Traditional methods of accounting don't begin to capture the value of knowledge, relationships, and intellectual property that exist in today's business environment. Employees are hired and retained, not just for the hours of robotic-type service spent on an assembly line, but for the intrinsic value they bring to a company through their brain power, connections, skills, and personal resources.
Barry Libert, a director with Arthur Andersen, sees the traditional accounting methods as being outdated for the New Economy. "Relationships, customers, employees, suppliers, vendors, partners -- they're assets," Libert claims. That may seem like old news, but the fact that businesses are now trying to figure out ways to account for these assets means a potential new arena for accountants.
Will companies attempt to place a monetary value on intellectual assets? Will the companies of the future be required to create two sets of financial records, one using traditional methods and other using New Economy methods of accounting?
Another new type of asset to value is the amount of time customers spend on the Internet. Companies with an Internet presence are finding that the amount of time users spent at their site translates directly into revenue.
Libert states that companies should find ways to measure "anything that creates value." The Securities and Exchange Commission apparently agrees. The SEC has created a commission assigned with the task of finding a new system of measuring value in the corporate world.