Ethics Article Review

Ethics Article Review
The article, Keep Your Books Lean, discusses the differences between lean accounting and traditional accounting. In addition, this article discusses how some created financial reports can be easily distorted to make the stakeholder happy. Lean accounting has become the popular form of accounting when it comes to manufacturing and distribution companies. The lean accounting system focuses primarily on seeing a balance between actual production and customer demands. This creates a costly inventory because lean manufacturing penalizes production in regard to demand. Traditional manufacturing encourages the fact that a higher unit volume produces lower costs units. The traditional accounting system focuses on the fact that the easiest path to lower costs is higher volume. In several ways has this conflict created a dilemma with lean companies; including the need to calculate production variances and focuses plant management on satisfying customers instead of accountants, (Engle, P., 2005 pg. 22). This article purposes that the investment community demand a standardized approach to financial reporting that complies with GAAP.
Keep Your Books Lean relates directly to the assigned readings this week in many ways. More so, in regard to how financial reports can be misleading to stakeholders because of the manipulation of numbers to improve the reputation of a company. The article discussed the conflict with traditional and lean accounting, which leads to the discussion in the reading about bookkeeping. “Bookkeeping is the preservation of a systematic, quantitative record of an activity, (Albrecht, W. S., 2005).” In the manufacturing industry, bookkeeping is vital because it keeps track of all activity including inventory. Along with bookkeeping will be the accounting portion that is primarily the focal point of cost, expenses, and overhead. Stakeholders look for a healthy and performing company to invest in and the bookkeeping records are the...