Re: Are knowledge managers losing jobs right now? #KMers #discussion-starter #jobs #state-of-KM


Dear David,

I have attended several Intellectual Capital - Knowledge Management conferences. At one of those, we had a panel discussion with a top executive either from FASB or GAAP. She made a very valid point, which you have under no. 8 bellow.

She said that no company will identify and subsequently put freely and deliberately any unnecessary assets into their balance sheets, which would then trigger the appetite of tax people. I remember that after her statement the spirit of the conference kind of collapsed. Nobody was thinking about this point until that moment. But it is true, there is no interest of companies to pay more taxes.



Bill -

I have always described KM activities and resources, projects and people, as investments, not costs.

How do CFOs respond to calling KM efforts “investments?

A bit of background:
(anyone with more current knowledge of accounting practices, please correct me)

I’m looking at this as software & systems for internal use.

By the rules of FASB (Financial Accounting Standards Board) 86 for software systems:
1/ - spending through proof-of-feasibility is expensed
2/ - system construction spending is capitalized & depreciated over 3 years
3/ - after completion maintenance/repairs are expensed

Obviously these rules do not directly address the inconvenient fact that the bulk of KM work is human work, not tools.

There are a variety of forces in play here.

4/ - Accountants are very conservative.

5/ - They do not like to put hard-to-value resources on the balance sheet.

6/ - The intangible aspect of “goodwill” is an excellent example.  Just look at the Kraft-Heinz fiasco where they had to write down $1.2B in “intangible assets.”  Looks bad.

7/ - If software projects  —  an ERP implementation?  —  were put on the balance sheet, the frequency of such large-scale efforts being cancelled is such that it would look bad to regularly write off large amounts of defective “assets.”  Much safer to just dribble the spend through the income statement as G&A.

8/ - It can potentially be dangerous to have juicy assets on the balance sheet… because eventually the tax man will notice & demand their cut.

9/ - Solid software & process management (aka KM) can become more rather than less valuable over time.

A significant conundrum for double entry bookkeeping.

See: H. Thomas Johnson’s Relevance Lost

- David

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