Advanced management accounting offers various tools and techniques of accounting which can be used by the users to get better understanding of situations which are faced by them during the course of business(Baldvinsdottir,Mitchell and Nørreklit, 2010). In this report it has been stated that what are the roles and responsibilities of management accountant and how they likely to change as per various organisational situations. Various concepts of strategic management accounting and application of various techniques has been mentioned therein. Strategic management is helpful in making decisions regarding future goals and present situations in a way which is necessary to attain various goals and objectives which have been desired by organisation. Concepts mentioned in this report has been supported through statements of various authors.
How the role of management accountant is likely to change
Management accounting change is referred as the change in expectations of a management accountant. There are some drivers which changes the expectation of management accountant. These changes and change in role of accountant have affected both the professional field and academic accounting literature in past few years(Burritt,Schaltegger and Zvezdov,2011). There may be some issues which can impact over the working environment related with this field. As now a days as stated by some authors technology has become a major factor which changes the roles and responsibilities of various employees.
Management accountant also need to implement certain technological factors in performance of his duties so that they can deal with their responsibilities in an efficient and professional way. Accountant require to make his working skills flexible so that in case where situation changes and earlier methods to solve those problems are not efficient enough then in such case they can change their method to deal with the adverse and challenging situation. Innovations are made in form of flexible organisational technologies.
Management accounting deals in management of organisational funds which are used in various projects(Cinquini and Tenucci, 2010). So its become the responsibility of a management accountant to find the best alternative regarding finance which has less cost and less obligations so that organisation can smoothly run their operations in a way which can assist it to achieve predetermined targets and objectives.
As stated by the author, factors like technology, techniques and flexibility of concepts are some factors which changes the role of cost accountant in an organisation.
The role of management accountant helps in performing the task in a better way so that they can ensure the financial security of company as well as helps in handling all the financial matters(DRURY, 2013). Along with this it assist in managing overall strategy so that they can attain the success. There are so many key challenges which are faced by the business and management accountant have to adapt the change for improving position of business. Innovation is a advance form of operational system and flexible technology for doing operations and make new form of business enterprise. The staff members of business entity have to do proper developments so that they can attain success. Along with this it assist in improving the value of developing greater versatility for the future. Fluid organisation assumes in a different forms as they are a informal group and helps in achieving goals and objectives. In organisation changes is necessary to gain the new experiences. They have to follow appropriate strategy, structure, process as well as products. In doing the changes in management accounting, they have to do responsibility accounting, budgeting, costing as well as performance measurement. The manager of business entity have to do the changes in strategies which they are following in attaining success(Ferreira,Moulang and Hendro, 2010). Likewise, traditional costing system allocate the overhead to products which are proportional to direct labour content. Firms have to change competitive strategy towards product differentiation as it helps in increasing profit from using the activity based costing. For doing the changes in management accounting they have to allocate proper resources which helps in doing changes and attain goals and objectives.
The application of new MA techniques and information systems calls for additional skill requirement from management accountants. Functions of management accounting supports the decision making of company. The management accountant of the business entity has a authority as well as responsibility so that they can do the proper operations. Along with this they have to use appropriate information as well as data so that they can make a correct business decision. Other important strategic task which include cost and financial control, planning as well as managing budgeting operations and profit improvement(Granlund, 2011). Management accountants assist a teams to solve intricate problems as well as improve existing processes, which helps in improving skills to organise and analyse oral and quantitative information, particularly in cross-functional team meetings. They have to do appropriate reconciliation so that they can attain lead to the role of management accounting which has changed in recent years so that they can enhance growth. They have to do fully-fledged strategic planning which are responsible for planning, analysing, classifying and controlling costs. Along with this they have to do proper coordination and attain best results by the strategy formulation as well as have to do strategy implementation so that they can attain targets(Kapferer, 2012). They have to use appropriate management tools and techniques so that they can not face any problem. If facing then they can easily resolve the problems so that they can reap leading position in the market.
The likelihood that wider adoption of strategic management accounting and application of associated techniques is likely to lead to improved organisational performance
Strategic management accounting is all making strategies and formulation of various plans so as to maintain the way to achieve goals which are decided by owners of entity. It deals with the overall development so that the productivity and profitability can be increased. There are a few strategic management techniques and methods which are helpful in improving performance of an entity. It provides direction towards various objectives of entity and suggest the best alternative technique or methods to deal with the situation(Kaplan and Atkinson, 2015). Managers can develop policies through which different available resources of firm can be allocated on plans or projects. As per various authors, accountants develops various techniques to deal with the organisational issues and problems so that they can make a way to get out of such situations. They have developed a number of models and approaches which an entity in drafting of strategies and policies. These decisions are not framed in way which can be classified in those categories which have rigid plans. Managers and accountants frames such decisions so that if any loop is there, then such gap can be filled up through feedbacks of there superiors and subordinates. They work in accordance with these decisions and strategies so that they can increase market value of cited firm. Further they can ascertain market trade off and trends with help of research and analysis so that operations of entity can cop up with such market scenario.
Strategic management accounting have system methodology which defines the process through which accountants can make proper strategies for effective management(Lukka and Modell, 2010). The systematic approach to management problems assists management in providing a better framework for analysing organisational problems and to getting access over their solutions. System methodology includes certain steps which are mentioned below :
Input : In this step information and data which are collected through various research and surveys are analysed during performance management and solution for organisational issues. Data and information which is collected through surveys must be relevant and reliable which means these data must be related to financial and non financial aspects of cited entity(Modell, 2010). Many authors have suggested that surveys are best method to get data for betterment of organisational procedures so that they can deliver best product which is desired by their customers. They can get information regarding financial aspects such as which source of finance is to be utilized for which project so that it can generate maximum cash outlay. As finance and funding must be cost effective so that they can meet their other obligations. Relevancy of information depends on the capacity of data in assisting the managerial personnels in decision making process. If management accountant can use such data for taking decisions regarding financial and non financial decisions then such information can be considered as relevant. On the other hand a data is considered reliable if it error free and the source from which it has been gathered is a valid source. Proper control over research process is to be made by cost and management accountant so that data can achieve required level of accuracy(Parker, 2012). Data can be collected from two category of sources i.e. Internal and external sources and these are mentioned below :
Internal Sources : Internal sources to gather information are considered as more reliable as compared with the other source i.e. external source of data collection. As in this it is know that who have provided such information, time of information or period for which such information belongs is also known. What are the assumptions are there while selecting such data. This source of data collection is cost effective as system for collecting data is already exist in organisational structure. Internal sources of data collection are considered as less effective as its scope is narrow.
External Sources : External sources of data collection are less reliable as they are outside the organisational structure. But they are more reliable as they have a wider scope to collect data in comparison with internal sources. But its time consuming as well as it is not economical.
Process : A process should be formed through which cost accountant can improve their productivity and accounting management. A team is formed in this steps which assist accountant through its opinion and expertise(Shah,Malik and Malik, 2011). Various tools has been advised with the help of such tools accountant can initiate certain steps which provide better solutions. Further through such process a control can be made over various function to ensure proper results.
Output : Output is the result of various processes which are running inside an entity. Mostly when there are several processes inside a firm then output of one process is input for second process. A formal reporting system is implemented in this step through which narrative view can made over the whole system and to take decision over distribution strategy.
It is a method through which management team of cited entity can attain its objectives and they can fulfil their responsibilities(Vaivio and Sirén, 2010). Further they can fulfil the desires of stakeholders. This process includes certain elements like :
- operational decision and decision related with strategic process.
- It also focuses on ability of management and their performance.
- It also deals in controlling the system.
- Control can be related with acquiring feedback so as to conduct changes which are required.
- Control can also relates with feed forward which means comparison of planned performance along with forecast. Which is organised so that operations can be corrected out before it fails.
Extent to which career in management accounting role is suitable
Management accounting provides a wide scope to personnels. As a person can learn various techniques and methods to deal with financial problems as well as he can learn about how to deal with non financial issues(Van Helden and Northcott, 2010). Better mathematical knowledge and good computer operating skills are required to handle job of management accountant. Other than this a sound knowledge of cost accounting and regular accounting is necessary so as to maintain the financial data of any entity. Management accountant advice to the senior level managerial personnels in financial and other business related operations. A management accountant performs a series of task to ensure financial position of cited entity in a good condition. As high responsibilities provides high level of technical knowledge. There are lots of opportunities a person can get as a cost accountant or management accountant. They are considered as the key elements of the organisational structure which decides the way through which organisation can proceed towards their objectives and goals(Ward, 2012). While working in an entity as a cost and management accountant a person can learn about :
- Practical approach to cost accounting and its techniques.
- Financial planning.
- Managerial skills
These types of technical knowledge can provide better skills to deal with various issues. So that they can handle various organisational issues and problem which can impart the growth of entity. A management accountant can perform many task in any firm such as :
- Taxation and its effect over financial structure of entity
- Management of assets
- Strategic planning
A cost accountant or management accountant can work as a staff accountant, internal auditor and accountant for affairs related with taxation. There are a lot of opportunities for a person who is working in department of management accounting.
In the above mentioned report as per the various statements given by authors and analysis of various concepts propounded by them it can be ascertained that how role of a management accountant in a firm can changes. Further how important is his role in any organisation can be ascertained through this report. A person who seeking for opportunities and self development should opt for career as a cost and management accountant. This report also showcases the adaptation of strategic management accounting and its techniques in various entities.
- Baldvinsdottir, G., Mitchell, F. and Nørreklit, H., 2010. Issues in the relationship between theory and practice in management accounting. Management Accounting Research. 21(2). pp.79-82.
- Burritt, R. L., Schaltegger, S. and Zvezdov, D., 2011. Carbon management accounting: explaining practice in leading German companies. Australian Accounting Review. 21(1). pp.80-98.
- Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a loose coupling?. Journal of Accounting & organizational change. 6(2). pp.228-259.
- DRURY, C. M., 2013. Management and cost accounting. Springer.
- Ferreira, A., Moulang, C. and Hendro, B., 2010. Environmental management accounting and innovation: an exploratory analysis. Accounting, Auditing & Accountability Journal. 23(7). pp.920-948.
- Granlund, M., 2011. Extending AIS research to management accounting and control issues: A research note. International Journal of Accounting Information Systems. 12(1). pp.3-19.
- Kapferer, J. N., 2012. The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers.
- Kaplan, R. S. and Atkinson, A. A., 2015. Advanced management accounting. PHI Learning.
- Lukka, K. and Modell, S., 2010. Validation in interpretive management accounting research. Accounting, Organizations and Society. 35(4). pp.462-477.
- Modell, S., 2010. Bridging the paradigm divide in management accounting research: The role of mixed methods approaches. Management Accounting Research. 21(2). pp.124-129.
- Parker, L. D., 2012. Qualitative management accounting research: Assessing deliverables and relevance. Critical perspectives on accounting. 23(1). pp.54-70.