Unlike many recent blog posts, which we hope have been of interest to both learning professionals and those who work in other business roles, this is likely to be of most interest to those working within the Finance function, a group for whom many of MTP’s courses are designed.
We read with interest the first set of Global Management Accounting Principles released by the UK Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) on 22 October 2014. The four principles can be summarised under the headings: Influence, Relevance, Value and Trust.
The Principles have been developed in the environment of an ever increasingly complex world of big data and they address the issue of how management accounting needs to move forward with the times to bring real value to quality decision making.
We like this approach as it is at the heart of what many of our clients are grappling with. We also like how the principles support the role of the Management Accountant as a Business Partner where we see the importance of bringing great behavioural skills, business acumen and financial skills together.
More information on each of the four principles is set out below:
– Communication provides insight that is influential. Good management accounting begins and ends with conversations, allowing management to cut across silos and create a path to integrated thinking.
– Information is relevant. One of management accounting’s central roles is providing decision-makers the right information on a timely basis. If the needs of the decision-maker are understood, then identification, collection, validation, preparation, and storage of timely information can be carried out.
– Impact on value is analysed. This principle requires a thorough understanding of the business model and the macroeconomic environment. Strong management accounting functions are able to turn information into insight by assessing the impact of scenarios being considered.
– Stewardship builds trust. The principles require active management of relationships and resources “so that the financial and non-financial assets, reputation, and value of the organisation are protected.”
The work we have been carrying out over recent years with a number of our clients in the area of Finance Business Partnering clearly has a strong link to the work of the accounting bodies in creating the Global Management Accounting principles.
The Principles come with a diagnostic checklist to enable organisations to assess the effectiveness of their management accounting functions. We would be extremely interested to hear your feedback on the Principles and whether or not they have been adopted in your organisation.