Analysing the change in the role of the management accountant

Analysing the change in the federal agency of the prudence controlThis get to is pore on critically evaluating the tenacity of the change in the mapping of the c ar controller from conventional explanation partings to that of a strategical planner and patronage better half.The work of Johnson and Kaplan (1987), titled Relevance lost has prompted a drill-down on this question bea. Though nearly of the researchers agree to the changing component of the caution controller (Burns and Baldvinsdottir, 2005 Cooper and Dart 2009 Al roundabout 2000 Chenhall and Langfield-Smith2007 Siegel1999 Kerby and Romine 2005 Vaivio1999 Ittner and Lacker2001 Ax and Bjornenak 2007Bhimani 2006Roslender and Hart 2002). The importance the tralatitious component part still awaits vital to a nonher(prenominal)s, and should serve to complement the tonic-sprung(prenominal) techniques or the change. (Bromwich and Bhimani 1998 Burns et al. 1999). some others atomic number 18 of the view that history is still a relevant part of the future or the changing trend. (Fleischman and Funnell 2006 Luft 1997Beaman and Richardson2007).The type of placement as hale as the direction may also check over the nature of change. Yazdifar and Tsamenyi(2005). This change does not take the same form in organic laws, more than(prenominal)over differs in pattern. Sulaiman and Mitchell (2005). With the usher in economical miasma, some researchers are fifty-fifty advocating a return to the old ways the tralatitious portion, (Baldvinsdottir et al (2009).The runner section of this work go away in that respectfore review these views presented and try to evanesce a comparison between these views to see if the role of the worry restrainer has actually changed and to what extent. This result be do drawing support from literatures. It pass on immediately be followed with some of the new roles the counsel comptroller is fetching up in organizations. on that pointafter th e position of handed-down story utilisation in this new trend of events bequeath be discussed. This ordain enable us to kat once where to place the traditional be role, whether it has lost its public-service corporation and should be totally discarded or should serve to compliment the new roles.Next to that, some of the new techniques in guidance invoice that organizations are adopting, the factors that are driving the change in role as well as their significance to the new role will be discussed. Conclusions will then be drawn as to the counseling accountants roles change.The changing role of the attention accountant.Johnson and Kaplan (1987) are deemed to charter set the sail in this wrinkle with their book titled Relevance lost the rise and fall of trouble history. These strong terms used by them has prompted or necessitated a bevy of research work in this direction. They betoken that the existing form of steering write up lacked the know-how to meet up with t he dynamic billet surround. Their argument was support by citing technological advancements, culture technology, as well as international and domestic competition as reasons making the existing uses inadequate.According to an bind published in the Journal of Accountancy (Most Companies Want Their CPAs to Be crinkle Strategists, Survey Says, 1996), much more is now being demanded of the solicitude accountants at heart organizations. Their jobs are going beyond the preparation of monetary statements as explanations and interpretation are now required of them of the information they contribute. The management accountant is wherefore a high-level last support specialist.Kerby and Romine (2005) argue that for management accountants to remain a relevant part of their organizations, there must be a change in stress from the traditional report practices which involves the counting, abbreviation, interpretation and origination of financial information. They advocate that the management accountant should be versed with friendship about changes touching the personal line of credit of his organization and imbibe qualities that would enable them take to the woods as full-fledged business partners.Smith (2007) opined that the focus of the management accountant within organizations is now shifting to the external environment. That the management accountant is no more uniformed of what happens externally to his organization, He now looks both inwards and outwards.Cooper and Dart (2009), give support to this view that, management accountants are moving from being information domiciliaters to supporting the decision making. Siegel (1999), illustrious that management accountants were before now not knobbed in the actual decision-making growth, but acted in support of the decision makers and later got informed of facts. But the role of the management accountant had changed and greater part of their time was being dog-tired as internal consultants or busi ness analyst within their companies. comparable most of the other writers he attributes this changing role to the advancement in technology which he states has freed the management accountant from what he describes as automatic accounting. He stated that the new role of the management accountant now involves a lot of direct contacts with people throughout their organizations, and that they are more involved in decision making and cross-functional teams. This he termed evolution from military service internal clients to being business partners.The management accountant as strategic planner and business partner.The central message of this work has been on the management accountant assuming the role of strategic planner and business partner as opposed to the traditional role of corporate cop and attic counter. The management accountants role has evolved and is shaping up into a strategic financial planner and manager of information. The management accountant is said to be having les s(prenominal)(prenominal) to do with the routine accounting practice. (Siegel 2000, Cooper and Dart, 2009, Latshaw, A. and Choi, Y., 2000).New areas of focus of the management accountant include the development of financial plans, information technology systems management, parcel in the formation of business objectives as well as observe results and keeping up with marketing objectives. Others are management and organization of workforce, contend advisory role in operational decisions, programmes and projects. (Feeney and Pierce, 2007).For the management accountant to function effectively as business partner, certain attainments must be acquired. This will include the quality of analyzing and processing oral and numeric data into significant information. This should be buttressed by the ability to work effectively in a team. (Curruth, 2004)As business partner, the management accountant combines both the traditional role of protecting the assets of the business with a new role o f summary and participation in decision making in the business administration.(Kennedy and Sorensen, 2006).Caron (2006), draw steps that should be taken for the management accountant to assume the position of a business partner. They includeActing as operation and fellowship expert.He/she should be able to provide lift out practice information and strategic skills.Should be able to put to practice the familiarity acquired in developing strategic management plans.He/she should be able to muster the human resources at his disposal.He/she should be able to disseminate accounting information effectively.Management accounting the position of the traditional role.Although Johnson and Kaplan(1987) opined that the traditional accounting role of the management accountant had lost its value and arrive at argued that it is no more relevant to the dynamism of todays world, not everyone believe their opinion is best for management accounting, and have thus expressed their reservations. ( Bromich and Bhimani 1989 Burns et al 1999 Yazdifar and Tsamenyi 2005).Baldvinsdottir et al. (2009) are of the opinion that a return to the traditional or mechanical accounting methods is of great importance especially at this period of economic down-turn. They argue that although the sparking plug about the changing role of the management accountant, a lot of the traditional accounting role has relatively remained the same over some(prenominal) decades.Luft (1997) is of the view that history serves as a platform for understanding the present that the lapses of the present could actually be alleviated by referring back to history.Fleischman and Funnell (2006), while agreeing with Johnson and Kaplan, that it is important that management accounting reports provide management with information that will aid them in minimizing cost and breakd productivity, argue that although these activities are advancing looking, they have to be based on what they described as intragroup dependenc e between the past and future.They insist this is necessary because of the uncertainties and instabilities associated with commercial environments, conjugated with the intricatsies of management. That, management accountants in the course of severe to make the information they provide more reclaimable to their organizations should bear in mind that this should be done in observation of necessary ethical issues.Beaman and Richardson (2007) found out in their research that accounting practices within organizations are being confined to the traditional role, instead of the expected role of decision support and problem solving.There has been the acknowledgment of the wide use of traditional accounting techniques in most organizations as opposed to the supposed expectation of radically new advanced(a) accounting techniques being adopted by these organizations. ( Burns and Scapens, 2000).Emerging techniques in management accounting.Some relatively new trends/techniques have emerged wi th the aim of tackling the inadequacies of the traditional accounting methods. Some of them have been lauded as the new champions of management accounting solution providers in organizations. (Cooper and Kaplan, 1991). Although these techniques are highly praised, their adoption and murder may not have been as widely accepted as the hype associated with them. (Collier and Gregory, 1995 Roslender and Hart, 2003).These techniques includeActivity based costing (ABC) The advent of ABC has changed the practice of cost allocation requiring that management accountants develop more analytical skill to tackle the complexities of allocating overheads to different cost objects using cost drivers. (Burns and Yazdifar, 2001 Byrne and Pierce, 2007 Anderson, 1995). ABC make the management accountant an essential part of the decision making process by focusing on pertinent information needed to improve firm murder financially and market wise. (Kennedy and Affleck-Graves, 2001). Kaplan and Anderso n (2004) however noted that organizations have abandoned ABC because of its failure to capture the complex nature of their operations, the delays of implementation and the cost effect which are usually too expensive.Balanced carte du jour (BSC) The balanced scorecard enables the management accountant to strategically measure performance and develop a framework for the strategic measurement and management systems (Kaplan and Norton, 2007). It changes emphasis from financial aspect to embracing customer, internal and as well as learning and growth factors of organizations. (Kaplan and Norton, 1996). This has altered the role of the management accountant placing him strategically as a decision support specialist. (Latshaw and Choi, 2002). BSCs are adopted by firms for strategic performance measurement, but the outcome of these measures is usually developed to gouge operational strategy, however it was noted that organizations often fail in trying to put BCS into a particular use (Wier sma, 2009). Atkinson (2006) noted that the BSC has been found insufficient from empirical results of its proceedss.Strategic management accountingStrategic management accounting (SMA) SMA shifts the focus of management accountant to non-financial factors external to the organization. (Simmonds,1981). It demands that the management accountant be knowledgeable in topics like performance indicators development, value chain analysis as well as capacity cost management. It broadens the scope of the management accountant beyond the firm to strategizing for competitive market and opportunities. (Whiteley, 1995). SMA requires the management accountant as a member of the cross functional team which his role now embraces to bring to bear relevant information and expertise that will aid decision making. (Roslender and Hart, 2001). The management accountant now addresses the impact of other non-financial activities, the cost position of competitors, and evaluation of rival products and service s. These activities have placed the management accountant in the significant role of strategic planner and business partner.(Whiteley, 1995 Langfield-Smith, 2008).However, Roslender and Hart (2003), noted that what constitutes strategic management accounting is still not clearly defined. Collier and Gregory, (1995) opined that the level of implementation of strategic management accounting may defer in different economies. That is, the economy determines the strategy and functionality of the management accountants.Enterprise resource planning (ERP) ERP requires the management accountant to have big(a) knowledge that will enable him to provide information that will technically meet the needs of the firm. It also demands that the MA be versed with knowledge of business functions related to production, marketing and information technology. For the management accountant to contribute going with all these functions, he needs to build a unfathomed inter-personal and social skills. (Bart on, 2009Pierce and ODea, 2003). It may however reduce jobs, creating unemployment.Enterprise resource planning (ERP) enables the management accountant to track production by job, work center, and activity (Zimmerman, 2009720). However, respondents to research carried out by Knnerley and Neely (2001) were not sure the ingress of ERP to their organizations had made any noticeable impact.Factors driving the change in the role of management accounting.The usefulness of management accounting has come under interrogation following factors like automation of factory processes and procedures, information technology, competition, and globalization, complexity of business among others. Some of these factors and their significance will be discussed briefly.Information Technology (Carruth, 2004 Beaman and Richardson, 2007), noted that information technology has enabled management accountants to take more responsible roles in their organizations. The management accountant is now able to save t ime in his analysis and interpretation of information. The management accountant helps in presenting data in a form that makes them relevant and useful for managerial purpose. This involves strategizing and being involved in the decision making process. Granlund, M. and Malmi, T. (2002) It has changed the nature of information and placed decision making on information provided by the management accountant. (Atkinson et al. 1999).Automation requires the management accountant to develop more analytical skills and to be able to provide such(prenominal) information that will enable firms take decisions and adopt such strategies that will help them stay in competition. (Kerremans et al., 1991). Automation is advantageous in lowering promote cost, but may create job losses. (Mantripragada and Sweeney, 1981).Other factorsOther notable factors driving the role change in management accounting include the emphasis on quality, intellectual capital, more customer focused organizations, increas e in overhead cost, less of direct labour cost, and priority on environmental and external issues. These factors have helped tailor the management accountants role to that of a strategic planner and a business partner. The management accountant now takes a more proactive role in knowing and providing solutions to strategic issues in his organization. The issue of competitive business environment which is closely related to globalization is another major factor affecting the way management accounting functions are handled in organizations.ConclusionAlthough there have been needs for the change in emphasis on the role of management accountant, this change has not been absolute. This is because the cost and complexity of applying these new techniques have made their adoption slow.The introduction of new techniques in management accounting and the impact of various factors have made the management accountant more focused on non-financial aspects of organizations and has widened the scop e of activities external to the organization, making him a useful part of the decision making process. However recent issues following the economic downturn has suggested retention of part of the traditional role in junto with new techniques might be more useful. ( Balvinsdottir et al., July/Aug. 2009)Moreover, the importance of these new techniques and the benefit they provide to organizations cannot be overemphasized. These new innovations have made the management accountant more flexible, a solution provider and an important part of the organization as business partner and strategist, restoring relevance. (Johnson, 1992). It is noteworthy that though many are the advantages of implementing these new techniques, some organizations still stick to traditional accounting because it is less complex to implement, saving time.