A set of financial statements reports the results for the entire organization. It seems difficult to me to use the financial statements to identify the incremental effect of any particular participant in the organization. For example, how much effect does executive Jones have on the Earnings Per Share of the company? Earnings Per Share is for the entire company, while executive Jones is one of several thousand participants in the organization. Nevertheless, the compensation committee of the organization seems to use financial statements as the criteria for bonuses. Required

a. Describe why it is difficult to use the financial statements to show the incremental effect of an organization member?

b. What alternatives to the financial statements are available to evaluate organization members?