“There are very few Management Accountants pretending to be Tax Accountants
but
plenty of Tax Accountants & Auditors pretending to be management accountants!”

This came up today on LinkedIn and I really felt the need to share this discussion to get more people thinking…
The thread began with a contentious discussion asking the question “Is Management Accounting the most undervalued and misunderstood Accounting discipline”?
The response has been quite eye opening with some interesting points – summarised and paraphrased here as snippets:

  • Management Accounting is focused on business performance through critical information for decision making. In complex circumstances not all accountants are cut out for the problem solving that might be involved, let alone explaining it to their audience.

 

  • The focus of management accounting skills has been replaced by a focus on Business Intelligence (BI) systems providing volumes of data; some of which is just plain distracting management reports that don’t provide information to run the business

 

  • Financial indicators themselves do not measure the value creation process in an organisation. BI tools can be useful to a skilled practitioner but are often there to make people feel that they are on top of the data – they don’t do the real analysis, correlations etc that would help.

 

  • Management Accountant should invite two experts to come in:
    (1) Business Intelligence/Business Analytics experts to help with data modelling and technology,
    (2) Change Management experts to help with business process improvement, communication and stakeholder engagement.

 

  • A good Financial Controller can reduce Audit Fees. It is reasonably well known that it is harder for an Auditor to communicate the value of their services in a company that has a good management accounting function. A good audit client (Fee perspective) is a company in a reasonable financial reporting mess but not messy enough to make it a high risk for an unqualified Audit.

 

  • The entire Accounting Industry is upside down!Virtually every business in Australia has to lodge a tax return and pay a Tax Accountant. What value does it add to their business? – Very little, it saves them a bit of tax but rarely makes them more profitable.
    What next? The audit if the company is big enough, that is. Again, how much value is added? – Not much.
    And who is left? – the Management Accountant – is there any money left in these SMEs to pay for the Management Accountant – rarely!And which type of Accountant is most likely going to improve their bottom line – yep, that’s right the Management Accountant. Why? – Because they look at what drives the business.

 

  • There are very few Management Accountants pretending to be Tax accountants & Auditors but plenty of Tax Accountants & Auditors pretending to be Management Accountants.

Smart Accounting’s role as a management accountant was recently described to me by a client as their “business architect”, their tax accountant as their engineer and their bookkeeper was the bricklayer in his scenario! – I liked the way he worded the differences in skill sets – each has their part to play and each must rely on the other to get the job done.
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