TQM, also known as the Total Quality Management system, is an accounting practice followed by enterprises globally. According to this concept, organizations can produce goods and deliver them with fewer defects. This practice is also considered as a \”lean business practice\” that allows enterprises to have continuous improvement along with just in time production and just in time inventory management.
TQM covers the entire organization right from management to department heads, managers, and other employees. Under this practice, employees are motivated to produce goods with higher quality and at the same time, find faults in the process. Managers are supposed to find inefficiencies and defects in the process and also contribute to the improvement of these processes by implementing new techniques or methods.
Lately, organizations have become wary of the importance of their employees in gathering performance-related details. The employee is by far considered to be the most important resource in the company and no more tagged as \”auxiliary.\” The performance of a company is determined by the way people interact and work with each other. If a TQM is inevitable in accounting, then it is required to gather useful information about all users. Currently, the financial accounting system does not capture necessary information for and of employees. As a matter of fact, not until June 1997, France was the country that started maintaining a social balance sheet that captured all social information of users. The consequence of this initiative was that the social balance sheet comprises of various information of users such as their salaries, social expenditure, etc. The objective of this social balance sheet is to have continuous improvement, which is the fundamental of total quality management. This also further extrapolates to the effective planning of human resources and always have monitoring and comparison of all data.
Just like the point, as mentioned earlier, is about TQM in accounting related to human resources, you can implement TQM in the account, which is related to the environment. It implies the implementation or combination of managerial accounting and financial accounting, which leads to a new accounting concept. Some people also call this as green accounting. However, the interpretation of green accounting can be different in varied contexts. At a country level, green accounting is considered to be the process of keeping a check on the accounting of natural resources. This, at a holistic level, has a macroeconomic view. This entirely talks about the consumption, quality, and quantity of natural resources. However, in financial terms, green accounting is related to the financial forecasting and computing of environmental costs and associated liabilities. In the case of managerial accounting, the concept of green accounting is all about computing investments that help in economic decisions.
In either of the cases, TQM plays a critical role because of it helps countries or organizations to effectively manage the resources and compute it at the right time for effective data population and subsequent decision making. Total Quality Management is all about improving the efficacy of the country or the organization to bring them to a level where the number of defects is minuscule, and productivity is optimum, which can be easily accounted for.