Lean Accounting, Fat Problem? A Critical Analysis of Lean Accounting’s Value

Abstract

Lean accounting is an accounting system that is designed specifically to facilitate the application of lean manufacturing. It is considered a new tool among the various accounting methods available to management. As a managerial accounting method, the purpose of lean accounting should be to provide valuable, insightful information to management for decision-making. However, lean accounting sometimes fails to serve this ultimate purpose as a managerial accounting alternative. We conduct a case study of Toyota to examine lean accounting’s value. The analysis shows that lean accounting tends to be short-term focused, which may jeopardize a company’s long-term growth prospective. Lean accounting is also incapable of providing accurate product cost information, and therefore is unable to support a strategic decision-making process. Traditional standard costing and activity-based costing may be superior to lean accounting for long-term planning and decision-making. The potential exists for a dual system with lean accounting for tactical short-term information and either standard costing or activity-based costing for strategic long-term information.