Effect accounting allows booking transformational processes

  • They become observable and documentable over a defined period.
  • At the base of each effect accounting, profitability accounts and balance sheets acquire a new meaning.
  • The effects of value added processes become observable. This will require creatively tailored methods for business processes to be able to follow up on origins and effects.

Actions and behaviors have effects. These effects occur whether you realize it or not. We perceive consciously established and achieved goals more consciously than effects. Goals are often missed. Because realities are difficult to plan and to predict. By acting purposefully, we inadvertently generate more or less welcome side effects. But the truth actually includes all effects, both historic and current, both conscious and unconscious. Reality must be accepted as such.

Let’s use a research department in a company as an example, to clarify what is meant. The investment for equipping a research department would be entered as fixed assets. This will be amortized throughout several years. Best case scenario, employee development performance will be booked as “unfinished product” in the balance sheet. We want to appropriate this principle.

The idea is to predict effects and also to asses them. Best-case scenario, every investment in resources or processes generates advantages for enterprises. Otherwise, this investment will not materialize. Opponents of monetization would argue that this is at the expense of people. Our counterargument is that the a person’s performance generates values, which in turn generate monetary values.

Money is a rationalization of values that are generated and decay. Money is determined by added value and valuing. We will also apply this principle for future fiscal years. With effect accounting, we intend to book the impact and the target goals of values previously not accounted. This way, we can obtain transparency about the value generation process. Effect accounting incorporates the calculation of the expected revenue of business activities.