Responsibility accounting is the name given to accounting where the reports specifically identify the responsible managers. This is a useful technique for getting clarity about who is responsible for what ... and there is rarely much agreement.

Not easy for the accountants ... but can be very effective in getting the management team to stop dodging their role in poor performance.

Responsibility accounting is a variant if GAAP accounting that aims to be very clear about who is responsible for the results being reported. Each page of a financial report is associated with a specific individual or team.

In TVM Value Accountancy applications a similar approach can be used to help the public to identify responsible individuals and units and to hold them responsible for performance

Responsibility Accounting – I

I first used responsibility accounting as a Division Controller at Aerosol Techniques Inc. (ATI) 40 years ago. It was amazing how fast people took exception to bad numbers when their name was on the paper ... and how quick they were to find fault with what the accountants had done. It was not comfortable. But quite quickly the errors made by the accountants were corrected and the reports started to reflect the performance of the responsible manager ... and then quite quickly these managers started to make decisions that made performance better. Most of their improvements would never have been identified by analysis of the numbers by accountants ... but most of these responsible managers knew their business, and now they had a reporting mechanism where their GOOD performance could be highlighted. In these reports, the company used not only accounting costs ... budget and actual ... but also a fairly large set of key item controls that measured activity levels that were important for company performance.

Responsibility Accounting - II

I tried to introduce Responsibility Accounting to UNDP almost 20 years ago. The proposal was to help UN leadership to have the management information that would identify financial performance issues and help to hold people accountable. A colleague with UN experience suggested to me that the idea was silly since there were few, if any, UN staff that were interested in management or responsibility, and certainly not in accountability.