed capital worth, a transparent and accurate management view of all measures involved in the business, and fully informed corporate governance to ensure strategic value creation.

The Opportunity for Accounting

R-pM provides a new foundation and significant competitive advantage through the 21st century management. R-pM provides the opportunity for the accounting profession to transform to professional records management.

The accounting profession should take steps to focus financial records to accurately record the business for the full business cycle, eliminate the limitations of 20th century accounting, and develop 21st century professional records management for all financial and non-financial records.

R-pM provides a new view of the enterprise and the professional record manager's role. Accountants can begin by learning R-pM and thinking of ways to help their management by keeping informative financial and non-financial records, and assessing the complete need for professional records management.

R-pM eliminates the 20th century accounting problem

Once enterprise management and corporate shareholders recognize the simplicity of R-pM for one set of records by time period on capital investments, results produced, performance solutions utilized, the suppliers who provide input results, the providers who provide outsourced or procured solutions, and the customers who provide the value to final results, there will be no return to 20th century accounting.

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