Management Accountants: Thinking Outside the Box!
Apr 07, 2014
I have been working in a public accounting firm for 21 years. Although I am a CPA, I am also a CMA. When I give my 30 second “about myself spiel”, those who have already heard, know that I never really cared for preparing financial statements or tax returns. Not really the best asset for a CPA firm, right?
Well the rest of my spiel is that, shortly after earning my CPA and my MBA, I earned my CMA. Eighteen years ago that was almost unheard of for practicing CPA’s and many did not even know what it meant. Now the designation is more common, generally with accountants in industry, not public accounting firms. Every single consulting job that I perform that falls under this umbrella of “Management Accounting” is unique and intriguing to me. Whether it’s data analysis, forecasting, product costing, or simply assisting management with financial oversight, it is always new and thought provoking. One of my very first blogs was about “playing by the rules”. Over three years later, I believe it to be true more than ever. To be a true management accountant, you must be very good at working without rules, without structure, without a framework, you must be able to think out of the box!
In the past few years, many governing bodies have tried to put a “framework” around the practice of management accounting. From my perspective, this is nearly impossible. When I try to apply rules to the engagements that I perform, it does not work well. According to Wikipedia,a “simple” definition of management accounting is: the provision of financial and non-financial decision-making information to managers. That is about as vague and broad as you could possibly get.
According to the Institute of Management Accountants (IMA): Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy.
The American Institute of Certified Public Accountants (AICPA) has its own definition, as does the ICMA (Institute of Certified Management accountants) and the list goes on. I am going to go out on a limb here and say that NONE of these definitions has it right on the money and I don’t believe the process can ever truly be defined in just a few sentences. They all address characteristics of a successful management accountant. I believe each of these bodies can continually draft their version of a definition for a management accountant or for “management accounting” as a profession, but it will never be precise; it will never be entirely accurate.
A true management accountant can AND should analyze EVERYTHING in so many different dimensions. This includes historical information: company, financial, industry, geographic and projected trends in the future related to the same dimensions. They analyze financial data and non-financial data. They know operations and try to quantify impacts of everything from non-value added activities to purely developmental to the operations themselves. They act as interpreters for those who don’t understand numbers and how they impact operations. They act as the liaison between the financial accountants and operations and operations and management. They are databases of information for the design engineers and the salespeople. They are the report designers, generators AND translators for the flavor of the day. They ARE the strategic business partners; and EVERY situation they face is unique, sometimes intimidating, always challenging, and provides an opportunity to think out of the box, and help the organization grow and succeed to achieve its overall vision.
Categories: Cost Accounting