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Changes to the Role of the Management Accountant

Using appropriate academic literature, critically evaluate the argument that the role of the management accountant has changed in recent years from traditional accounting functions to that of a strategic planner and a business partner”.
Introduction When it comes to the change of management accounting or management accountant, several researchers and scholars have stated the similar view that people cannot describe the management accountants as ‘the bean counter’, ‘the scorekeeper’ or ‘the corporate cop’ in the contemporary age, their new role are performed as ‘a strategic planner’ and ‘a business partner’ within the organization. (Anastas, 1997; Bromwich, 1990; Burns et al., 1999; Byrne and Pierce, 2007; Johnson, Kaplan , 1987; Roslender and Hart, 2002) This essay is aiming to find out how ‘the bean counter’, ‘the scorekeeper’ and ‘the corporate cop’ become to the internal consultant, the strategic planner as a business partner. Before the main body of this essay, the writer makes a hypothesis that there is an inference procedure that causing the change of the management accountants’ role. It is widely appreciated that the business environment has greatly changed in the recent years. Thus that the traditional management accounting is not suitable for the contemporary business, a new management accounting system was generated. Following that there are many new management accounting techniques are required, it directly change the task of management accountants. Finally all these process have caused the change of the role of the management accountant.
In the following parts of this essay, the writer will analyze all the parts of this process respectively refer to the other scholars’ research findings, this is for examine and certify the hypothesis in the last paragraph.
The changing business environment It is not deniable that the business environment has already dramatically changed during the last decades, which is toward a more competitive orientation. It includes many external and internal factors. In the general economic area, the globalization is integrating the world into a global market. It could lead it to an increasing competition. Companies have to pay more and more attention on the customer and market orientation. The development of technology is another factor both in the information system and the methods of production with the widespread use of enterprise resource planning systems (ERP). The change of organizational management structure could affect the business as an internal factor.(Burns et al., 1999) The development of digitisation could also change the business environment, for example e-mail has already replaced the traditional postage and fax to a great extent, which is benefit from the wide spread of the internet. It could reduce the cost and enhance the companies’ efficiency. The new technology could also be applied to the monitoring performance area. For instance, factories could profit from the use of beepers and mobile phones to monitor workers’ performance, while restaurants could benefit from the use of beepers in their operating system.(Zimmerman, 2009) There are also many other elements could cause the market condition changing, such as the commencement of the North American Free Trade Agreement (NAFTA) could decrease companies’ cost among Mexico, Canada and the United States. American and Canadian companies may set their factories in Mexico for the lower labour cost. The same situations have also emerged in China, Vietnam and some other developing countries.(Zimmerman, 2009) The new business environment also bring a huge revolution in the other fields, for example the demand of more quality control, customer-focused, the intellectual capital, automation, increasing overheads, decreasing direct labour cost and more emphasis on environmental and external issues.
The drawbacks of traditional management accounting The traditional management accounting was driven by the external financial requirements but not the internal or actual need. For instance, it fails to compare the cost with the competitors, which is a fatal factor in the business competition.
Tends to be too technical
Many accountants focus on their contribution only in the financial numbers, but ignore the other useful information which the users may require. (Pierce and O’Dea, 2003)
Most companies still use single overhead allocation base
Time Limitation
Pierce and O’Dea (2003) found that most managers complained that the traditional information system cannot provide timeliness information to the users. For example, some managers reflected that even though the financial information could cover almost all they needed, but they cannot use it timely cause the information lag. It could extremely influence their decision making process.
Mainly focus on the internal performance of the organization but ignoring the other activities, such as external and social issues.
Paying too much attention on the manufacturing but neglecting the high cost post-conversion activities.
The change of management accounting A UK research project claimed that management accounting had not changed over six decades in Britain. (Burns et al., 1999) Despite there are some substantial improvement in the technological and environmental areas.(Johnson, Kaplan , 1987)
Several studies revealed that the traditional management accounting system and techniques were still valuable and some new management accounting techniques were not widely used as expectation, such as activity-based costing (ABC) and strategic management accounting. (Burns et al., 1999)
However, the advancement of information technology could enhance the management accounting into a higher level, which means that managers could have a direct and real time access to the information instead of waiting for the accountants sort it out.(Burns et al., 1999) It could make managers conducting the accountants’ task by themselves, for instance budgeting, analyze and calculation. (Burns et al., 1999)
This change has brought a more significant effect on forecasting rather than budgeting.(Hope and Fraser, 1997) This means that managers could forecast by themselves, while budgeting was accountants’ traditional work. The ‘commercial orientated’ gave the British managers a further view on the potential factors which could making profit in a long term.(Burns et al., 1999) It could be considered in the management strategy and interpreting by the non-financial terms.(Burns and Scapens, 1997) It implied that financial information could only provide limited picture, not the whole. Thus there are two possible solutions. The first one is that some new techniques could be used by management accountants to provide a comprehensive view, such as ABC system. Alternatively, the financial information could be kept in a simple way but could be interpreted in the wider background.(Burns et al., 1999)
Based on the previous analysis, the form of management accounting has been changed, but there is no huge difference on the management accounting techniques.
Strategic Management Accounting The strategic management accounting has already introduced in the accounting literature more than ten years. (Berverley R, 1996)It is defined as ‘The provision and analysis of financial information on the firm’s product markets and competitors’ cost and cost structures and the monitoring of the enterprise’s strategies and those of its competitors in these markets over a number of periods’ (Bromwich, 1990) The Charted Institute of Management Accountants (CIMA) also defined it as ‘A form of management accounting which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information.’ The majority of literature in the United Kingdom stress that the strategic management accounting extends the traditional management accounting from internal factors to the external competitors’ information.(Berverley R, 1996)Comparing with the traditional management accounting, it has more external, forward-looking and longer-term orientated and the strategically driven.(Roslender and Hart, 2002) There are three main characteristics of the strategic management accounting were summarized, which are the ‘collection of competitor information, exploitation of cost reduction opportunities and the matching of accounting emphasis with strategic position’.(Berverley R, 1996) Some scholars describe the strategic management accounting as ‘a specific form of approach to the provision of accounting information to management'(Roslender and Hart, 2002)
The new requirements to management accountants As the previous analysis, the traditional management accounting techniques is still essential skills that management accountants should grasp. However, in the contemporary age, there are several new tasks that management accountants should perform.
Before 1980s, the majority of the managers expected the management accountants’ roles performed as a service staff who can provide the ‘satisfying such managers’ information.(Hopper, 1980) The requirements to management accountants are not only about becoming an expert in the financial matters, but also having a broad view in business and good teamwork capability with their collegues.(Burns et al., 1999) Pierce and Bernard (2003) have concluded that the management accountants should have the knowledge and skills in three domains. Firstly, they have to be the master of the essential technical knowledge which could make them have the ability to modify information. Secondly, they also need to learn the other business knowledge, such as IT, marketing. Lastly, a well developed interpersonal relationship skills is necessary by the reason that the accountants have increasing number of cooperation with other staff within the organization. Anastas (1997) has also stated that management accountants have to handle the new information technology software, achieving an average understanding of the business and fluently express their idea both in writing and speaking in order to interact with their colleagues. Anastas (1997) stressed that to achieve the success in the role of internal consultants; management accountants must improve their interpersonal skills and the knowledge of productivity and administration. The strategic management accounting provides management accountants an opportunity to get a position in the decision making team.(Roslender and Hart, 2002) The strategic management accounting requires management accountants having techniques, such as ‘competitor position analysis’, ‘target costing’ and ‘life cycle costing’.(Roslender and Hart, 2002)
The role of the management accountant in organisations Management accountants’ role in an organization has been considerably changed in recent years.(Anastas, 1997; Burns et al., 1999; Byrne and Pierce, 2007; Johnson, Kaplan , 1987; Pierce and O’Dea, 2003; Zimmerman, 2009) Several literature have stated the same views. In the past, when people were thinking of management accountant, they always associated it with some words, such as the scorekeepers, the bean counters and the corporate cops.(Byrne and Pierce, 2007; Zimmerman, 2009) This is because management accountants were not the decision-makers or decision participants; they always played the role as assistants or financial information providers to the real or actual managers in the decision making process. But in 1999, the situation has changed. Increasing managerial accountants began to help their companies to analyze the business as an interior consultant. With the development of the technology, they do not need to use the majority of their working time for preparing the financial reports. They therefore have more and more time to explain or translate the accounting information to the people who need to use these within the organization as a member of the decision making team. Siegel (1999) remarked that ‘the role of management accountants has evolved from serving internal customers into being a business partner.’ Some accountants even changed their title from corporate controllers to business analysts (Burns et al., 1999) A key role of the management accountant is that interpreting the financial information to a more readily comprehensible perception to the internal and external users.(Burns et al., 1999) As it was depicted ‘Information technology is pushing management accountants and financial managers up the ladder as they become advisors or internal consultants to other manager in the company who have access to software manage cost and budgets’.(Anastas, 1997)
Pierce and O’Dea (2003) have interviewed many managers with an opened question that sharing their views of the future role of the management accountants. Their responses were highly consistent that management accountants’ role will be the ‘business partner’. Management accountants should interact with management within several aspects, including the raise of their physical location, the requirement of their team work capability and the understanding of business.
There will be fewer management accountants but they will be at the higher level of management in the organization as a member of the cross-functional team share their view in the decision making process.(Anastas, 1997)
The evolution of the information technology liberated management accountants from the ‘bean counter’, ‘corporate cop’ to a higher level role ‘internal consultant or strategist’ who make the recommendation to guide the decision making process (Anastas, 1997)
CONCLUSION The analysis in the main body reflects the consistency with the hypothesis in the introduction section, but not completely same. To start with, the business environment is changing as the assumption. The business environment is changed to a more competitive, customer-oriented due to the globalization, digitisation and some other changed business conditions. In addition the writer analyzes the disadvantages of the traditional management accounting, which is not applicable for the present system and fulfil the requirements in the new business environment. Following that the analysis of the change of the management accounting shows that although there is a new business environment, but the basic management accounting techniques is still required, it is still necessary. But due to the development of the business, the requirements of the management accountants are not only demand the accountants have the traditional and basic management accounting techniques, but also some new task of the understanding of knowledge in the other business area and a good interpersonal skills for the increasing teamwork opportunities. Hence, the role of the management accountants has been changed from the financial information provider (the basic role) to the internal consultant in the organizations as a business partner. The strategic management accounting system could provide management accountants a higher level to perform their new role to satisfy the new requirements. As Burns (1999) founded that although the role of the management accountants is changed, but they still have to use the traditional management accounting system, some people called it ‘antique’.

Accounting Student Internship Report

Chio Lim Stone Forest (CLSF) was founded in 1985 and it started from a textile centre in Jalan Sultan to the present Wilkie Edge in Sophia road. CLSF is a member of RSM International, the 6th largest accounting and consulting firms worldwide, with 736 offices in 76 offices. Member groups in RSM International unite together to offer their clients the premier quality of services.
In Singapore, CLSF is the first Certified Public Accountant (CPA) firm to be ISO 9002 certified and largest CPA firm outside the Big 4. It has extensive experiences with all sizes of clients but caters best to the mid markets in terms of giving advisory services. It also offers a wide spectrum of business services (see Appendix 1) that caters to every stages of a business’ growth. Their value system which consists of passion, proactive, practical, personal, perseverance, progressive and professional forms the guiding principle of their service delivery.
CLSF has an open platform where there is no bias towards any race, religion and language. Having an open platform is important as it helps to create a harmonious working environment. In terms of the number of employees, it has 572 staff from 17 nationalities, comprising of 19 partners and 15 directors currently (see Appendix 2). With regards to the revenue earned, it is ranked 10th among the member groups in RSM International (see Appendix 3).
In addition, CLSF is committed to being a socially responsible corporation by contributing back to the society through sponsoring book prizes, bursaries and giving donations to charitable organisations.
What makes CLSF different from any big four firms is that it is ambitious-grown oriented. Building on technical competence, proactive client servicing and an obligation to integrity and professionalism enables CLSP to provide value-added services to clients to help their businesses grow. This can be seen from the fact that the number of employees in the company grew by 17% per annum for the past 22 years due to more and larger clients i.e. listed companies.
Description of job/work assigned (500-600) 594 words I learnt to perform audit for an investment holding company (ELC Success Pte Ltd). At the start of audit, I prepared lead schedule using the clients’ management accounts i.e. trial balance report. Using previous year’s template as a guide, I transferred the final audited figures to the last year figures column (2009) in current year’s template and then keyed in current year (2010) figures under the unaudited figures. I would ensure the figures in the respective sections such as cash and cash equivalents tied to both balance sheet and profit and loss report before I start my audit planning.
I read the previous year’s file to have a better understanding of the client and take note of any outstanding matters for this year’s audit. I then proceeded with the completion of planning forms such as engagement risk questionnaire, independence questionnaire, materiality determination form etc to understand the client’s business. Engagement risk questionnaire helps to identify the risk level through factors like ownership, management, business environment, financial and liquidity considerations to determine if we should accept/reject the audit. Independence questionnaire is an evaluation of the company’s compliance with ethical standards and to ensure that there are no threats to independence. Materiality determination form documents the calculation of planning materiality which guides the extent of the audit procedures performed. It enables us to propose either adjusting or waiver audit adjustments based on the materiality limit.
After completing the planning forms, I arranged for an internal planning meeting with my manager. The meeting highlighted any matters that I had to take note for this year’s audit such as investment property, both current and deferred taxes and to review my planning forms at the same time. Once the forms were approved and signed by my manager, I started my audit fieldwork by following the audit procedures closely in the manual audit programme sheets (MAPS) on the various sections like revenue etc. I obtained the analysis of revenue and checked the casts. After which, I agree to the ledger and cross reference the supporting analysis to the lead schedule. I also reviewed and documented the client’s revenue recognition policy. For the section on revenue from the use of assets, I performed rental reasonableness test to test the completeness for the quantity of units of assets owned by the company and checked the total revenue by applying the rates in the rental contract. In addition, I scanned the journals to identify any major or unusual transactions.
After completing the programme sheets on the different sections, I drafted current year’s financial statements, with the help of an accounting guidelines book and previous year’s financial statements. I amended the wordings according to the book and updated the current year’s figures based on the audited figures in the lead schedules.
In addition, I was also taught how to do an accounts strike-off for a company that is winding up (Austro Asia Pte Ltd). The purpose of doing a strike-off is to close and zero-rise all accounts. I had to ensure that all expenses are taken up till the date of the strike-off before closing the accounts. Hence, I would look at the bank statement for any movements in the cashbook. Then, I passed adjustments to record any expenses that were incurred i.e. filing, audit and XBRL fees but not yet recorded in the general ledger for that year. I also did statutory audit to certify that the register of members is accurate and there were no changes to be made. After that, I would prepare and send the confirmations to the directors for approval.
Learning experiences

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