|
Developing
the Role of the Management Accountant by Bill Murphy, Ian Herbert
and Richard MS Wilson
1. Introduction
Since the mid-1980s Management Accountants have been subjected
to major criticism concerning their relevance to the information
needs of managers. Management accountants face growing difficulties
in ensuring that the accounting processes, methods and techniques
can cope with the pressures for change. This third article continues
a series of discussions about the evolving financial function with
an exploration of the developing role of the management accountant
using recent literature from practitioner-orientated sources. A
fuller version of this article is presented in on the project’s
website at www.roleof-finance.com.
The existing thinking expressed in the accountancy press and in
texts is that management accounting and management accountants should
be concerned with the use of techniques and information systems
designed to maximise the functional utility and relationships based
at the level of the individual e.g. Principal and Agent. Organisations
are perceived as entities having a more or less fixed structural
form and a tangible existence which exists independently of people.
The role of the management accountant is expressed in relation to
effectiveness in achieving the goals of the business entity. Exchanges
occur between systems and with the external environment. Accountants
are expected to bridge the gap between theory and practice and to
use knowledge/information systems in a rational and economic manner
for decision-making and control.
It is argued later that these readily available sources need to
reflect more strongly the complexities of the nature of organisations
and the processes by which individuals construct their role and
the role of others.
2. Pressures for change
The pressures for change in the ways managers approach their responsibilities
arise from challenges bringing new competition, such as globalization
and deregulation, and technological and structural changes within
organisations presumably aimed at taking advantage of, or defending
against the use of, any derived competitive advantage. The main
forces influencing the profession include:
Table 2.1 Pressures for Changes
Deregulation and privatization New laws have led to increased and
new forms of competition within the public sector and regulated
industries. The legislation can be accompanied by a need to review
all processes and practices. The impact is seen in structural changes
to the market and to individual organisations; in a reassessment
of the balance between cost reduction and specification of service
level both internally and in the nature of the relationship with
the end-consumer.
Internationalization and globalization Due to the internationalization
and globalization, the location of the business has become irrelevant,
and is thus, transforming the management accountant into a multi-disciplinary
professional having to operate within differing national cultures.
New business process and technologies Developments in technology
are taking the skill out of routine accounting tasks, which is freeing
up time for the management accountant to complete more advanced
work on business support activities such as diagnosing, decision-making
and controlling. Cost reduction techniques, production control and
real time information systems have forced a revision of costing
methods and the integration of accounting information systems and
other processes.
Rise of non-accounting competitors and alliances The deskilling
of accounting routines is moving the ownership of data away from
the accountant, allowing other professions to present themselves
as multi-disciplinary business advisers. Due to this trend professional
accountancy associations are now promoting general business qualifications
or MBAs.
Shifts in organisational structure Companies are adopting more flexible
structures and patterns of working and the accountants have to follow
suit.
The need for more and different types of information Increasingly
businesses are requiring more rapid financial and non-financial
information. Technological developments are deskilling the routine
work of the accountant and moving the focus to diagnoses, advice
and decision-making. The internal organisational consumers of accounting
services are reducing their demand for traditional feedback information
and demanding more advice on operational decision-making, the managing
of people, and the developing of strategic financial plans.
The list of pressures is fairly consistent across texts. May (2002)
adds ‘shareholder power’ to the list, which has forced
two reactions by business, the obvious one relates to delivering
shareholder value but the second relates to intangible assets and
the need to have integrated mechanisms to manage corporate risk.
Linked to this is the requirement for a ‘heightened awareness
of environmental, ethical and social issues’. This suggests
a need to consider beyond the boundaries of the business entity
and to recognise the constant re-shaping of boundaries. As a consequence
managers are considering changing from the predominant command-and-control
management style to one that is empowering, encouraging innovative
and possessing a ‘bottom-up culture’.
The pressures and the switching of score-keeping to score-making
and opportunity seeking, already established in the earlier articles
of this series, require management accountants to broaden the nature
of their role to include e.g.
• Change management
• Environmental management
• Information management/Knowledge management
• Risk management
• Strategic management
The descriptions of these extended roles vary in detail. For instance,
strategic management is articulated to a higher degree than the
others. Change management is not explained but is linked to the
selling the ideas harvested through interrogation of knowledge bases.
Again, knowledge management is rarely articulated but seems to involve
finding ways to extract new ideas out of information. There are
warnings that major organisations may be flagging due to information
overload, which suggests that understanding knowledge management
is a necessary dimension to the role of the management accountant.
However, there is little to indicate the processes the individual
accountant has to undertake in order to fulfil these new roles.
A common theme through the practitioner writings is that technology
is already releasing accountants from data preparing and sorting
and the consequence is an extending of the company’s financial
systems and a restructuring of the accounting and finance function.
However, accounting and computing departments may be having difficulties
adapting to an information-focus, “While it’s clear
that the management accounting profession is moving toward a greater
partnership in strategic decision making, there’s a widespread
perception by many financial executives that the tools and methodologies
haven’t evolved to aid this transition” (Garg, Ghosh
and Nowacki, 2003, p6).
An extended skills base is called for in order to enact the new
roles, once again with little articulation of their meaning:
• Ability to integrate financial and non-financial information
• Advisor
• Analysis and Interpretation
• Business knowledge
• Communications - speaking, listening, sending, receiving
• Decision-making /Problem solving
• Involvement in operations - Management Accountant’s
will need to have a greater involvement in other operations in the
company, to enable them to effectively reduce costs without any
implications to customer satisfaction.
• Leadership and Management skills
• Proactive
• Strategy - Ability to think strategically about long term
plans taking into account the market.
• Team player – Although being a team player is necessary,
it is also highlighted by some researchers the need to be a leader.
• Technology - IT competence
It is clear that the future management accountant, any accountant,
requires specific personal skills/attributes, however, it is unclear
how those skills, and the other more technical skills, can be understood
and used to the benefit of the organisation without the individual
being more aware of the complexities of organisations and the complexities
of interactions between people within organisations.
3. Discussion
Brunsson and Sjöblom, (2001) expressed the concern that “Management
accounting textbooks are prescriptive, rather than theoretical,
and self-referential, rather than related to management accounting
research”. There is a need to differentiate the views of organisation
from views of the individual. Organisations are not entities with
a relatively fixed form that exist independently of people but are
in a constant process of being re-shaped with constantly emerging
patterns of belief and activity. The organisation has “little
existence separate from the ongoing, social, political, cultural
and economic processes of human individuals and groups” (Tansley
and Watson, 2000, p110). The roles of individual management accountants
are being constantly shaped and re-shaped through negotiation.
Organizational research is not being embraced within our University
teaching, nor by implication, by the training and education processes
of the professional accountancy bodies. Writers have the task of
placing their observations within frameworks that help comprehending,
redressing surprise and constructing meaning (Weick, 1995, p.6).
For us, the consequence is that ‘sense-giving’ is the
purpose of the research agenda of the ‘Evolving Role of the
Financial Function’ project. The research process needs to
investigate accountants as they are involved with others in the
relational enacting of business opportunities. It is only through
observing management accountants in the process of their everyday
engagement with others that allows the investigation of intrinsic
processes of the emerging role of the management accountant and
the financial function. It is argued here that unless accountancy
practitioners seek a contextual sense of the processes of change,
they might well be unable to be part of an effective ‘partnership
in strategic decision-making’ (Garg, Ghosh and Nowacki, 2003,
p6).
Bibliography
ACCA Focus - Canada Newsletter, various articles at website http://www.acca.co.uk/publications/canada/
Visited April 2004.
Brunsson, K. and Sjöblom, A. (2001), ‘What We Learn and
What We Teach—and Why’, paper presented at the European
Accounting Association Conference, Athens, 18–20 April.
Garg, A., Ghosh, D. and Nowacki C. (2003), Perceived Losses from
not Implementing Best-Practice Solutions, Strategic Finance, July,
pp.1-6
May, M. (2002a), Transforming the Finance Function, Pearson.
Tansley, C and Watson, T. (2000), Strategic exchange in the development
of Human Resource Information Systems (HRIS), New Technology, Work
and Employment, Vol.15, No.2, pp.108-22.
Weick, K.E. (1995), Sensemaking in Organizations, Thousand Oaks,
Sage Publications.
Ian Herbert is a lecturer at the Loughborough University Business
School.
William Murphy is a principal lecturer in managerial accounting,
organization theory and research methods at the University of Derby.
Richard MS Wilson is professor of business administration and financial
management at Loughborough University Business School.
|
