Factors impacting the management accounting
Discuss About The Established Management Accounting Knowledge.
The management accounting has not changed much in the last 10 years. There has been a significant improvement in the technology and environmental areas. The traditional management accounting is still valuable but some management accounting techniques were not used as expectation such as activity-based accounting (ABC) and strategic management accounting. The development of information technology has enhanced the management accounting to a higher level. It provides access to the managers to use information in real time. The managers can also conduct the task of accountants by themselves like budgeting and analyze (Van der Stede, 2016). The evolving changes in the management accounting have brought substantial effect on forecasting than budgeting. So, the managers can forecast by themselves. The budgeting was traditional work for accountants.
If the changes in the management accounting are overviewed than the two factors brought change in the operations of management accounting. These factors are external and internal. The external factors force an organization to change it’s internal structure in order to compete with improved technology. The modern management accountants are more involved in the accounting matters than the previous years (Appelbaum, Kogan, Vasarhelyi & Yan, 2017).
The managers require more information than before for the decision making and organization matters for the profitable results. The internal factors like decision making entail advance information and efficient modes to accomplish such tasks. So, these days have the majority of information management accountant and are computerized and easily accessible at all levels of an organization. The managers can easily monitor the performance of accountants easily. The development in the management accounting has replaced the traditional methods where managers could evaluate the progress at the end of the month (Van Essen, Otten & Carberry, 2015). Nowadays the managers can generate information without referring to the financial analysts.
The role of management accounting has increased than before at the corporate, national and international level. The focus of accountants is always to improve the performance and profitability of an organization. The changes in the environment and the economic factors have changed the approach in the recent time. The noticeable change is considered in the form of a great deal of management accounting work which is driven by the need for compliance and control. Now the focus on competitive support has increased than the need for compliance and control. The scope of competitive factors has been increased due to the enhanced competition, greater customer focus, globalization and more. The focus on the competitive support requires management accountants to practice more analytical and the communication skills. The support and process managers have also direct involvement in the decision-making process. They are engaged in the short term as well as long-term planning (Ax & Greve, 2017). They support to provide information required by the organization. The new developments have made management accountants involve directly in the formulation and the application of business strategies.
Scope of management accounting
The demand for the strategic skills is growing among the accountants. The demand for the strategic skills is increasing due to automation in the financial processes. The strategic skills are the process of defining the strategy of the company (Bromwich & Scapens, 2016). It also allocates particular resources to support the strategy of the company. The modern accountants need to develop a T-shaped skill set to prepare themselves for the strategic roles. It embraces the accounting and a financial skill as vertical core but equally adds strategic awareness, business consideration, influencing and leadership skills (Johnsen, 2015). There are various strategic skills which are essential to the career success of accountants such as:
- Improve and inspire others
- Exhibit high reliability and honesty
- Solve problems and investigate issues
- Drive for outcomes
- Persuade powerfully
- Cooperate and promote teamwork
- Build connections
It is an ability to plan for the future. The strategic thinking is a capacity to prepare schemes and invoke ideas to cope up with the changing business environment and the challenges. The management accountants who adopt strategic thinking believes in learning changing takes place in the business environment, seeking advice from others, afraid to take risks and aims at organizational goals.
The strategic thinking has provided a different focus for the accountants than other members. The accountants have become more forward-thinking in their daily roles. The organizations achieve more power and support for the overarching strategies of the business. The flexibility of accountants has increased and expects ways in advance to add inventive and distinction value to the organization (Cramm & Nieboer, 2015). They have also found new sources of motivation and excitement in their work. Earlier the strategy used to focus on the organization only but now it focuses on the ability of individuals to contribute value to the organization.
The analytical abilities include mathematics and statistics. The accountants still perform mathematical calculations to support internal reports of an organization. For instance, the management accountants collect quantitative data from the balance sheets, income statements, and cash flow statements in order to measure the performance of organizational activities. The revenue and expenses are analyzed through business activities. The management accountants also have the capability to determine the budget, utilize funds in order to maximize profits and reduce costs. The accountants can also make use of financial data to support and forecast fiscal requirements for the approved operational initiatives. Basically, the analytic skills comprise the framework for acquiring and shaping the data (Cramm & Nieboer, 2017). It helps to solve problems. The analytical abilities also include skills like critical thinking, solving problems and formulating plans. The accountants take a decision after thinking critically about the financial information. Their critical thinking comes through the attainment of accounting education which allows them to understand the purpose and applications of accounting principles. The accountants are able to quickly review information by making use of mathematical and critical thinking skills. They also know to create and formulate plans to work out a financial plan for the operations of the company.
Required skills for modern management accountants
Changes
The analytical skills are important in developing the successful career of management accountants. The analytical skills have started developing more opportunities for the organizational improvement. The analytical skills stimulate critical thinking and problem solving by attaining, processing and blending information (Cramm, Twisk & Nieboer, 2014). It has enhanced skills and the ability of personnel proficiency level. The analytical skills suggest a plan by using abilities like mathematics and statistics. The major changes are faced by emerging software related to accounts and statistics which leads to organizational improvements. The different methods have been consulted year to year to collect and process information to evaluate the personal proficiency of accountants (Kihn & Ihantola, 2015).
The business acumen is willingness and promptness in understanding and dealing with the business situation in order to attain a good outcome. It is also helpful in improving financial performance and leadership development. The business acumen includes the skills like decision-making, distinguishing traits, financial knowledge, leadership, and development. The business acumen skill enables the management accountant to understand how the moving parts of a company work together to make it successful (Fullerton, Kennedy & Widener, 2014). The abilities given below describe a person having a strong sense of business acumen:
- Sees the big picture of the organization and understands how the key drivers of the business are linked to each other and work to produce profitable growth and relate to the job.
- Have a better understanding of the important communication and data of organization comprising financial statements (Suomala, Lyly-Yrjänäinen & Lukka, 2014).
- Uses the information to make good decisions.
- Evaluates how actions and decisions impact the key measures and the leadership objectives.
- The individuals have efficient communication ideas to other members, managers, management, and the public.
This skill enables a management accountant to follow a logical evolution which helps to make the right decisions in order to drive the best business output for the particular organizations (Granlund & Lukka, n2017).
The changes in the last 10 years have acknowledged better the reality of the situation. The business acumen shares the new vision and has started managing the expectations in a better way. The accountants have started learning new behaviors and started creating a new culture. It has become a multidimensional approach which comprises training people and enabling a process which can facilitate members in an organization (Lavia López & Hiebl, 2014). Now the business acumen requires customization at each level. The accountants are seen to support and integrate across the marketing sales management and sales representatives. It also creates greater accountability for the sales force.
The management abilities enable accountants to manage others effectively. The management skills include motivation, problem-solving, professionalism, communication, technical skills, and innovation. The managers motivate employees which help to increase productivity and employee satisfaction. The problem-solving skill helps to overcome several problems which arise at the workplace. The analytical skills enable to know which is relevant to the industry and the ways of gathering data. It interprets the critical industry data. The professionalism skills help to provide exceptional service to customers with a professional attitude. The communication has a crucial role in communicating effectively (Longenecker & Fink, 2015). The communication maintains lines of communication with the associates. It also helps to resolve employee disputes. The technical skills have a major role in achieving a higher level of success. The technology creates reports and drafts presentations with the Microsoft Office. It manages social media accounts and the marketing campaigns. The managers also support employees and customers. The innovations help a company to stay at the top by developing new products and services. It generates fresh ideas for the marketing campaigns. The research models are also developed to test new products (Messner, 2016). The innovations are helpful in redesigning systems in order to increase productivity and functionality.
Analytical Abilities
The management abilities are not only becoming expert in the financial matters but also in the teamwork capability. These three stages define the role of management accountants and how it has been changed in the last 10 years:
- Firstly, the management accountants have to be an expert in the technical knowledge which enables them to modify information.
- Secondly, the accountants are required to learn other business knowledge such as marketing, information technology and more (Otley, 2016).
- Finally, an efficient interpersonal relationship is essential to increase cooperation with other members of the organization.
The accountants should improve their interpersonal skills in order to gain knowledge of productivity and administration (Quattrone, 2016).
The knowledge is a concern for the organization as it depends for success. The appropriate knowledge in the management accounting and operations is the process of creating, capturing and utilizing knowledge to enhance the performance of an organization. The accountants are involved in the management of organizational knowledge as knowledge is reflected in the business performance (Ragas, & Culp, 2017). The appropriate knowledge includes the skills which it does not have currently. It adds value to the organization through the effective use of organizational knowledge. The accounting management includes acquiring, sharing, retaining and utilizing knowledge. The knowledge can be formal and informal. The management accountants use accounting knowledge to better perform organizational functions. The proper knowledge in the management accounting includes general business knowledge, expertise up to date technology, communication skills, leadership abilities, customer service orientation and specialized expertise. The general business knowledge includes the accounting and finance functions. It is important to predict the business functions and understand how the accounting role impacts the organization. The up to date technology brings enough skills to the job of accountants (Self, Self, Matuszek & Schraeder, 2015). The accounting automation has become popular in the accounting companies. The outside training is also taken by the accountants to advance their current position.
The accounting technology has changed as it started using the skills like advanced excel, ERP experience, Microsoft visual basic skills, visual basic capability and knowledge of quick books. The communication has improved through email, telephonic conversations, meetings, and presentations. The role of accounting professionals has increased with the collaborative personality. The knowledge has increased by simply paying attention to the professional situations. The management accountants have become ambitious to develop new sights and manage projects (Shields, 2015). The accountants have demonstrated good customer service by understanding the needs of clients.
Conclusion
The role of changing management accountants is good for their profession. The developments are taking place in accounting and finance which plays an important role in the successful economy. The role of the management accountants has moved to another level. The introduction of techniques and the technological advances have brought the new software which has made work reliable and faster for the management accountants. It is always in need where the markets are competitive. It has been observed that management accountants have become more involved in the business processes. They also have demonstrated a strong business understanding. As the processes have changed over the years, so the role of management accountants has also changed in order to meet the need of changing business. The accountants are anticipated to think forecast in order to add value to the organization. Nowadays, the approach of management accounting has moved towards analyzing, inferring and providing information for the decision making process. The ethics and honesty are given importance for the accountants to conduct business activities. The accuracy is important in evaluating data. The skills help accountants to think critically and be good at problem-solving. The management accountants think logically in the business settings. The good personnel skills are required to close the communication gap. It is apparent that the management accountants equip themselves for the new role in the changing business requirements. The professional accounting bodies should update management accountants and update them in order to cope up with the new IT systems and business strategies. The weight has increased for the soft skills and interpersonal skills of management accountants. It is necessary to identify the changes taking place in the profession and identify the accounting skills for the success of the business.
Business Acumen
References
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