Uses of Information and Communications Technologies in Management Accounting - Essay Example

Uses of Information and Communications Technologies In Management Accounting Introduction The role of management accounting is to assist in business building by working from within the organisation. The management accountant designs and evaluates business processes, prepares budgets and forecasts, implements and monitors internal controls, and analyses, synthesises, and aggregates information to drive economic value for the organisation. Management accountants support business decision making, planning and control. Management accountants are business partners who directly support the company's strategic goals (IMA 2008). The job of a management accountant requires knowledge of finance, accounting, budgeting, and cost control principles including Generally Accepted Accounting Principles or GAAP. The job also requires knowledge of financial and accounting software applications, government financial regulations, the ability to analyse financial data, and prepare financial reports, statements and projections (HR Village 2007). Information and communications technologies, ICT, play a vital role in supporting the activities of organisations. ICT encompasses hardware and software products; information system operations and management processes; human resources and skills required to use ICT for the production of information; and information system development, management and control. Accountants are expected to have the required level of competence to perform the work required. ICT is one of the core competences required of accountants, even as provided in the GAAP. ICT is affecting the way in which organisations are structured, managed and operated. It is changing the nature and economics of accounting activity (Skidmore 2002). This paper takes a look at the author's personal professional experiences with ICT in the role of a management accountant, how the author's ICT skills have improved personal performance, and how these improved personal performance through the use of ICT has improved the wider organisation's performance from the perspective of management accounting. Using information technology in my profession My role as management accountant involves applying the principles of accounting to analyse financial information and prepare financial reports by compiling information, preparing profit and loss statements, and utilising appropriate accounting control procedures (HR Village 2007). To accomplish my tasks, I use several ICT applications. Standard office applications for word processing, spreadsheets and presentation graphics such as those provided by Microsoft Office are some of the ICT software that I regularly use. MS Word allows me to create professional looking reports and other communication which I can format myself or use templates available within the software. I can highlight important text with different font and typestyle options. MS Excel is also an indispensable tool because it allows me to create spreadsheets with ease. The built-in functions also provide capabilities for calculations with a formula, summarising numeric data, as well as creating graphical charts for easier visual appreciation of trends and distributions. MS PowerPoint is another software I use, especially for easy to understand presentations to management or other non-accountant groups. I can incorporate text, numbers and even graphic images to drive home the points I am trying to make. I also use MS PowerPoint when I orient accounting staff on accounting policies and procedures. I use SAP accounting software for to help me deliver accurate financial reports fast, accelerate cash flows through shorter reporting cycles and receivables, and turn information into effective execution of business strategy so that as management accountant I can be a strategic partner to the business (SAP 2008). I also use Hyperion Essbase, an online analytical processing server, OLAP, to developing custom analytic and enterprise performance management applications useful to my functions as management accountant. For example, I use Hyperion Essbase to develop and manage analytic applications that model scenarios, make forecasts and perform "what-if" analyses (Oracle 2008). I prepare profit and loss statements and monthly closing and cost accounting reports through SAP and MS Excel. I compile and analyse financial information to prepare entries to accounts, such as general ledger accounts, and document business transactions using SAP and Hyperion Essbase, as well as the standard office applications. I establish, maintain, and coordinate the implementation of accounting and accounting control procedures. I analyse and review budgets and expenditures. I monitor and review accounting and related system reports for accuracy and completeness. I prepare and review budget, revenue, expense, payroll entries, invoices, and other accounting documents. I analyse revenue and expenditure trends and recommend appropriate budget levels, and ensure expenditure control. All these I do more easily with the ICT tools available such as SAP, Hyperion Essbase and the office applications. The Internet and its various capabilities are also very useful ICT tools in my profession. Through search engines like Google, I can look for resources that contain developments in my field. Most of the government agencies which have to do with accounting practice have websites and this eases getting updates of government regulations. I can also subscribe to online professional journals and other online professional and industry publications. Email is another very useful tool. I am able to readily explain billing invoices and accounting policies to staff, vendors and clients using email. It also helps resolve accounting discrepancies, because communication can be passed back and forth without the need for face-to-face interaction. When I have to interact with internal and external auditors in completing audits, email is also a useful tool. When I am developing the annual operating budget and consulting with departmental management on the financial aspects of program planning, salary recommendations, and other administrative actions, I also use email a lot. Applying ICT skills to improve personal performance I gauge personal performance by my ability to accomplish work I had agreed to be engaged in, whether it be on the professional or personal level. In my work as management accountant, this means that I consider myself performing well if I am able to deliver what is required of me, which includes conducting accounting processes and procedures on schedule and in a timely manner so as to produce the required information; producing accurate, relevant and reliable financial reports; and producing analytical and recommendatory reports and other documentation when required. In a more personal and private capacity, I consider personal performance as my ability to handle the various pressures I encounter on my time, including those which concerns family, friends, school and other societal groups I am involved with. For both professional and private sectors, I use and apply the information and communication technology tools and skills that I have and are available to improve my personal performance. In my profession, as described in detail above, I use various ICT tools to help me accomplish my work as fast and as accurately as I can to contribute to the value of the organisation I belong to. Without these ICT tools, I doubt that business data can be gathered, stored, retrieved and analysed as easily. Just the simple capability of word processing to correct mistakes by mere type over, rather than re-writing the entire document is already a major contribution of ICT not only in my profession but in all other professions as well. Electronic spreadsheets rather than manual ones is yet another major contribution. What more with accounting software packages which can integrate accounting processes, thereby eliminating the need to maintain multiple manual books of accounts for keeping up-to-date records; or allow built-in formula and calculations to arrive at relevant summarised financial information; or even allow what-if scenarios that aid in producing more sound financial forecasts and budgets. Indeed, ICT tools and skills play a major contribution to my personal performance as a management accountant. In terms of my personal and private life, ICT tools and skills also play a very useful and necessary role. Not only does it facilitate day-to-day life, it also helps to ease tedious personal processes which may impact my professional life. I am able to use MS Excel for my personal budget. I can use email to stay in touch with family and friends. I can send electronic greeting cards without spending much time to buy a card, write a message, buy stamps and mail the card. I can use the Internet to research various interests, aside from accounting I can look up recipes, read the news, watch or download videos. I can also use my personal computer to play computer games. It used to be that computers and information technology were there only as a giant calculator, especially for accountants like myself. But with information and communications technology, it has become an entirely new and wider field encompassing almost all aspects of human processes. The benefits of ICT knowledge, tools and skills in improving personal performance are without doubt. In fact, ICT, if understood and used by all, provides a common ground for communication and understanding between functions, processes and individuals within and without the accounting profession. This would make for improved personal performance all around. Improvements in the organisation brought about by ICT skills and other associated skills ICT today affects the way organisations are structured, managed and operated. Huge organisations integrate business and ICT strategy because ICT is the backbone for maintaining business data and information from which businesses can develop, implement and evaluate business strategies. It is thus mandatory for organisations to preserve and enhance the ICT competence of accountants to maintain the credibility and capability of the accounting profession in supporting strategic information technology initiatives. The ICT skills of accountants not only serve the accountants in the performance of their functions, it benefits the wider organisation which requires the accountants' output. As ICT enables accountants to produce accurate, timely and relevant analytical reports, so is the organisation better equipped to manage its business because of ICT. Management accounting is a highly technical field, but with the accountant's knowledge of software with graphical interface, he can convert highly technical financial reports into a form that is readily understandable by other functions within the organisation, especially those without accounting background. The use of pre-packaged accounting software not only eases the work of the accountant, it frees the accountant for more meaningful pursuits that can provide additional benefits to the wider organisation. This may be in the areas of information analysis and forecasting or in evaluation of new business strategies or newer technologies. The ability of management accounting to store financial data in electronic databases which can be made available to other functions also help the wider organisation in monitoring and controlling the overall business. Data on sales compared with targets, usually analysed by accountants after accounting periods can be made available within the period so that adjustments in marketing activities can be made to prevent target shortfalls. The convergence of information and communication technology, and the ability of accountants to make use of them benefits the entire organisation as accountants can readily communicate information across the organisation. Access to networks, whether the local area network of the business or the inter-organisation network of multinational corporations the accountant in his function and benefits the organisation as well since information can be shared throughout the networks. Use of the internet for commerce between the business and individuals or between businesses, which are part of the management accountant's functions, such as data exchange or fund transfers, are beneficial to the business. The ICT competence of accounting professionals would be positively correlated to the effectiveness of the accounting function of a business. The more ICT proficient the accountants are, the more usefulness they can provide to the organisation for which they are supposed to produce accurate, timely and meaningful information that can help grow the business or prevent failures. As previously stated, management accountants are supposed to produce output that will drive economic value for the organisation, supporting business decision making, planning and control. They are the company's business partners. Since businesses are run using information and through its strategic use, it is necessary for management accountants to have the skills for managing information. And today, this is best done with skills in information and communication technologies that benefit both the accountant and the wider organisation as a whole. Conclusion The use of information and communication technology, which has been around for many years now has already been proven to improve work processes. ICT tools provide ease in handling voluminous data in terms of storage, retrieval and summarising across all professions. The communication component of ICT with examples like presentation software, the internet and email also serve all professions. The benefits of ICT in the management accountancy profession have been discussed in detail and cannot be over-emphasised. ICT will not eliminate the need for management accountants. In fact, ICT enhances management accountancy in that it helps them perform their functions better, help organisations perform better and also provides management accountants opportunities for enhanced and more meaningful pursuits within the organisations they belong to. Works Cited HR Village. 2007. "Accountant Job Description." 5 September, 2008. Institute of Management Accountants. 2008. "About Management Accounting." 5 September, 2008. Oracle. 2008. "Oracle Essbase." 5 September, 2008. SAP. 2008. "Financial Excellence." 5 September, 2008. Skidmore, S. 2002. "Information technology in the accounting curriculum." 5 September, 2008. Read More