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What's Ahead For Management Accountants?
By Debra Kerby Associate Professor
and
Jeff Romine Associate Professor
What's Ahead For Management Accountants?
Traditionally, management accountants have focused on the tasks of counting,
comparing, recording, and reporting financial information. To remain vital
members of their organizations, management accountants must develop more
breadth. It is imperative that management accountants become knowledgeable
about trends affecting business and finance, prepared to change the types
of tasks they perform, and willing to acquire the necessary knowledge
and skills to function as full-fledged business partners.
Trends Impacting Management Accounting
Management accountants are experiencing evolutionary change in almost
all dimensions of their professional work environment. Increasingly, management
accountants are being asked to become business partners and change agents.
Computer technology and intense business competition are propelling this
change in role from transaction processor to business partner. Will management
accountants be prepared for their changing role in business?
The introduction of the desktop computer enabled accountants to gather
data, perform analyses, and report information in real time. In many organizations,
the accounting department now serves as the information and computer service
provider. The availability of user-friendly financial and analytical software
now allows many routine accounting functions (bookkeeping, financial statement
preparation, etc.) to be maintained by computer. This frees the management
accountant to perform more sophisticated analysis and decision support
activities. Technological tools, such as e-mail, the Internet, electronic
data interchange (EDI), new groups, and Intranets, will shape how information
is reported and exchanged. The implications for management accountants
are tremendous.
As competition has increased, businesses have responded by emphasizing
two new priorities, improving the quality of products and services and
increasing productivity. Many companies have adopted the concept of re-engineering
to achieve these priorities. In many organizations the finance function
has been the first process to be re-engineered, and a common result of
the re-engineering has been downsizing. According to a study commissioned
by the American Institute of Certified Public Accountants (AICPA), the
average cost of the finance function has dropped from 2.2 percent of revenues
in 1988 to 1.4 percent of revenues in 1996. The study further projects
that costs may be reduced by as much as 50 percent in the next few years
and that the number of people employed in finance should drop by one-third.
Those accountants trimmed from finance will likely be individuals who
are unwilling or unable to switch their focus from historical-based data-gathering
activities to future-oriented, decision-focused activities.
Also as a result of increased competition, cost management is growing
in importance. Although cost management is closely related to management
accounting, it is an entirely different field of knowledge. Cost management
techniques, such as activity-based costing, target costing, value-chain
analysis, economic value-added measurement, and life cycle costing, can
be completely separated from the financial reporting system. In addition,
cost management requires in-depth knowledge of an organization's strategy
and production or service delivery systems. It is the user or functional
specialist who is in the best position to collect data and develop cost
management practices. Therefore, growth in cost management jobs will occur
in functional areas and not in management accounting. However, the management
accountant can play an important role in cost management by developing
certain skills. Every management accountant should self-assess his portfolio
of skills and ask if these are talents that he possesses:
- Expertise in systems design;
- Expertise in change management;
- Ability to relate strategy to cost management;
and
- Increased expertise in functional areas.
In an effort to assist AICPA management accounting members with the adjustments
necessary during these evolving times, the AICPA has established the Center
for Excellence in Financial Management. One of the purposes of this organization
is to help CPAs in business and industry prepare for the future.
Changing Role of the Management Accountant
In this age of technology and competition, current and useful information
is the key to business access. By positioning themselves as information
specialists, management accountants can ensure that they will continue
to be involved in management decision making. In addition, management
accountants must develop a thorough understanding of all aspects of a
business, apply analytical skills to the detection of trends and the development
of forecasts, provide insightful advice to top management, and serve as
change agents. Accountants who view their jobs as historical data gatherers
and reporters of financial information may find themselves victims of
re-engineering.
Preparing For the Future
Following are a few tips for students preparing for the changing role
of the management accountant.
- Develop competence in systems analysis and computer
technology;
- Develop facilitation skills, such as persuasion
and communication skills;
- Acquire a broad business knowledge in strategy,
operations, human resources, marketing, finance, and economics;
- Develop analytical skills;
- Learn to the future;
- Develop a willingness to embrace change and assume
risk;
- Complete an internship in business and/or public
accounting; and, of course,
- Master accounting and tax issues.
Flexibility and a willingness to learn are essential ingredients for continued
success as a management accountant.
Conclusion
Now is the time to begin preparing for an exciting and rapidly evolving
management accounting career. The era calls for professionals with an
appropriate balance between technical skills and breadth of knowledge.
This balanced preparation can be accomplished only through a carefully
structured educational program and continuing professional development.
Those who are prepared to meet the challenges of a management accounting
career will be valued members of their organizations.
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