Accounting has roots that go back 500 years to Columbus-era Venice when local merchants built global businesses and needed ways of keeping track of their financial transactions. This system worked well over the following centuries even as the global economy changed dramatically through industrialization. That’s because it is a system to track financial transactions. The system works really well for arms-length purchase and sale of tangible assets.
This system helped measure the financial health and success of an organization. But in today’s economy, accounting is facing some real challenges. A lot of the value created in and by an organization happens outside the view of the accounting system. In order to understand the health and success of an organization today, you need to look beyond the assets captured in the accounting system.
Workers thinking, processes improved, problems solved, lines of code written, designs drawn, relationships created, worker motivated—all of these exist in the accounting system only as operating expenses, here today and gone tomorrow. That’s the problem. Because what’s happening inside companies today leaves behind a footprint, a lasting value, a renewable and, most importantly a re-usable resource. Human capital, relationship capital, structural capital (knowledge, processes, designs, etc) and strategic capital are all long-lived assets that are the infrastructure driving the financial success of companies today.
ICounting is based on the principle that the knowledge and data and processes and relationships you form in your work have a lasting value. Rather than relying on financial transactions, ICounting looks at the value created by the exchange of knowledge and solutions. And the long-term infrastructure that gets left behind in the form of competencies, processes, data, networks, designs and trust. If you want to understand the health and success of an organization, you’ll need to understand these “intangibles.” And to do that, you’ll need to find an ICountant. Or to become an ICountant. For more information, visit the ICounts section of our website.
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