"There are three kinds of lies:  lies, damn lies, and government statistics." 

Variously attributed to Mark Twain,
Benjamin Disraeli,
Alfred Marshall
and several other dead people.

Anyone who has worked with numbers knows the end results can be manipulated if one tortures the numbers long enough.   Washington's smoke-and-mirrors number crunchers are infamous for this type of hocus pocus.  As the cost of everyday items like gas, food, medical expenses, education, etc continues to rise rapidly, do the Government's sanitized statistics for CPI, GDP and unemployment really make sense?  Of course not!!!  Very few people understand that the government formulas used to calculate economic statistics are constantly changing!  Yup, every year the government changes the formulas ... usually in a way to make themselves look good. I won't get into the details of hedonics and other statistical trickery but if you were to use the government formulas from 20 or 30 years ago to calculate CPI, GDP and unemployment, you would get very different and very disturbing numbers.  John Williams (http://www.shadowstats.com/) contends there is rampant data distortion - the real unemployment rate is 4-7% higher than what Washington claims, inflation is 5-9% higher and the GDP is actually 5-6% lower (which would put us in a recession).

But it is not just the public sector which distorts the numbers; it is also quite common in the private sector -- specifically, corporate finance.  The pressure to make the numbers and threats from bosses can result in exotic number massaging and some very creative accounting.  Even with SOX, this nonsense continues.  CFO.com recently published an article titled An Anatomy of a CFO's Agony which is a case study of one CFO's relentless, exhausting pressure to hit the numbers and the accounting cartwheels required to make ends meet.

Within Finance, potential skullduggery does not stop with accounting but also includes metrics -- the act of collecting data about systems and processes - and then reporting them in dashboards. Metrics allow you to track progress toward top goals, alleviate key pressures, and solve key challenges ... BUT figuring out which metrics to gather and how to gather them accurately is crucial despite Dogbert's consulting advice:
 
DILBERT: © Scott Adams/Dist. by United Feature Syndicate, Inc 

Even worse than pointy-headed bean counters gathering metrics just for the sake of gathering metrics is gathering stupid metrics that can drive unintended behavior.  Let me give you a great example in Accounts Payable - a true story of a really dumb AP productivity metric that led to unintended consequences. 

I was at a company a few years ago where they actually measured productivity using a ruler.  The dreaded ruler was used to measure the size of paper stacks on employees' desktops.   The thinking was that if the stack was small, the employee was being very efficient.  What was the unintended consequence of this metric?  AP Clerks learned that if you store invoices in your desk drawer ... you become a lot more efficient.  The "ruler" productivity metric was just a stupid lie and led to all sorts of visibility issues where invoices kept getting "lost" in desks, payments were late, discounts were lost, procurement and suppliers were unhappy, etc. 

So what are the AP metrics that should be measured to promote the right behavior?  And how and when should these metrics be gathered?  Check out this extremely popular webcast with Jon Casher where he reveals the 10 Must-Have AP Metrics.

-Rakesh Shukla