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How Accountants Sort Things Out

6/28/2018

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How accountants sort things can have serious consequences. And provide some fun.

In our business acumen workshops, managers talk about how they organize their kitchen or their clothes. There’s a lot of laughter as the obsessive-compulsives in the room get outed for their color-matching proclivities. 

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Photo by Hannah Morgan on Unsplash

Applied to accounting, we ask questions like: should we classify the cost of a trip to meet with a client as Marketing or, perhaps, Travel? And if Travel, should we break out airfares from ground travel?

The important lesson is that we can obscure financial information by how we aggregate, slice and describe it.  

For example, when a mining company’s sales are reported on its income statement by type of mineral rather than by mining region, it can disguise how much of the company's activities happen in dodgy places.  
  
Back in the classroom, our recent favorite classification was a student who said she organized the novels on her bookshelf by how the authors would get along. Who needs alphabetic when you have that kind of insight?

Peter

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Photo by Dmitri Popov on Unsplash

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Imprisoned By Misunderstanding

6/21/2018

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In 1954 Sam Sheppard was on trial for murdering his wife. The judge, explained to the jury that if they were to convict him there needed to be no “reasonable doubt".

But the judge's definition was so convoluted, the jurors likely misunderstood him. Ten years on, Mr. Sheppard was released after a second trial.

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Photo by Peter Lloyd on Unsplash

Language matters. And that applies as much in the numeric world of accounting, as anywhere else. 

When we started Color Accounting twenty years ago, we thought color was the big thing. It still is integral to what we do. By color-coding financial statements we engage people's neurological response to color, thereby achieving accelerated learning.

But now we believe that our innovation around language and deliberate - and sometimes atypical - use of words is an even bigger deal. 

For example, when people grasp what  “revenue", “expense”, and “equity” really are (and are not), it opens a massive door to clarity of financial thought and access to powerful communication. 

The lawyer of an accountant on trial for revenue shifting told me that, even when handing down their guilty verdict, the jury didn’t clearly know what “revenue” was. They thought it was money. And vaguely thought he'd nefariously put it under a mattress or similar. The lawyer believed that his client may have been imprisoned because of this confusion.

If the jury had better appreciated how gray rather than black and white the issue of revenue recognition is, they may have had reasonable doubt. 

Clearly, words change lives. 

Peter

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Photo by Nicholas Kwok on Unsplash

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Trooping The Colour

6/14/2018

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Color Accounting Partners from around the world assembled last week in London to discuss our quest to advance accounting literacy globally.  

With participants from Australia, China, Canada, India, USA, South Africa, Greece, the Caribbean and UK, it was also an opportunity to observe another color spectacle, Trooping The Colour.

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Photo by Mosa Moseneke on Unsplash

This British tradition of Trooping The Colour, which goes back to the 1600s, has hundreds of marching and cavalry troops in their finest, presenting themselves to the British sovereign and marking her birthday.

Today of course, it is an excuse for pomp and ceremony which the Brits do like no other. 

The assembled Color Accounting trainers had the pleasure of watching the parade from a vantage point near Trafalgar Square, capped off by a flyover from the Royal Air Force, Spitfires and all. 

While the armies of yore used color to enable soldiers to recognize their own companies, we use color to logically code concepts of company finance.

And while the empire has long since shrunk, the quest to spread accounting literacy to the world continues to expand, and took a big, fun and fabulous leap forward last week. As you can see below.

Peter
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Attendees to ColorCon18, our global Partners conference, assembled in London, England

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    Co-founder Peter Frampton is the lead author of this blog.

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