Question

Some individuals argue that accountants should focus on producing financial statements and leave the design and production of managerial reports to information systems specialists. What are the advantages and disadvantages of following this advice? To what extent should accountants be involved in producing reports that include more than just financial measures of performance? Why?

Post

Yes, there are differences and different skills required for managerial and financial accountants, but that doesn’t mean there needs to be a position for each. The main objective of managerial accounting is to produce useful information for a company’s internal use and the financial statements of a company are produced through financial accounting and are designed to disclose business performance and financial health to external users (Ross, 2019). These differences can also be summarized as past and present thinking. Financial accountants provide data from the past while managerial accountants are concerned about estimates for the future. Managerial accountants use the financial accountants data to populate their reports that break down numbers and projections related to departments, products, employees, and customers (Holt, n.d.).

There are people who think the two expertise should be separated. Personally, although there are differences in the activities performed by each accountant, the knowledge required for each is not that different. Hiring two people who basically have the same skills and education to perform two separate things that could be achieved by one person doesn’t seem like the most efficient thing to do. As mentioned, managerial accountants gather most of their data from financial accountants, so I think it would make sense that the financial accountant could just populate the reports for management. They are the ones who know where the numbers are coming from and they understand the general fluxes in each account due to the activity they see every day. Yes, a system created by managerial accountants to generate the reports may not need to understand the numbers to draft a report but having someone who can explain the reports and why ratios are changing or why revenue is decreasing seems like something that would be very valuable to any company. Yes, the accountant may need some more education on information technology, but having knowledge in both fields can be very beneficial. The accountant that knows where the numbers are coming from may be able to program a report better than a managerial accountant because they know what the numbers mean and know what outside users will want from the company performance wise. Knowing what outside users, like shareholders, want from a company is important to know when creating estimates and figuring out goals for the future of the company. So, I personally see no advantages in separating these two positions. To save money and to get better reports seems like a no brainer.

Required:

Agree with the above post by building upon their points or challenge their opinion and provide reasoning for the disagreement.

Answer 1

My personal opinion is that Managerial accountants and financial accountants should definitely be two different positions. While financial accountants are responsible for publishing the data that is happening in the current year, however managerial accounts are more focussed on what will happen to these numbers in the future.

I believe both of these require entirely different skills although it is expected from managerial accountants that they do understand the meaning of the numbers being published by financial accountants. Once they make an analysis of these numbers, the next question obviously comes if the organisation is heading in right direction? And if not, what should be action plans in terms of entering into new product portfolio, more campaigning of products, etc. All these answers definitely require managerial skills which is not there in financial accountants.

Whereas for financial accountants, their prime responsibility is that they gather the correct data and take the right inputs while reaching to the final numbers. Because if the gathered data is incorrect, managerial accountants will definitely not be able to head in right direction. The skill of gathering correct data, inputs that should be included/ excluded is only their with financial accountants and not with the managerial ones.