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The June issue of Strategic Finance Magazine has an interesting article calledProvide Insight or Face Extinction by Noah P Barsky and Anthony H CatanachJr The main theory is the traditional accounting equation and how it should bechanged to provide information for decision making For five centuries its focushas been on accumulating processing and reporting the results of economicactivity for many types of organizations Recently due to increased competitionand advances in industry it has been suggested that we reconsider theusefulness of this equationManagers have always recognized that in order to make good business decisionsthey need proficient information Information however can only be gathered byassessing collected data and adding personal insight if it is to assist thedecision making process Raw data is of little help to managers so thisthinking leads us to a new equation which is more suited to todays competitiveworkplaceData Insight InformationIf firms consider using this updated accounting equation they must understandthat it is most effective when data processing technologies and creativethinking are used together This supports the reasoning behind firms beginningto seek financial consultants rather than accountants because they can provideadded insight to the data Data that hasnt been evaluated has much less valueto management because it cant be utilized as effectively in decision makingComputer software packages can now perform a broad range of traditionalaccounting functions making it easier for businesses to generate financialstatements or leases using very little human involvement Still those programscan only produce data and are not able to create information because they cannotprovide any insight Insight requires value-adding human qualities to deliveranalysis and interpretation and cant be found in any computer programIf they dont want to be made redundant by computers accountants should realizethat they are no longer expected to just prepare financial statements thatsimply comply with the minimum standards and requirements of the past Companiesand clients are now expecting reports to be dealt with strategically to providethem with insight into how the data effects their business processes
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