Counting More, Counting Less…

The IMA’s 1999 Practice Analysis of Management Accounting Makes Recommendations for Accounting Educators

The following article is excerpted with permission from the Executive Summary of Counting More, Counting Less: Transformations in the Management Accounting Profession, the IMA’s 1999 Practice Analysis of Management Accounting.

The IMA’s 1999 report Counting More, Counting less: Transformations in the Management Accounting Profession, opens a window on the dramatic changes in the area of management accounting occurring in corporate America. This study is the follow-up to the IMA’s first Practice Analysis (1995), tracking the correlates of this transformation.

The goal of this research project was to determine how the work of management accountants and their corporate roles have changed in the last five years and what changes they predict will occur in the next three years. Telephone interviews were conducted with 300 practicing management accountants. Respondents were required to have at least seven years of accounting experience. In addition, in-person interviews were conducted at Abbott Laboratories, Boeing Company, Caterpillar, Hewlett-Packard and US West.

When compared with the 1995 report, the 1999 Practice Analysis shows ongoing and escalating change in the work performed by management accountants, in their role in the organization, and in the value they bring to business decision making.

Highlights of Results

• Value to organizations increasing. Respondents say they are perceived by a growing number of people outside the finance function as providing greater value to the company.
• Image improving. In many companies, management accountants believe they are shedding the “bean counter” stereotype and are being perceived as “business partners.”
• Communication with nonaccountants increasing. Management accountants spend more time working with others in their companies today than they did five years ago.
• Business decisions improving. In corporations where management accountants function as business partners, respondents believe anecdotal evidence suggests that better business decisions are being made.
• Work location shifting. Although accountants traditionally worked in physically isolated accounting departments, 20 percent of all respondents report that at least half of the management accountants in their company are located within the operating departments they service. In larger finance organizations, 45 percent report that shift.
• Team partnership/leadership increasing. More than 50 percent reported that they now work on cross-functional teams and are increasingly likely to take on leadership roles.
• Work activities changing. While traditional work activities continue to occupy large blocks of management accountants’ time, the trend in the profession is clear:

• Analysis and decision making are way up. Nearly 80 percent report they are spending more time analyzing information and participating in decision making than they did five years ago.

• Other nontraditional accounting activities are up. More time is spent performing forward-looking, nontraditional work activities such as strategic planning.

• Traditional work activities are down. Nearly 50 percent say they spend less time preparing standardized financial reports now than they did five years ago. More than 60 percent believe this trend will continue.

• Strategic planning and process improvement most critical for company success. Respondents believe these two areas are the most critical work activities for the success of their companies and that these areas are rarely included in university accounting curricula.

• Work exciting/trends intensifying. An air of excitement infuses the way respondents describe their involvement in running the business. They believe the trend toward business partnering will intensify.

• Quality of life concerns. Because of increased demand for their services, respondents work longer hours, raising concerns about the balance between work and personal life.

• Name of the profession obsolescing. The term “management accountant” is prevalent in the academic accounting literature, but is rarely used in practice. Respondents refer to themselves as working “in finance.”

• Change accelerating. More than 80 percent say change in their work was more rapid over the last five years than between 1990 and 1995. More than 70 percent expect the rate of change to accelerate over the next three years.

• Skills for success. For entry-level management accountants to succeed, respondents believe the most important skills are: ability to communicate well orally and in writing, ability to work on a team; analytical skills, solid understanding of accounting; and solid understanding of how business functions.

• The next plateau. Some say their role will broaden beyond business partnering and expand to strategic partnering, toward being more strategic, better visionaries and more proactive. They will share organizational decision making with the CEO.

The report, Counting More, Counting Less, makes recommendations for accounting educators, corporations, professional associations and management accountants.

Implications and Recommendations for Accounting Educators
Given the report of respondents that strategic planning and process improvement are the two most critical work activities for management accountants today, accounting educators must focus more attention on these areas in the accounting curriculum. It is critical that students acquire the necessary knowledge, skills, and abilities to perform these and other key work activities (the IMA’s definitions of KSAs were identified in the 1995 Practice Analysis).

To better meet the needs of students and corporate employers, college and university accounting educators must obtain a strong and current understanding of the work performed in modern corporations. This can be accomplished by meeting with practicing management accountants, visiting their companies, and referring to the original Practice Analysis database, updated by the current research. The insights gained should be used to revise management accounting courses and the management accounting curriculum.

The complete 1999 Practice Analysis of Management Accounting, as well as the 1995 report, are available on the IMA’s web site at: http://www.imanet.org, or from the IMA at 10 Paragon Drive, Montvale, NJ 07645-1760.