The Changing Role and Image of Management Accountants (Coursework Sample)

The changing Role and Image of Management Accountants
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The changing Role and Image of Management Accountants
The changing role and image of Management Accountants over the last three decades
Among the most significant traditional roles of management accountants was the role of relaying the contents of ad hoc reports to the departmental managers and the board (Abdel-Kader, 2011, p67). Nonetheless, nowadays systems that measure corporate performance have come to play and they relay the data directly to the computer of an executive with all the tools required to translate the data into the organization’s KPIs thus able to be compared with the departmental and entire company goals. Since the modern day global economy offers every company almost the same level of access to resources, and business processes are almost similar and meet global standards across different countries, the decision-making function remains to be the main differentiator. Change is taking root in the high performing companies such that there is a direct correlation between the performance of a company and the company’s finance functions, especially where management accountants have transformed to being business partners.
Among the evolving roles of management accountants is cross-functional deployment, since managerial accountants are ordinary staffs who in recent times have been deployed to cross functional teams in order to assist companies in the decision making process (Epstein, & Lee, 2004, p.112). BP also aims at making disciplined financial and management choices that aim at boosting growth in the company’s operating cash from different ventures, decisions to do with prudent capital allocation, and financial resilience through the leadership of its management accountants (Bp Global, 2015).
The management accountants also play a critical role of decision facilitation. This is because top management trust managerial accountants in providing the company with vital information that is critical in helping the company make decisions (Abdel-Kader, 2011, p.89). Perhaps through the analysis and recommendation by management accountants, BP’s board passed an USD 8bn budget for investment towards the research on alternative energy sources such as natural gas, hydrogen, solar, and winds in the near future (Bp Global, 2015).
The power to influence critical management decisions is also increasingly being placed on management accountants. This is because such decisions are influenced by the proper inference and interpretation of accounting information such as the budget (Abdel-Kader, 2011, p.103). Management accountants in BP play a major role in maintaining an active portfolio management by concentrating on the company’s strong points. This includes increased exploration. In the company’s upstream pipeline, it is concentrating on giant fields, deep water, as well as other gas value chains. While in the downstream business, following advice from management accountants, the company aims at boosting its newly upgraded assets, technology and customer relations for purposes of increasing operating cash flow. Certain strategic partnerships could have been driven by management accountant such as BP‘s acquisition of Amoco in 1998 and Lucas Energy Systems earlier on in 1980 led their diversification into solar panel production (Bp Global, 2015).
The modern-day managerial accountants should be endowed with human behavioral analysis and interpretation skills. Reason being, the more a managerial accountant has honed his/her skills in understanding human behavior, the better they are placed to be important information providers for a company (Hansen, & Mowen, 2000, p.239). The managerial accountants need to know the timing and scope of information to provide to the company as well as possess both oral and written communication skills. It is probably BP’s management accountants who played a critical role in advising the company to hedge against political risks in the globally recognized oil producing nations through techniques such as government deals and partnerships. An example of such is the 2009 BP hedging contract with Rosneft, a Russian state-owned oil company (Bp Global, 2015).
Management accountants are also ever increasingly sharpening their skills in just in time inventory management. This entails the management accountants ensuring that parts and raw materials are bought and deployed at the best timing so as to be utilized in a pull system (Abdel-Kader, 2011, p.176). Probably following advice from its management accountants, BP has developed distinctive capabilities by deploying advanced technology within every facet of the hydrocarbon value chain, beginning with the sourcing of resources, to creation of low energy and high-performance customer products (Bp Global, 2015).
Management accountants are also nowadays tasked with the role of ensuring continuous improvement and quality management of goods and services. Also referred to as kaizen costing, it entails gradual but continuous improvement of products and services through small improvement steps rather than a massive unexpected change (Epstein, & Lee, 2004, p.328). BP’s operations and projects portfolio might have required the help and expertise of management accountants in creating the most value as opposed to the most volume as a result of continuous product and process improvement (Bp Global, 2015).
Modern-day management accountants are also tasked with coming up with superior quality goods at the shortest time, and with minimal cost while still maintaining superb customer service (Hansen, & Mowen, 2000, p.297). This requires timely, accurate, and relevant information. The management accounting function is in tandem with BP’s target of running reliable, safe, and compliant operations resulting to improved operational efficiency as well as safety performance. It is also about delivering timely and budget-adhered projects (Bp Global, 2015).
Fig.1 overview of an advanced accounting role incorporating information systems
Source: (Cross, J., Earl, M., J., & Sampler, J., L., 1997, p. 405)
URL: http://maaw.info/Chapter1.htm
How Management Accounting Business Partners could better support decision making, control and performance management within the company
Decision making
British Petroleum Company, like many other public listed companies, is held by shareholders who expect dividends from the company’s earnings. Management Accounting Business Partners can play a critical role in setting up Enterprise Resource Planning (ERP) software unique to BP only that captures such variables as inventories, revenues, costs, profits, and assets of the company (Cross, Earl, & Sampler, 1997, p. 406). Since the system will ensure information is free from misstatement then the top management and directors will be assured that there will be uniform product prices across their different stores thus boosting future sales and developing customer loyalty among their users.
The management accounting business partners can further help the entity to support decisions by addressing operating expenses to increase the profit margin. The computerized accounting system provides historical data regarding the entity’s operation which management relies on to cut down the company’s unnecessary expenses so as to alter the profits (Skærbæk, & Tryggestad, 2010, p. 117). Further, this data availed by the management accounting business partners is used to forecast future operational costs, future profits, and future overall cash flows and even helps the management to formulate investment-related decisions for instance pricing of the company’s shares, mergers and acquisition decisions, and what proportion of investment to be apportioned on marketing of company core products.
Performance Management
The management accounting partners can easily develop Human Resource Enterprise Resource Planning (ERP) software which captures past information on all the employees salaries versus output. This is necessary to calculate the salaries based on output and thus an acceptable salary structure as well as setting targets and reward systems. Therefore, the management in British Petroleum Company should rely on such information to formulate relevant targets which achievable by the respective employees and can detect any dragging or fall in employee performance and device the necessary actions to remedy the situation. Overall, the management accounting partners can help the human resource managers to motivate its employees.
Evidently, the management accounting business partners can support the entity to develop effective scorecards. In such a case, the management should measure the performance of every department within a given period and determine the manner in which growth is realized in the particular department. The condition enables the management to formulate viable performance scorecards to the respective individual in the department (Cross, Earl, & Sampler, 1997, p. 420). Performance dashboards and score cards assist in the process of measuring the performance of organizations against pre-set KPI metrics, and categorically, easily, and comprehensively communicating the results in the form of reports. In the modern-day strategic management, the management business partners play a crucial role in deriving individual accountability from high-level strategic objectives and timely measurement of the progress against set goals.
Control
Finally, the business partners can support the company to attain control through the formulation of a precise risk management approach. The use of information technology helps the entity to store financial information. Th...