That's just covered the seven aims of accounting. And it brings us almost to the end of this course, time to summarize the Theory of Constraints, throughput accounting, and Lean Accounting. What have we learned? Well, I hope we've learned a lot. But in particular, we've learned that the Theory of Constraints, throughput accounting, and Lean Accounting, are all concerned with measuring and managing the flow of work through business processes. And the argument is that if we increase the flow, we increase the opportunity for profit for the business process or the value stream, because we have created more capacity to do work in the given timeframe.

We've also learned that every business process has at least one constraint that might be resources or equipment, policies and procedures, people in their skills or the market. We've seen that the Theory of Constraints and throughput accounting folks on identifying and removing constraints in the process. We've also seen that the concept of flow suggests that a business should be organized by a process, which are called value streams in the lean philosophy. What else have we learned? We've learned that throughput accounting is defined as a management accounting system that seeks to maximize the return on bottleneck activities. And that's according to the accounting dictionary.

We've also seen that throughput accounting argues that a business process can be managed with just three measures combined into four KPIs as we saw earlier, I'm not totally convinced by that as they're all financial KPIs, but that's what throughput accounting argues. Lean Accounting, by contrast, offers a broader palette of tools, and a more holistic outlook on the value stream as a whole process and a particular focus on customer value. Lean Accounting aims to support the lean philosophy fee with a particular emphasis on customer value flow and engaging people in the process in continuous improvement. What more have we learned? We've learned that Lean Accounting argues that financial measures and tools must be simple to collect, analyze and understand, since it's the people who work in the process, who are the ones that are best placed to improve it. And as well as lean performance measures, the two key tools of Lean Accounting are the weekly box score, and the value stream profit and loss account.

The box score provides a sort of balanced scorecard view of the process and is used in performance management, improvement and planning. And remember, the box score is a tool of weekly performance improvement. We monitor the data weekly so that we can take prompt action on issues and work to continuously improve. Most importantly of all, we've learned that Lina can Counting argues that cost is related to the rate of flow of work through the business process or value stream. And if we can stabilize the flow, we stabilize the cost of operation. By improving the flow of work, we reduce costs.

And critically, we create capacity to do more profitable work. This means that Lean Accounting emphasizes measures of flow and process stability, because those are the key to improving profitability. And Lean Accounting provides a structure that enables us to justify the investment in improvement by showing the increasing contribution that improving the capacity of the process brings to the business. To summarize then, what is the heart of Lean Accounting? It's defined processes with clear customer purpose. It's aligned cost centers.

It's an understanding of flow, value, Process Performance and their impact. On cost. Its weekly reporting of key process measures, particularly a flow, quality and service. It's empowered improvement teams working on the process. Its management focused on the key drivers of cost and value. And it's an understanding that creating capacity by improving the process and increasing demand by focusing on improving customer value equals increased profitability.

And finally, how do Lean Accounting and throughput accounting compare or relate to financial accounting? Well, I want to say that throughput accounting and Lean Accounting and not financial accounting, they provide a different approach to management accounting and decision making, based on the philosophy of flow. However, they do not prevent an organization preparing its financial accounts in any way that it wishes. Nonetheless, the same accounting system will have to serve both masters and this raises an number of issues. Firstly, changing the cost center structure of an organization to reflect value streams means that the routines that you have for preparing financial accounts will have to be reviewed and revised. Secondly, the value stream profit and loss account is not the same as a profit and loss account prepared under financial accounting rules.

As we've seen, the value stream profit and loss account does not include corporate overheads, and the other and attributable costs. And thirdly, the value stream profit loss account and the book score are not intended to be financial statements. Instead, they're designed to drive action. Your financial statements should be prepared from source systems rather than from these tools of performance management and improvement. That is everything we have to cover in the course. I would like to thank you for your time, but please take some extra time to look at the test your knowledge Part Two and also at The assignments that I've left at the end of this course.

But thank you for your time so far. I hope you've enjoyed this course. I hope you've learned a lot from it. My name is Ross Maynard, and I hope perhaps you'll look at some of my other courses. Thank you for your effort. Goodbye.