Chapter 2 – Where Managers And Numbers Meet

‘If you’re a CEO and you think you can fudge the books in order to make yourselves look better, we’re going to find you, we’re going to arrest you and we’re going to hold you to account.’
President Bush, July 2002

Overview

This chapter is very straightforward. It explains why managers need to be proficient with numbers. It outlines the concepts of numerical and financial methods. It lists what you should look out for as a manager. It explains that directors, and therefore managers, have responsibilities to report financials accurately. It examines accounting principles, requirements and reporting around the world and looks at current trends. And it throws acronyms around as if they were going out of fashion. Of course, they are not. They are very much in vogue, and being familiar with a handful will stand you in good stead for meetings with bean counters.

Mastering money management issues

After reading this chapter, you will be able to answer the following questions:

Why do managers need to be proficient with numbers?
How can managing numbers help you to manage better?
Are you familiar with the analytical approaches (in concepts at least) listed in the Jargon watch section opposite?
What should you keep in mind while reading this book?
What is financial reporting? How can it ruin your marriage?
Why are there national differences in the approach to accounting?
How did financial reporting spread around the globe, and why is it coming back together again?
Are you familiar with accounting acronyms FASB, ASB and IAS?
How do differing accounting principles allow flexibility in reporting?
What will happen in 2005, and are you ready for it?