Introduction the accounting information that the management accountants

Introduction

According to Byrne
and Pierce (2007), the role of management accountants in contemporary
organizations has changed over the years. The aim of this essay is to give a
comprehensive understanding of the role of the management accountant within the
firm. To achieve this aim, the essay firstly illustrates the roles that
management accountant is expected to perform. It then defines the
characteristics required for those roles. Finally, the essay provides the
definition of total quality management (TQM) by differentiating quality costs and
explaining the cohesion with quality control managers.  

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The roles and characteristics of a management
accountant

Managerial accounting plays an important role in the
management process, mainly in providing financial and statistical information
to internal users (persons inside the organization) in order to put in place an
efficient decision-making process and therefore, any manager should know how to
use the accounting information that the management accountants (MAs) provide
and enable the organization to pursue its goals (McChllery et al., 2011). To
address the essay’s aim, the case study designed by Byrne and Pierce (2007)
where interviews with 18 financial managers (FMs) and 18 operating managers
(OMs) in medium and large manufacturing firms is considered. An extensive range
of activities that MAs engage is indicated by the findings of the case study. First
of all, the role of information provider and interpreter are considered, under
unanimous perception, typical activities associated with management
accountants. Several operating managers in fact referred to them as a
“reservoir of knowledge”. The idea that there is a need for timely, accurate,
relevant, understandable and concise information is shared by both finance and
operating managers. In particular, OMs expressed the need for finance to
educate people to use the systems more, identifying them as opportunities to
have a better explanation of accounting information, more external information
and improving the forecasts (altra
reference?).

Looking at the decision-making process, the role of
MAs was described as not an aid and guide to management but rather recommenders,
suggest-ors, linesman. They, in fact, do not make many life-threatening
decisions. The extent of involvement was perceived by OMs as satisfactory, but
more was also sought, given the fact that commercial decisions are almost made
outside of the realm of the MAs. In addition, the latter were late in being
involved; in fact, according to the opinion of FMs, business decisions advance
to a level before they reach finance and similarly, according to the opinion of
an operating manager, there could be earlier involvement from the MAs to
“justify proposals”.

Another recurring activity is the periodic performance
reporting and planning. Most firms are in fact budget-driven. Planning on a
number of time horizons enabled the MAs to gain an organizational perspective
on performance. They are seen as having the finger on the pulse of site-wide
operations with the role of saying what the data mean to the business.

Half of the firms interviewed specifically attributing
to the MAs project work assignments. These projects included a major IT
deployment, division closures, relocation decisions and waste reduction
initiatives. In addition, they are generally viewed as mechanisms for
management accountants to get out a little bit more and show own skills.

Several financial managers also made reference to ad
hoc financial analyses including what-if scenarios and cost benefit analyses;
this in order to support the decision-making process. In addition, MAs roles
comprise administrative activities. These are considered as significant and, in
particular, the increased corporate reporting and governance regulation
appeared to have increased the level of administration on many functions (such
as the impact of SOX). Finally, the use of modern management accounting
techniques is an activity that only few companies have decided to implement.
The existing system such as budgeting, standard costing and variance analysis
are considered as quite good but at the same time managers also criticized them
as inaccurate or too simplistic.

The relationship between finance managers (FMs) and
operating managers (OMs) is perceived in the main as positive but in general,
most managers recognized the potential for some role conflict in MAs. Most of
the conflict cases are due to a bad way of marrying independence and
involvement together. Some operating managers, in fact, argued that MAs are
often excluded from project teams because they are considered controlling,
almost interfering influence as opposed to being on the team to add value to
the end result. In other words, rather than being collaborative they usually
controll and try to make the whole lot decisions themselves. On the contrary, the
conflict is viewed as a necessary phenomenon, enabling the accountants to be
more objective to be respected for their work and to develop better relationships
with OMs. The findings, in fact, indicate that with more interaction, the use
of and quality of accounting information increased as well as the value that
managers attached to it. The MAs benefited in terms of the interaction enabling
them to better evaluate incoming management information and to appreciate the
use of accounting information in a much broader organizational domain (IDEM).

The study conducted by the two authors Byrne and
Pierce (2007) has identified a comprehensive set of characteristics with
respect to the roles of management accountants (MAs). Interviews attached most
importance to interpersonal and communications skills, knowledge of the
business and flexibility. The main reason is that there is so much value to be
gained from interaction and communication. Referring to the MA’s business
knowledge, it was linked to the extent of OM-MA interaction, innovativeness,
assisting decision making and the level of influence MAs have over the
business’s results. The scope of MAs, highlighted by OMs, was to strengthen
their understanding of the business. Manager accountants (MAs), because they
are governed by data, appear reasonably rigid people. More flexibility is then
sought in terms of open mindedness, the consideration of non-financial criteria
and the implementation of budgetary control. In addition to these, FMs and OMs
emphasized personal qualities that promoted teamwork. These qualities included
being accessible, efficient, willing to fight the corner but not being dogmatic
and to have a good mix of aggression and politeness, to bring things home, just
to make sure that they get things done. MAs were perceived as strong on
monitoring skills which included being disciplined, organized, consistent,
systematic, up to date with regulatory requirements, and having a strong
personality with the own opinion on things. Some of OMs emphasized the need for
MAs to have a better understanding of the business to make controls “workable
in the day-to-day operation”. Perceptions of MAs organizational influence varied
from disproportionate, dysfunctional and most often being secondary to other
functions such as sales, marketing. Other characteristics of management
accountants, although there seems to be a little doubt about their adequacy,
are technical accounting skills and IT skills.