There is an old saying that, "Figures don't lie, but liars figure." The nation and the economy are robbed blind by lying "accounting systems" of various complexity and of varying duplicity benefiting very ignoble people.
What happens is those who create these systems of "accounting" and their kissing cousins, "budgets" have various axes to grind, most of them mired in getting unjustified amounts of money for overpriced products and services. They are a product of the, "something for nothing" mentality that is contrary to the national interest.
The cure for all this is "zero budgeting," and "zero based cost accounting." It also might be called honest accounting and no budgeting at all. This combination is sometimes called "Lean Management."
Lean management is the simple idea of paying as little as possible in each instance for the best possible product or service, and selling the resultant company products for as much as possible. Real simple, right? But, any sort of budgeting inhibits and discourages this lean management process, and dishonest accounting methods act to enable and hide the acts and consequences of non-lean management.
Thus both budgeting and accounting work against the maximum profitability of the company. Example: Company buys a box of paper clips at two dollars a box. Typically, this figure will go unchallenged either as a projected budget cost, or as an expenditure after the fact. That is all wrong. This purchase must be monitored in such a way as to ascertain whether any clips were needed at all, whether they could be bought for less, and whether the brand was a good one for the money, and whether their was any tie-ins being overlooked that could benefit the company purchase, and whether their were any corrupt tie-ins involved that raised costs and decreased quality because of some corrupt practice on the part of anyone or everyone in the approval chain.
This is the proper definition of real Cost Accounting, but don't go looking for it in any accounting text book. It is considered and affront to the old boy network and all their justifiers and hanger ons, a group no accounting firm dares to confront.
This sort of lean management has few advocates, and no supporters in academia as it squeezes the juice out of every transaction the company engages in, and that juice is what all corrupt and lazy employees feed off of, and it is they who mostly feed academia.
All talk of "budgets" disappear when lean management sets the goal of zero costs and maximized income. The only "budget" of any value is to keep expenses as low as humanly possible and profits as high as humanly possible. Once you set any kind of "targets" you dampen the prospect of reducing costs and increasing profits anywhere beyond those budgetary targets.
Now, justifying each expenditure and sales price can produce a blizzard of paper justifying each purchase and sale price, and this must be guarded against, for lean management means lean paper justifications as well. It is pointless to save on the purchase of those paper clips if the gain is to be eaten up in by paperwork justifications and chain of command approvals.
By: Founder Church