Cutting edge accounting — Philosophy : “Upholding the Principle of One-to-One Correspondence”

This time, Inamori* spoke about the above motto in Kyocera philosophy.

What Inamori said is quoted with “”.

 

“(Mr. Inamori once shared an episode about a Japanese trading company that colluded with a customer company to book fictitious sales and then erased those sales at the next closing of accounts.)

I believe that a company’s accounting figures must be created by its management.

But they are not to be fabricated through wrongdoing; they are to be created by the leader’s determination to generate that much real revenue.

In reality, however, those numbers are often crafted to suit convenience by manipulating vouchers and journal entries. From micro and small businesses to the largest corporations, there are many managers engaging in practices tantamount to cooking the books.

It is impossible for paperwork to move when there are no goods.

Above all, permitting window-dressed financial statements must never be allowed.

That is why I have argued for the necessity of the one-to-one principle.

I established a principle of one-to-one correspondence so that even the president cannot commit fraud—in other words, to bind management itself.

From the outside as well, this should serve as proof that the company conducts fair closings, demonstrating corporate transparency.

To enhance transparency in corporate management, this one-to-one correspondence principle is extremely important.”

To actually put into practice the principle Mr. Inamori states here and to raise corporate transparency in today’s environment, I believe the following elements are necessary:

 

 

 

Let me now explore each of these in greater depth.

 

1. Build a double-check mechanism into accounting.

Words of Mr. Inamori

“If a thoroughly reliable management system is established in accounting, it will prevent people from committing fraud.　Even if some wrongdoing were to occur, such a system would limit it to a minimal level.

However, such a management system does not need to be complicated or cutting-edge.

As long as it is grounded in a management philosophy that consistently pursues what is universally right as a human being, a very simple and primitive system based on principles such as “one-to-one correspondence,” “transparent management,” and “double-checking” is more than sufficient.

→ My Comment

Most business owners hire tax accountants or CPAs with the goal of reducing their taxes.

Few presidents would go out of their way to say, “Let me hire a tax accountant who will strictly check me.”

As a result, accounting staff are often left with wide discretion, and this makes it possible for numbers to be manipulated.

That is why, no matter who is in charge of accounting, it is crucial to build in a double-check system. This kind of attitude is essential in management.

 

2. Make full use of AI and IT.

Words of Mr. Inamori

“It seems that the sales representative did go to ask the customer in person, but because he was timid, he could not firmly request the customer’s seal on the delivery slip, and ended up leaving it as it was. When even one weak-willed person like this is involved, it can lead to a disastrous situation.”

→ My Comment

In our real estate industry as well, I often hear stories about companies or employees who fail to provide attentive service or who respond in a careless manner.

The same was true during the bubble era: once money alone begins to circulate, the quality of services provided by people and the quality of products inevitably decline.

Today, with an even more severe labor shortage, it is difficult to replace employees even when their quality is poor. Moreover, the current system makes it extremely difficult to dismiss workers.

In such an era, when we can no longer rely fully on human performance, the emergence of IT and AI suggests that leveraging these technologies has become increasingly necessary.

By making full use of IT and AI, we can also better enforce principles such as “one-to-one correspondence.”

 

3. Character check　

Words of Mr. Inamori

“Incidents where respectable adults embezzle funds occur almost every year.　And almost without fail, presidents say things like, ‘He worked diligently for decades and I trusted him, so I am shocked.’”

→ My Comment

In fact, tools such as Sanmeigaku and card reading can reveal a person’s character and inborn temperament.

A disposition to manipulate things behind the scenes

A tendency to draw others in, form factions, and bend the group to one’s will

A fixation on wealth or prestige

An inclination toward lying

By closely analyzing information such as a person’s date of birth, these tendencies can be seen with clarity.

In many small and mid-sized companies, the accounting function is often entrusted to individuals who may exhibit some of these traits.

Especially for SMEs, there are few ready substitutes, so scrutinizing character in detail before assigning someone to accounting is difficult.

However, if we understand a person’s aptitudes and inborn nature in advance, we can devise countermeasures—such as enforcing thorough double-checks and carefully implementing segregation of duties.

It is best if people have a keen eye for judging character, but that is not always the case.

At such times, I believe it is useful to make objective assessments of individuals and grasp their traits by drawing on disciplines like Sanmeigaku.

 

 

 

 

* Mr. Kazuo Inamori, the founder of Kyocera, KDDI (one of the top tele communication companies in Japan) and the top of revitalization project of JAL. As a well-known Japanese entrepreneur, he has been sharing his experiences and management know-how with managements of small to middle companies in Japan.

 

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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