Chartered Institute of Management Accountants

Task 2

Changing role of management accounting

With the non-expected hike in corp orates and services that are related to finance scope of management accounting has increased to a great extent. There are now more opportunities for accountants in this field as introduction of better tools, standards, methods and practices is done which has facilitated management accounting to deliver better results to user.

Developing data and models –

Unlike the traditional accountants who only use to do the analysis of the finance now their role is change. They have to develop better facilities with the available information of the organization and accordingly design the models that can be followed within the firm. It has a positive impact on the policies and strategies of the firm.

Technological assistance –

Now the accountants has the understanding of the distinct applications too which further raise their role in an enterprise. They direct the management to spend on such technologies which are better for the firm and ensures that implementation of it is done in the most appropriate manner.

Decision maker –

More of the management accounting jobs are now business oriented now and is not just restricted to finance. They have their contribution in almost all the distinct sections of company and has become trusted advisers and strategic partners which shows the changing role of management accounting in today’s scenario (Fouché, 2013). Now they work alongside to the managers and advise them on how better results can be achieved from the same resources. It shows the growth in their scope which has added more responsibility to them.

Changes in the dominant factor – 

Earlier management accountant in was limited to only the internal functions and analysis of business which shows that it has limited scope. Now the scenario is changed and it is evident that MA has its stake in both the internal and outside affairs of the business. It led to more demand of attributes from the accountant as only having the financial understanding is not enough. They now need to be easy with uncertainty, strong logical talents, constant learner and has tough management skills.

Table 1: Key transitions in MA practices.

Relevant Literature

The changing role of management accounting has its major role in the business operations, and is a result of its historic need of reformation. According to Soin and Collier, 2013 all those modifications which are made in this concept are not unplanned but are driven from the surroundings. Globalized rivalry has demanded effectiveness in the operations which are possible with the assistance of knowledge that is provided through management account to the mangers.

The new look of this practice has rapid changes which has facilitated commercial units with benchmarking, value chain and creation, fall in the total cost of inventory, target costing etc. It reflects the alteration made in it from being just a mechanical aspect that involves limited activities of budgeting and creating few reports to being an information provider too. With the increment in more rivalry business now lays emphasis on improve standards which are supported with controlled cost and are capable of fulfilling the desires of the market. For same accountant is demanded who is capable of fulfilling all these different demands which shows that the upcoming of management accountants is influenced by how they adapt and counter to the altering and developing technologies.

Skills expected in CIMA pillars

Charted Institute of management accounting is known to deliver best in its field. The pillars of same are linked to one another which are enterprise pillar, performance and financial pillar (Pietrzak and Wnuk-Pel, 2015). Each one of these demands variety of skills and are discussed in the following report.

Enterprise –

It has a significant role in business. CIMA accountant need to have the attributes of making it sure that finance is managed as per the requirements and goals of the organization. Ability to negotiate and to influence is also another requisite. Effective leadership skills need to be managed in same so that the work force can be motivated to work in a particular manner. For same dynamic leadership styles need to be adopted which is not common in all.

Skills of practicing directive leadership style needs to be present as there is no choice with eth work force in the accounts and has to follow the guidelines. Not everyone is capable of being autocratic and hence this skill is one which must be present. CIMA account should be effective enough to know how to react in the distinct situations. Skills of logically justifying the decisions taken are mandatory as business rely much on them and take high risk on the basis of their suggestions

Finance –

In an enterprise there are many actions and decisions taken on daily basis which demands much of expert advice and strategic analysis. It is expected from a CIMA accountant that he/she is capable of analyzing the external factors of business which has their influence on the operations of corporate. Understanding of risk management also need to be there as only then it can guide business with what steps it can take to mitigate the danger (Ahid and Augustine, 2012).

Complete knowledge of taxation, accounting information systems should be present which are required on daily basis. Company need to evaluate its position in the market and for same under the financial pillar accountants should have the ability to resolve the distinct complexities of finance. regulatory framework needs to be managed as per the factors of external surroundings and also same has to check the performance pillar results too.

Performance –

It is a huge demand that is inclusive of many aspects which are together evaluated so that overall results can be determined. Strategies are formulated by the different pillar but to check that weather it is realistic or not is part of the performance pillar. It has to be capable enough to make the budgets which further demands the knowledge and application of costing. Skills for understand the priorities of expenditure has to be there as they need to assist the business with making choice of capital expenditure, cost management and administration of performance (Paulsson, 2012). One should be able to motive the followers and other in the organization by following the different theories of influencing people.

Skills per level

The whole course of CIMA is divided into different levels and each one step has different offerings for the individual. On completing every level, the qualified person gains more skills and become capable of performing more. Henceforth, expectations from them are raised every time they cross one step. In order to understand how skills at each step differs following discussion is done.

Certificate –

This is the basic or the primary level of CIMA. It is the step through whcih entry in same is taken. Employers do value this also although not much accounting knowledge is found at this level.  People skills are also developing here linked managing them and how to motivate them. One has the skill of leering so that own understanding of distinct concepts can be raised. All these assist in carrying out the job smoothly so that the final objectives are achieved.

Operational –

This is the next level in CIMA which is equivalent to NQF Level 6 with the SAQA ID: 24406. Technical skills are developed here which are inclusive of the financial accounting understanding reporting. Planning and controlling are the other core skills developed which helps an individual in monitoring and evaluating the risk from business (Goretzki and Strauss, 2017). Planning need deep analytical skills and capacities of evaluating the different alternatives that are available to business. CIMA accountant must be capable of providing the accounting information to its user which is free from any error and has covered all the important aspects of the business. How to report the superiors also need to be developed so that flow of information is done in an appropriate manner.  

Management –

This is the another level of this profession. It consists of distinct pillars which were discussed above i.e. enterprise, performance and financial pillar. At this stage an individual is a complete charted accountant and hence needs to have the most important skill of explaining the financial terms to other in common language that can be understood by a common man. Also he/she must be successful in establishing the link between the long and short term goals of organization by dividing the final target of enterprise into short term goals which can be evaluated on regular basis. People skills are also found here at this stage through which the work force is influence to behave in a particular manner. Effective communication is adopted through which all the quality data is spared in the organization on time and quick actions are hence taken.

Strategic –

This is the final level of CIMA. It develops the skills in individual to formulate the strategies for business which can lead business to next level. It is an important skill as lots of analysis needs to be done and involves much risk (Lavia López and Hiebl, 2014). Organization leaders must be able to get the assistance from this level accountant to formulate their plans of how the predicted risk can be managed. Skills of how business connections can be developed are found in person which is another benefit for the enterprises as they learn better ways of running in a competitive world.

Conclusion

From the above report this has been summaries that the trends in accounting are now changed. It is not just limited to finance but has spread to the whole business. CIMA is a famous institution which is known for delivering the quality training to the accountants. There are different levels in which the whole learning is divided and each level offers variety of opportunities to person which further add more skills to them.

References

• Ahid, M. and Augustine, A., 2012. The roles and responsibilities of management accountants in the era of globalization. Global Journal of Management and Business Research. 12(15).
• Fouché, J.P., 2013. A renewed call for change in accounting education practices. International journal of educational sciences. 5(2). pp.137-150.
• Goretzki, L. and Strauss, E. eds., 2017. The Role of the Management Accountant: Local Variations and Global Influences. Routledge.
• Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized enterprises: current knowledge and avenues for further research. Journal of Management Accounting Research. 27(1). pp.81-119.
• Paulsson, G., 2012. The role of management accountants in new public management. Financial Accountability & Management. 28(4). pp.378-394.

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