Changing Roles of Management Accountants - Essay Example

Changing Roles of Management Accountants Changing Roles of Management Accountants Management accountants’ key responsibilities within an organization have significantly changed over time, involve making available well-timed accounting information to the managers, and employ such information to allow them to formulate knowledgeable business decisions within the organization. This enables them to be well prepared in management and have control functions, in their attempt to outclass the competitors. Such information ought to enable the managers within an organization to be forward-minded as opposed to chronological information. Accounting managers also ought to provide such information that is founded on specific models with numerous concepts that will aid in decision making generically, as opposed to case-based information. Besides, accounting managers ought to provide such information in confidentiality purposely for application by the top officials within an organization that include the managers, shareholders and creditors (Hansen, Mowen & Guan, 2007). As such, with the key changes in today’s business setup, accountants ought to provide such information with key consideration to the managers needs, using the management information systems as opposed to putting more emphasis to the financial accounting principles. Besides, business leader ought to be alert to latent of present advancement in the responsibility of the economic makeover within an organization. Management accounting also aids significantly in presenting management knowhow that rekindle collapsed economic transformation tasks, and produce management accountants’ capabilities in decision support roles, for effective and well-informed decision-making process. Since management accounting is a support role, the accountant may also be responsible in providing assistance in the strategic planning within a given organization (Grabski, Leech & Sangster, 2009). The management accountant serves as a partner, and this aid significantly towards the realization of organization’s set objectives. Management accountant roles have changed significantly to incorporate performance management. As such, the management as accountant has the responsibility of controlling and improving the performance of an organization through their astute administrative procedures. This is possible through the measure and improvement of economic aspects such as the decentralized business units, departments and divisions. Management accountants are also responsible for risk control within an organization (Kader, 2011). Such accountants make this possible through the identification, measuring, managing and reporting such risks to the management, and cooperate in looking for ways of minimization of such risks, towards the realization of the organization’s set aspirations. Management accounting has improved significantly over time, and its effective application within an organization is critical in the current business world since it aids in the provision of well-timed information for the management (Hansen & Mowen, 2007). Such information, if appropriately interpreted and worked upon may aid the management in choosing the course of action in various departments within the organization to enhance their success. Traditionally, management accounting was only involved in the provision of financial information to the management. However, this proved to be insufficient information for the management who required concrete information, both fiscal and non-fiscal, in order to make an informed judgment for improvement. This compelled the management accountants to incorporate both financial and physical aspects of the firms for the management to make informed judgments on the position of their organizations in the realization of their set goals (Hansen & Mowen, 2014). Such incorporated information included the value and process times of their products, clients’ satisfaction, the capability of their manpower, and the performance of new products among others. The improvement of roles from financial accounting to management accounting changed from the communication of economic information to individuals and organizations external to the direct organizational operations. Its successors’ roles now include provision of financial and management information to the managers and employees that directly involve themselves with the firm’s activities. Additionally, former financial accountants placed great emphasis on the mode in which financial information was conveyed (Botten, 2009). Conversantly, the management accountants allow magnificent discretion to design systems responsible for the provision of information aimed at helping the managers and employees in the decision-making process. Prior to management accounting, Strategic organizational needs of numerous business organizations emphasized its need with improved management systems. For instance, a need for cost control led to the rise of costing systems. Another example is where various firms’ needs to adapt to the environment saw an introduction in the accounting systems that sustained adaptability. (Lucey, 2003) The managers’ need for realistic information that aided in their decision-making also prompted the introduction of management accounting. The establishment of numerous firms within the limited market promotes noteworthy increase in the competition globally. As such, this compelled the firms to improve their systems, as well as the decision-making processes. This prompted an improvement in the accounting procedures from the traditional predecessors that faced limited challenges in cost analysis, quality and operations improvements, to management accounting systems that addressed these issues (Sisaye, 2006). This compelled the firms to be relevant only if they upheld superiority in their costs, quality and product capability over their strongest competitors. This was applicable in products’ and service delivery organizations, as well as governmental organizations that were compelled to improve their performance, hence the need to transform from financial accounting to management accounting. Management accounting has also improved significantly with the improvement of both technical and non-technical challenges within today’s world (Foster, 2006). New accounting technologies are now available, thereby simplifying the financial accounting procedures considerably. As such, management accountants have to employ new accounting techniques, with critical consideration of the context within which such techniques emerge, their design and implementation processes, in an attempt to assess their suitability in the ultimate decision-making processes and an improvement in the competitive advantages of such firms. In the 1980’s, the management accountants’ key role was to highlight the significance of the employment of financial information to the management team. However, this has change over time, and the management accountants began to work alongside these employees, in ensuring such information was appropriately employed to boost the efficacy and the profitability of such firms. Such accountants also became responsible for the coordination of various employees and department globally towards the achievement of organizational set goals (Hoque, 2005). Current business settings also task the accounting managers with the role of instilling discipline within the employees, in their bid to ascertain the achievement of centrally determined strategic goals. The earlier accountants did not have a direct link with other employees. However, their role in the decision-making process calls for an increased relationship with other employees in their attempt to provide information for the decision-making processes. Currently, the management accountants create a link between the employees, the management and the stakeholders through the provision of financial and nonfinancial information of their firm. This calls for an improvement in the upholding of their code of conduct. Management accountants have upheld their organizational ethics, and this has aided significantly in improving their relations with other employees and stakeholders both internally and externally. Besides, the management accountants’ ethical principles have also changed. Various accounting bodies have set ethical standards, which such professionals ought to uphold in their careers. Failure to adhere to such ethics poses significant implications to these personnel. This has significantly increased the interrelations within organizations (Hoque, 2005). Management accounting change in improvement roles has resulted rapidly, owing to a number of factors. Such factors include the advancement in technology (Foster, 2006). Modern day technology has facilitated the rapid growth in accounting procedures and decision-making process with such tools as decision support systems and numerous accounting packages. This has significantly reduced time during the decision making process while improving the efficiency of various accounting processes. Globalization that has prompted the decentralization within various business settings has significant impacts to the improvement of the management accounting processes (Sisaye, 2006). Numerous firms have grown significantly and created branches globally. As such, efficient decision-making processes are critical within such organizations, in their bid to foster development and expansion towards the realization of profit maximization within such firms. This calls for advanced and timely decision making processes, hence the need for suitable information from the management accountants. Emergence of various firms that offer competing products and services also offered to compel the management accounting to improve. Higher production processes lead to the creation of high-quality products by various firms, hence a rise in competition in the shrinking markets (Botten, 2009). This challenges the firms to improve in productivity in their attempt to outclass such competitors, hence the need for suitable decision-making processes. The development of the management accounting procedures capacitated this. The role of the accountants has significantly changed from the financial accountant, whose chief responsibility was to provide the organizational management with financial information only for review to the modern day management accountants whose roles have increased to incorporate the provision of fiscal information and assistance in the decision-making process. As such, the management accountant ought to consider various aspects such as production, costs, creation and promotion of new products among others, in their bid to provide astute information to the management that will aid significantly in the decision making process. Additionally such management accountants are also tasked with the responsibility of working hand-in-hand with the management in the decision-making processes and provide apt advice on the course of action towards the improvement of efficiency and profit maximization within a firm. However, though these roles have significantly changed, their traditional fundamental role within business settings has not altered significantly. This includes the creation and availing judicious information aimed at boosting a firm’s competitiveness towards the long-term profit maximization. References Botten, N. (2009). CIMA Official Learning System Enterprise Strategy. Oxford, U.K.: CIMA Pub./Elsevier. Foster, S. (2006). CIMA Exam Practice Kit Management Accounting Risk and Control Strategy. Burlington: Elsevier Science & Technology. Grabski, S., Leech, S., & Sangster, A. (2009). Management accounting in enterprise resource planning systems. Oxford: CIMA. Hansen, D., & Mowen, M. (2007). Managerial accounting. Mason, OH: Thomson/South-Western. Hansen, D., & Mowen, M. (2014). Cornerstones of cost management. Mason, OH: South-Western Cengage Learning. Hansen, D., Mowen, M., & Guan, L. (2007). Cost management: accounting and control. Mason, Ohio: South-Western. Hoque, Z. (2005). Handbook of cost & management accounting. London: Spiramus. Kader, M. (2011). Review of management accounting research. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. Lucey, T. (2003). Management accounting. London: Continuum. Sisaye, S. (2006). The Ecology of Management Accounting and Control Systems: Implications for Managing Teams and Work Groups in Complex Organizations. Westport, CT: Greenwood Publishing Group. Read More