Intergrated Accounting a la Francaise: The Perspectives of the Systeme Croise

1. Intergrated Accounting a la Francaise: The Perspectives of the Systeme Croise Eavan Keane Carsten Binnewies Benjamin Gaillard Amy Wheatley Jari Sairinen

2. Summary • Description of the French accounting system • Why do French companies use a « système croisé » • Benefits of this system • Limits of this system Prof. Igor N. Baranov Management Accounting

3. Introduction • Like many countries France has a specific accounting system • In France, there is a distinction between • financial accounting, official and mostly for tax reasons • analytical accounting, unofficial and non financial in order to study cost centres Prof. Igor N. Baranov Management Accounting

4. Requirement in accountancy for French companies • Fixed by the “Plan de Comptabilité Générale” • Include • Balance sheet • Revenue sheet • No cash flow statement • => mostly for tax and control purpose Prof. Igor N. Baranov Management Accounting

5. Description of the Revenue sheet • All charges and products are grouped by nature and not by function or cost centre • Thus they are only classified according to their entry • Criticism • Value added produced vs value added sold • Really hard to compare with foreign companies • No managerial view • Really useful for financial analysis Prof. Igor N. Baranov Management Accounting

6. Prof. Igor N. Baranov Management Accounting

7. Why French companies use a « système croisé » • Big companies began to use this system in the 1980’s • By concentrating the entries in one department • It consists of recording data in two different accounts with two separate double entry • One corresponds to the nature of the operation=> for the income statement • The other one corresponds to the cost centre for the analytical accounting Prof. Igor N. Baranov Management Accounting

8. The next step: integrated system • A triple entry system is used, introducing an extra dimension into the recording of each transaction • As well as the application (debit) and source (credit), the nature, i.e. the purpose or « raison d’être » of the operation • Impact for the company • Reliability of the information • Improve data relevance • Clear overview of the current cash flow Prof. Igor N. Baranov Management Accounting

9. Source: The integration of financial accounting, management accounting and Cash flow accounting, Stowoy and Touron Prof. Igor N. Baranov Management Accounting

10. Benefits of « système croisé » • Allows precise analysis of cost center for the company • Combines both accounting systems (financial and analytical) in order to reduce disparities between the two • Moves from an accounting approach to a management approach Prof. Igor N. Baranov Management Accounting

11. Limits of the system • Implementation can be hard and expensive • A huge upsurge in the volume of clerical work • Traditional mistrust about French accounting from a global perspective • Lack of incentive to introduce this croised system=>many SME don’t have a clear idea of the principles of management system Prof. Igor N. Baranov Management Accounting

12. Conclusion • Given the French accounting system, the Systeme Croise is the best way to implement management accounting. Prof. Igor N. Baranov Management Accounting