Question

The changing roll of the management accountant and management accounting information

The roll of management accountant has changed considerably over the last few decades from being primarily a ‘number crunching’ function, recording and reporting on a diverse range of aspects of a company’s current financial health status, to a much more valuable broader strategic roll, vitally important in planning and decision making.

Requirement

Discuss this statement with reference to the changing business environment that has led to substantial changes in how management accounting operates and outline what you have found to be the current roll that the management accountant is required to perform in a large organization.

Answer 1

ANSWER 1

The field of management accounting has evolved considerably with reference to current market conditions . In 1980s management accounting function was located at the lower end of the information supply chain. Now it is perceived to be at the highest end of the same. Information value chain refers to the people and processes involved in collecting data, designing the information system, analysing the same and using information in formulation and execution of the strategy. Management accounting has moved from transaction and compliance orientation to that of strategic business partner - to be steward of corporate performance management, planning and budgeting; champions of corporate governance process, providing risk management, internal control, and financial reporting at the time of great change; and experts in cost management methods that help the organisation to become more competitive and successful.

CIMA observes that management accounting combines accounting, finance and management with the leading edge techniques needed to drive successful business.

Role of the management accountant in present scenario

Management accountants’ responsibilities have shifted, and are still shifting, to a more valuable position within the company. They are shifting from, pejoratively spoken, simple number crunching—or, to put it more mildly, the recording and reporting of diverse aspects of an organization’s current financial health status—to a close partnership with the management and other decision-makers, assisting in strategic decisions, business risk analysis, or financial planning or forecasting, for example. The value management accounting is contributing or adding to the organization is generally increasing.

The role of management accountant include collecting, recording and reporting financial data from several units of an organization, observe and analyze their budget and suggest their funding and allocation. This includes estimation of cost of raw material, labor, manufacturing, sales and advertising, social media networking, lobbying and company’s internal operation cost. A management accountant need to coordinate with all concerned departments to make an overall analysis of company’s functioning capital and availability of funds and then he or she has to report all the information to senior management and board of directors

The role of a management accountant is thus, very crucial for a firm’s well being. His role and responsibilities are so huge that even a single miscalculation or underestimation of any business plan by a management accountant can put a company’s future in danger