Definitions for TrueValueMetrics
In the TVM system, the basic principles of consolidation accounting apply. TVM keeps complexity to a minimum so that community level socio-economic performance can be easily understood and have value to the public, especially in the community.
The consolidation technique makes it possible for complex organizations to aggregate their financial reporting so that a single report gives a fair representation of the underlying operations. What is powerful and useful for the corporate style accounting is equally of importance and useful in developing metrics for the community. For organization accounting the idea of consolidation is to be able to present in one report the combined activities and results of many entities or units. For TVM the idea of consolidation is the same. A simple consolidation report can summarize the outcome of many different activities and organizations in a community.
Roll up and drill down. Community is a place ... and all communities should “add up” to a larger place, that my be a district, or a state, or a country. In this perspective of community there is no spatial overlap. Within a community there may also be neighborhoods ... and within neighborhoods also blocks. Community may also be based on a group interest ... an affinity group. This may overlap the community defined by geographic area. A note of caution ... the “roll-up” or aggregation of affinity groups is complex and should be done carefully and rarely used as a national or global aggregate.
Consolidating statements. In corporate accounting a consolidating statement is used to help analysts understand how the data for the consolidated reports were aggregated, and to give a profile of the performance of the organization. The same sort of report is useful in the community to show what entities in the community are creating wealth and which are not. In organization accounting, consolidating statements show how different units make up the consolidated results. For TVM a consolidating statement shows similar information. A consolidating statement shows what is working and what is not.
Rules about consolidations. The principles of consolidation accounting are quite clear. However law and practical complexity make consolidation accounting difficult, and in turn less and less useful. In corporate accounting there are strong rules about how consolidations are done ... but the strong rules are also complex and subject to many interpretations about what is permitted.