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Reporting on the results of a recent research case study, Sylvia Dempsey and Ruth Vance show how the management accounting team at Musgrave SuperValu Centra in Cork city have moved from a traditional ‘bean counting’ role to become strategic, value-adding members of the management team.

With the introduction of computerised accounting systems, the traditional role of the management accountant has shifted. Those management accountants who successfully embrace the shift find themselves elevated to more prominent positions in the organisational structure. The management accountants at Musgrave SuperValu Centra in Cork city are an excellent example of a team who have moved away from merely offering support to the management team, to becoming strategic value-adding members of the team. Their role is now to lead the agenda, rather than simply supporting it.

The research on which this article is based consisted of in-depth interviews of the management accountants in Musgrave SuperValu Centra (MSVC): a leading indigenous wholesale organisation in Cork city. Most of the interviewees are physically located within the finance department and some are located in the departments they service.

IT PUSHING ACCOUNTANTS OUR OF THEIR COMFORT ZONE

Management accountancy is traditionally defined as gathering, interpreting and presenting financial and other information to people within the organisation. Textbooks stress the importance of presenting the right information to the right people in the right quantity at the right time. However much of this role is now automated. In fact, computerised accounting systems can out-perform the management accountant in the accuracy, speed and the volume of data they collect and process.

MSVC has grown by 50% in the last five years, but the number of employees in the finance department has dropped from 105 to only 64.

The finance department had a “fleet of people”(1) employed to input data into its computerised system. Over the last five years, the company invested in EDI (electronic data interchange), a warehouse management system, Oracle and other software. Consequently, the finance department no longer requires these people. It has a “system that works like a dream, but as well as that the management accountants and the other managers in the business are more confident that the information provided is reliable”(2).

Instead of sitting back and letting technology take its place, the finance department supports advances in technology. Technology has taken over what the management accountants described as the “transaction based, number crunching activities”(3) and encouraged the management accountants to “progress out of their comfort zone”(4) into more proactive leadership positions.

Each of the interviewees sees the “profile of the department actually rising”(5). The number of qualified accountants in the department has increased. It is the number of clerical workers that has fallen as the need for number crunching and inputting has been dramatically reduced. Therefore, not only has the technology nudged the management accountant out of its traditional role, it has also provided both the time and tools to allow the management accountants be successful in more testing and more rewarding roles. Accountants supplying the right information

A survey of CIMA members in Irish manufacturing firms found that what management accountants thought was useful to managers significantly underestimated the needs of the managers(6). Managers were often resorting to preparing their own information using basic spreadsheet models such as EXCEL.

Instead of consulting the management accountant, managers were frequently asking IT personnel for assistance.(7) This is not a new phenomenon, Cooper predicted that the “need for management accountants will fall, while the need for management accounting will rise”(8).

INTERPRETING AND MAKING SENSE OF THE DATA

The interviewees in this research totally disagree with Cooper’s prediction. They all state that advances in IT have made the management accountant more important than ever. Computerised systems provide managers with too much information, “the managers do not have the skills to interpret the information and make it useful in supporting their decision-making”(9). The Finance Director of MSVC stresses that this is a key area where the analytical skills of the management accountant are still imperative. The other management accountants agree stating that, more often than not, the managers are not interested in numbers, they are “looking for the insights, they are looking for explanations, no system will give them that”(10). It is the “management accountant that interprets and makes sense of the data”(11). The management accountants in the finance department of MSVC go one major step further. They are not traditional management accountants, simply supplying the managers with the information that they ask for. Instead they view themselves as proactive business partners, more often than not leading the strategy instead of just supporting it. The finance director states that their new systems have freed up their time allowing them to focus on the information and how they can use it to add value and lead the agenda for the future. Another interviewees says:

“Our new systems have freed up our time to allow us focus on the value-add analysis and insights needed by management”(12). As far as the Finance Director is concerned “Retrospective review is gone” . The finance department should now be “telling the managers what they need, not asking them”.

ADDING VALUE

Computerised systems can now gather the data, so it is up to management accountants to determine what data is gathered and to add value to the information that the systems provide. They can do this by placing the information into a broader business context, relating it to key non-financial measures and presenting it to the users in a language and style that they will understand(13). Therefore the modern management accountant needs advanced technology skills and a broad business acumen as well as the traditional accounting and analytical skills(14).

TECHNOLOGY SKILLS

Working with systems is now a major part of the job of the management accountant. With the aid of new technology, it is easier to get the right information to the right people on a timely basis and in a meaningful format.15 The management accountant must be familiar with the business’s systems and have the technological ability to ask the right questions, design the most relevant reports and transmit this information in the most efficient and effective manner to the management team.

“Access to information by emails, blackberry et cetera is very important to our sales team. As well as contacting our sales team with useable information, they can feedback real-time data to us by the use of hand held terminals or lap-tops. We can now get information to them or from them wherever they are and faster than ever.”(16)

The Finance Director sees knowing how these systems present information as an important part of their job. He stresses that it is only with a knowledge of the systems that management accountants can “come up with the right questions and the right way to ask them”(17). This emphasises the importance of the management accountant’s involvement in not only using but also designing information systems. This systems knowledge provides additional benefits, such as improving internal communications, designing suitable information systems as well as promoting a better understanding and more effective use of these systems, advising on operational decisions, managing people (particularly in change management situations) and developing strategic financial plans in the modern organization (18).

BUSINESS ACUMEN

To add value to the information provided by computerised systems, the management accountant must have an in-depth understanding of the way the organisation operates and the external environment in which the organisation operates. It is “sitting back, taking a look at the information and explaining what is going on in the business and offering insights back to the business that is important”(19). The management accountants are trusted to know what is going on in the business. It is “a combination of commercial experience and analytical skill”(20) that allow other managers to trust the management accountant.

MOVING OUT OF THE BACK OFFICE

One of the ways in which management accountants can improve their business acumen is to move out of the “back office” and place themselves with the operations of the organization(21). Even though most of the accountants in MSVC are still located together in the “Finance Department”, in the last three years some of the management accountants have moved out to the department which they service. They see this as a way of being “closer to the business and knowing what is going on”(22).

This means working in integrated or multi-functional teams, thus having more contact with managers and being more actively involved in strategic planning and the decision-making of that department. Because of this move, the softer skills set of the management accountant is very important. Such skills include interpersonal skills, leadership, cooperation and communication. The move has also modernised the profile of the accountant, making the profession more “visible and integrated into the business”(23).

To quote the finance director of MSVC:

“As well as the threshold accounting skills, the management accountants must fit in with the company, they must have a high level of credibility and gravitas and good interpersonal skills. We no longer spend our time with our head in books”.

When questioned what are the key skills of a management accountant in the 21st century, the interviewees all agreed that accounting and analytical skill are automatically a prerequisite, but high systems orientation, multitasking abilities and interpersonal skills are now essential. To quote one of the accountants:

“You could be the world’s best ‘bean counter’, but without the IT and softer people skills you are not going to progress in the business”.

Conclusion The role of contemporary management accountants exceeds the old text book definition of gathering, interpreting and presenting financial and other information required by others within the organisation.

Management accountants no longer merely support managers decision making needs but anticipate the information needs, and more importantly, use their business acumen and information available to them, to lead the agenda in providing new business strategies and ways ahead for the future of the business.

They do this by using their knowledge of the business and the environment in which it operates as well as their analytical and technology proficiencies. It is this combination of traditional and newly required skills that will allow the management accountancy profession to become more proactive and constructive in the modern business world.

Notes: 1 Interview with the Finance Director 2 ibid 3 ibid 4 Interview with Management Accountant 2 5 Interview with Management Accountant 1 6 Pierce, B. (2001), ‘Management Accounting without Accountants’, Accountancy Ireland, June 2001, pp 10-12. 7 Ibid 8 Cooper, R. (1996), ‘Look out, Management Accountants’, Management Accounting (US), June 1996, pp 35-41. 9 Interview with Management Accountant 3 10 Interview with Management Accountant 1 11 Interview with Management Accountant 2 12 Interview with Finance Director 13 Brignall et al 2003, Collins 2000, Burns et al 1999, Parker 2002, Hannon 2005, Homes 2005 14 Collins 2000, Parker 2002, Hannon 2005 15 Collins 2000, Hannon 2005 16 Interview with Management Accountant 1 17 Interview with Finance Director 18 O’Connor et al 1995, Collins 2000, Parker 2002, Fleming 2005, Homes 2005 19 Interview with Management Accountant 1 20 Interview with Management Accountant 3 21 Collins 2000, Pierce 2001, Fleming 2005, Homes 2005 22 Interview with Finance Director 23 Interview with Management Accountant 3 Bibliography: Brignall, S. and Ballantine, J. (2003) “Strategic Enterprise Management Systems: new directions for research”, Management Accounting Research, Article in Press Accepted 13 Oct 2003. Burns, J., Ezzamel, M. & Scapens, R. (1999), “Management Accounting change in the UK”, Management Accounting, March 1999, pp 28 - 30 Collins, A. (2000), “Accountants as Custodians of Information and Knowledge”, Accountancy Ireland, August 2000, pp 16-17 Cooper, R. (1996), “Look out, Management Accountants”, Management Accounting (US), June 1996, pp 35-41 Fleming, Peter D, (2005) "The future has never looked brighter” CMA Management Hamilton: Nov 2005, Vol.79, Issue 7; pp 20-24. Hannon, Neil J. (2005) “The Cost Accountant Is Dead; Long Live the Business Process Analyst” Strategic Finance Montvale: Dec 2005. Vol.87, Issue 6, pp 59-60 Homes, Gary (2001) “The hybrid manager” Industrial and Commercial Training. Guilsborough: Vol.33, Issue 1; pp 16-21 O Connor, Gerry, Smallman, Clive (1995). “The hybrid manager: A review” Management Decision. London: (1995),Vol.33, Issue. 7, pp 19-29 Parker, L. (2002), “Advance and be Recognised”, Financial Management, April 2002. pp 32 – 33. Pierce, B. (2001), “Management Accounting without Accountants”, Accountancy Ireland, June 2001, pp 10-12.

Sylvia Dempsey, FCA, is an Accounting Lecturer with Cork Institute of Technology. Ruth Vance, BBS, is a Lecturer at Cork Institute of Technology.

I have enjoyed reading through the artical. please help me this question that is a challenge to me. Using an organization that may be of interest to you, discuss why not that organization should engage a management accountant. Where the management accountant is engaged, indicate the problems and challenges he/she may face and prudently suggest how these can be overcome or minimized in the other hand where the organization should not engage a management accountant, indicate the difficulty such an organization may face in trying to be successful

its a very good article, but would like to ask weather yu have an artcle on emerging role of management accountant in business environment-from kenya africa