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Foreign Currency Financial Reporting from Euro to Yen to Yuan: A Guide to Fundamental Concepts and Practical Applications by Robert Rowan

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CHAPTER 9

Practical Knowledge

Things You Can Learn

Practical wisdom is only to be learned in the school of experience. Precepts and instruction are useful so far as they go, but, without the discipline of real life, they remain of the nature of theory only.1

—Samuel Smiles

Practical knowledge combined with well-designed systems and processes provides better information and greater productivity. When opportunities arise, though, often it is easier to continue doing what has been done before. You can even fool yourself into thinking that improvements are being made—for example, by upgrading a financial reporting system. In fact, the main change simply could be the appearance of the system, or some incremental “feature improvements.” Even when a new system is implemented for the first time, user requirements tend to drive product selection. Often no step exists to challenge the business process and value underlying those requirements. Minimal fundamental change and less than optimal improvement take place. Cost or organizational issues factor into the outcome too. Regardless, you are simply doing what comes naturally.

Any number of arguments can be made for the inertial state. Analysts and project managers like to rationalize their decisions based on cost–benefit analysis. Other arguments rely on the current process being adequate but the system being inadequate, the available time being inadequate, or a change being too large to undertake given the resources available. Total cost ...

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