Knowledge Accounting

Dan Stone and Sony Warsono have written an article about Accounting and it's use of knowledge management, or the lack thereof. The industry has recently taken many criticisms that focus on two main points:

• The engine of economic productivity in the "new" economy is knowledge, not physical capital


• Financial and mangerial accounting are trapped in an industrial and organizational model in which physical capital is the primary productivty enabler.

The question is...can one assert that accounting has failed the knowledge management revolution? In this article they examine the determinants of the value of accounting information and the economic and institutional forces that shape existing knowledge accounting information; and discuss 6 proposed alternative methods of knowledge accounting.

1. Total Value Creation
2. Accounting for the Future
3. Balanaced Score Card
4. Skandia Navigator
5. Imaginable Asset Monitor
6. Value Chain Scoreboard

OK...I'm not going to go into details on what those are, but feel free to look it up...interesting stuff...Here's my summation of the whole deal...

As we all know, accounting, for the most part, is a concrete deal. There are numbers that are generated by sales, expenses, etc that turn into charts and graphs and financial statements. Knowledge management, on the other hand, is abstract...like our thoughts. It can go anywhere you want it to. The thing that makes Knowledge Accountitng a second choice is the lack of reliability due to the very nature of knowledge. Claims are that the basic accounting model is irrelevant in the face of these changing economic conditions. There needs to be a merger of these concepts.

I personally believe that with the very nature of business these days, the same outdated systems of accounting cannot be relied on. We know this by looking at the banking industry and various executives who have fallen to money schemes gone bad. There has to be a system of "thought" incorporated into how we operate our money. The days of looking at numbers and takign them as truth has passed. We've got to get smart about it!

Introduction

Hi everyone!

This is my first entry and I guess I'll start it off by saying that I'm really excited about this class. I've blogged some in the past and feel that this is an excellent and unitimidating way to get your thoughts across. You can say what you want, when you want, and how you want. And if someone doesn't like it? Tough luck. They can write their own blog :-). Now let's talk business...

When I signed up for this class, I really had no idea what it was going to be like. The name "Knowledge Management" says a lot, but not much at the same time. I figured at the very least I would gain some knowledge, and perhaps learn how to manage it. But after the first class I saw that it was so much more than that. Something important I've learned already is that we live in a knowledge economy...yes, a knowledge economy. I didn't know what this meant either so here' what Wikipedia had to say:

"The knowledge economy is a term that refers either to an economy of knowledge focused on the production and management of knowledge in the frame of economic constraints, or to a knowledge-based economy. In the second meaning, more frequently used, it refers to the use of knowledge technologies (such as knowledge engineering and knowledge management) to produce economic benefits as well as job creation."

Still doesn't make sense. So here's how I'm understanding it. A knowledge economy is one that is driven by human capital(That means us). The product of this human capital is knowledge. This ideology is different from what many people understand because unlike the industrial age, you are not working to provide a physical product(cars, clothes, etc.) We are living in an information age and for businesses this means you need people who can not only do, but also think. It gets more detailed but I'm not going to go into all that now, we've got time.

With that being said...I'm out of here for now. Have a good 1!!!!