In today’s business world, accounting is defined as not only a tool for measuring financial figures, but also a foolproof system that can measure and manage the value. This has forced the companies to re-think on their internal processes so that the process also meets the value definition of the customer. Lean accounting can be the answer to all the expectations raised. It is a principle-based operating system which can be expressed in terms of customer value, value stream, flow and pull with minimum interruption, pursuit of perfection, and empowered people. It is a systematic approach to eliminate waste like overproduction, waiting, transportation, inventory, over-processing, etc. through continuous improvement. The current cost accounting system earns profit by full utilization of resources, and is associated with large inventory, long lead time and poor delivery, while lean system earns profit through ‘maximized flow’ on pull from customers and elimination of waste, resulting in superior customer value, good quality, good delivery and shorter lead time. This paper tries to explore the conceptual issues of lean accounting, i.e., its meaning, definition, evolution, need, and also presents a comparison between lean accounting and traditional accounting which helps the readers to understand the term lean accounting clearly.

In today’s dynamic and vibrant business world, accounting is not merely a process that collects, collates, analyzes, interprets and communicates financial information. It is defined as a lens through which decision makers can see through the clouded business world. Accounting is an almost mechanized process that can be used in every realm and is now highly scalable. It means, the accounting process is now robust enough to accommodate any unforeseen development. The challenges in the 21st century are colossal for the manufacturing sector in India. Manufacturers have adopted new technology that contributes to customer satisfaction and standing themselves as supermarkets. It appeals to customers of every type, who are provided with access to a wide range of new products and services. Moreover, worldwide open competition in market has raised expectations of more heterogeneous product choices to be offered to customers at high quality level, low prices and reasonable delivery times. So companies are demanding an accounting system which provides accurate, timely and understandable information to increase customer value growth, profitability and cash flow. Lean accounting can be the answer that meets all above expectations. Maskell (2005) says that it is the general term used for the changes required to be made in a company’s accounting, control, measurement, and management processes to support lean manufacturing and lean thinking. It supports the lean culture by motivating investment in people, providing information that is relevant and actionable, and empowering continuous improvement at every level of the organization. Maskell and Baggaley (2006) reveal that lean accounting fully comply with Generally Accepted Accounting Principles (GAAP), external reporting regulations and internal reporting requirements. It uses lean tools to eliminate waste from the accounting processes while maintaining thorough financial control. The present paper tries to explore conceptual issues of lean accounting, i.e., meaning, definition, evolution, and need, and also presents a comparison between lean accounting and traditional accounting.

Value Relevance of Accounting Information,Evolution of Lean Approach ,Need of Lean Accounting, Traditional Cost Accounting , Conceptual Issues in Lean Accounting