Changes to the Role of the Management Accountant

Changes to the Role of the Management AccountantUsing appropriate academic literature, critic everyy evaluate the argument that the function of the heed accountant has limitingd in recent years from traditional news report functions to that of a strategic contriver and a work partner.IntroductionWhen it comes to the change of wariness news report or focus accountant, several researchers and scholars support utter the similar prospect that people can non describe the steering accountants as the bean counter, the scorekeeper or the corporate cop in the contemporary age, their new routine are per wee-weeed as a strategic planner and a business enterprise partner within the organization. (Anastas, 1997 Bromwich, 1990 Burns et al., 1999 Byrne and Pierce, 2007 Johnson, Kaplan , 1987 Roslender and Hart, 2002) This essay is aiming to find out how the bean counter, the scorekeeper and the corporate cop become to the internal consultant, the strategic planner as a business partn er. Before the main body of this essay, the writer declares a hypothesis that in that respect is an inference procedure that causing the change of the management accountants role. It is widely appreciated that the business environment has greatly changed in the recent years. Thus that the traditional management account is not suitable for the contemporary business, a new management accounting system was generated. sideline that there are many new management accounting techniques are required, it directly change the problem of management accountants. Finally all these process occupy caused the change of the role of the management accountant.In the following parts of this essay, the writer will analyze all the parts of this process respectively refer to the different scholars research findings, this is for examine and certify the hypothesis in the last paragraph.The changing business environmentIt is not deniable that the business environment has already dramatically changed dur ing the last decades, which is toward a more competitive orientation. It includes many remote and internal grammatical constituents. In the general economic area, the globalization is integrating the world into a global food market. It could lead it to an increasing competition. Companies have to pay more and more attention on the customer and market orientation. The development of technology is an opposite factor both in the cultivation system and the methods of production with the widespread use of enterprise resource planning systems (ERP). The change of organizational management structure could affect the business as an internal factor.(Burns et al., 1999) The development of digitisation could similarly change the business environment, for example e-mail has already replaced the traditional postage and fax to a great extent, which is benefit from the wide spread of the internet. It could reduce the terms and enhance the companies efficiency. The new technology could also be applied to the monitoring performance area. For instance, factories could profit from the use of beepers and mobile phones to monitor workers performance, charm restaurants could benefit from the use of beepers in their operating system.(Zimmerman, 2009) There are also many other elements could cause the market condition changing, such as the commencement of the North American Free Trade Agreement (NAFTA) could decrease companies cost among Mexico, Canada and the United States. American and Canadian companies may set their factories in Mexico for the lower labour cost. The same situations have also emerged in China, Vietnam and or so other evolution countries.(Zimmerman, 2009) The new business environment also bring a huge revolution in the other fields, for example the demand of more quality control, customer-focused, the capable capital, automation, increasing overheads, decreasing direct labour cost and more emphasis on environmental and external issues.The drawbacks of tr aditional management accountingThe traditional management accounting was driven by the external fiscal requirements besides not the internal or actual need. For instance, it fails to compare the cost with the competitors, which is a fatal factor in the business competition.Tends to be too technicalMany accountants focus on their contrisolelyion only in the financial numbers, provided ignore the other useful information which the users may require. (Pierce and ODea, 2003)Most companies still use single overhead allocation baseTime LimitationPierce and ODea (2003) found that some buss complained that the traditional information system cannot provide timeliness information to the users. For example, some managers reflected that even though the financial information could cover almost all they needed, but they cannot use it timely cause the information lag. It could extremely influence their decision making process.Mainly focus on the internal performance of the organization but ign oring the other activities, such as external and social issues.Paying too much attention on the manufacturing but neglecting the high cost post-conversion activities.The change of management accountingA UK research project claimed that management accounting had not changed over six decades in Britain. (Burns et al., 1999) Despite there are some authentic improvement in the technological and environmental areas.(Johnson, Kaplan , 1987)Several studies revealed that the traditional management accounting system and techniques were still valuable and some new management accounting techniques were not widely used as expectation, such as activity-based costing ( first rudiment) and strategic management accounting. (Burns et al., 1999)However, the advancement of information technology could enhance the management accounting into a higher(prenominal) level, which means that managers could have a direct and real time access to the information instead of waiting for the accountants sort it ou t.(Burns et al., 1999) It could make managers conducting the accountants delegate by themselves, for instance budgeting, analyze and calculation. (Burns et al., 1999)This change has brought a more significant effect on forecasting rather than budgeting.(Hope and Fraser, 1997) This means that managers could forecast by themselves, while budgeting was accountants traditional work. The commercial orientated gave the British managers a further view on the potential factors which could making profit in a long term.(Burns et al., 1999) It could be considered in the management strategy and interpreting by the non-financial terms.(Burns and Scapens, 1997) It implied that financial information could only provide limited picture, not the whole. Thus there are twain possible solutions. The first one is that some new techniques could be used by management accountants to provide a comprehensive view, such as ABC system. Alternatively, the financial information could be kept in a simple way but could be interpreted in the wider background.(Burns et al., 1999)Based on the previous analysis, the form of management accounting has been changed, but there is no huge difference on the management accounting techniques.Strategic Management AccountingThe strategic management accounting has already introduced in the accounting literature more than ten years. (Berverley R, 1996)It is defined as The furnish and analysis of financial information on the firms product markets and competitors cost and cost structures and the monitoring of the enterprises strategies and those of its competitors in these markets over a number of periods (Bromwich, 1990) The Charted Institute of Management Accountants (CIMA) also defined it as A form of management accounting which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information. The majority of literature in the United Kingdom stress that the strategi c management accounting extends the traditional management accounting from internal factors to the external competitors information.(Berverley R, 1996)Comparing with the traditional management accounting, it has more external, groundbreaking and longer-term orientated and the strategically driven.(Roslender and Hart, 2002) There are three main characteristics of the strategic management accounting were summarized, which are the collection of competitor information, exploitation of cost decrement opportunities and the matching of accounting emphasis with strategic position.(Berverley R, 1996) Some scholars describe the strategic management accounting as a specific form of approach to the provision of accounting information to management(Roslender and Hart, 2002)The new requirements to management accountantsAs the previous analysis, the traditional management accounting techniques is still essential skills that management accountants should grasp. However, in the contemporary age, t here are several new tasks that management accountants should perform.Before 1980s, the majority of the managers expected the management accountants roles performed as a service staff who can provide the solid such managers information.(Hopper, 1980) The requirements to management accountants are not only about becoming an expert in the financial matters, but also having a broad view in business and good teamwork capability with their collegues.(Burns et al., 1999) Pierce and Bernard (2003) have concluded that the management accountants should have the intimacy and skills in three domains. Firstly, they have to be the overwhelm of the essential technical knowledge which could make them have the ability to modify information. Secondly, they also need to learn the other business knowledge, such as IT, marketing. Lastly, a well developed interpersonal relationship skills is necessary by the reason that the accountants have increasing number of cooperation with other staff within the organization. Anastas (1997) has also stated that management accountants have to handle the new information technology software, achieving an average understanding of the business and fluently express their idea both in create verbally and speaking in order to interact with their colleagues. Anastas (1997) stressed that to achieve the success in the role of internal consultants management accountants must improve their interpersonal skills and the knowledge of productivity and administration. The strategic management accounting provides management accountants an opportunity to get a position in the decision making team.(Roslender and Hart, 2002) The strategic management accounting requires management accountants having techniques, such as competitor position analysis, target costing and life cycle costing.(Roslender and Hart, 2002)The role of the management accountant in organisationsManagement accountants role in an organization has been considerably changed in recent years.(Anas tas, 1997 Burns et al., 1999 Byrne and Pierce, 2007 Johnson, Kaplan , 1987 Pierce and ODea, 2003 Zimmerman, 2009) Several literature have stated the same views. In the past, when people were thought of management accountant, they always associated it with some words, such as the scorekeepers, the bean counters and the corporate cops.(Byrne and Pierce, 2007 Zimmerman, 2009) This is because management accountants were not the decision-makers or decision participants they always played the role as assistants or financial information providers to the real or actual managers in the decision making process. yet in 1999, the situation has changed. Increasing managerial accountants began to abet their companies to analyze the business as an interior consultant. With the development of the technology, they do not need to use the majority of their working time for preparing the financial reports. They therefore have more and more time to explain or translate the accounting information to t he people who need to use these within the organization as a member of the decision making team. Siegel (1999) remarked that the role of management accountants has evolved from serving internal customers into being a business partner. Some accountants even changed their title from corporate controllers to business analysts (Burns et al., 1999) A key role of the management accountant is that interpreting the financial information to a more readily comprehensible perception to the internal and external users.(Burns et al., 1999) As it was depicted Information technology is pushing management accountants and financial managers up the ladder as they become advisors or internal consultants to other manager in the company who have access to software manage cost and budgets.(Anastas, 1997)Pierce and ODea (2003) have interviewed many managers with an opened question that sharing their views of the future role of the management accountants. Their responses were highly consistent that managem ent accountants role will be the business partner. Management accountants should interact with management within several aspects, including the raise of their visible location, the requirement of their team work capability and the understanding of business.There will be fewer management accountants but they will be at the higher level of management in the organization as a member of the cross-functional team share their view in the decision making process.(Anastas, 1997)The evolution of the information technology liberated management accountants from the bean counter, corporate cop to a higher level role internal consultant or strategist who make the recommendation to guide the decision making process (Anastas, 1997)CONCLUSIONThe analysis in the main body reflects the consistency with the hypothesis in the introduction section, but not completely same. To start with, the business environment is changing as the assumption. The business environment is changed to a more competitive, c ustomer-oriented due to the globalization, digitisation and some other changed business conditions. In addition the writer analyzes the disadvantages of the traditional management accounting, which is not applicable for the present system and fulfil the requirements in the new business environment. Following that the analysis of the change of the management accounting shows that although there is a new business environment, but the basic management accounting techniques is still required, it is still necessary. But due to the development of the business, the requirements of the management accountants are not only demand the accountants have the traditional and basic management accounting techniques, but also some new task of the understanding of knowledge in the other business area and a good interpersonal skills for the increasing teamwork opportunities. Hence, the role of the management accountants has been changed from the financial information provider (the basic role) to the in ternal consultant in the organizations as a business partner. The strategic management accounting system could provide management accountants a higher level to perform their new role to satisfy the new requirements. As Burns (1999) founded that although the role of the management accountants is changed, but they still have to use the traditional management accounting system, some people called it antique.