Management Accounting Presentation - The George Washington ...

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MANAGEMENT ACCOUNTING

DraftClick to edit Master title styleCurrent Accounting Information

“In the game of business …[accountants] aspired to be players, or at least umpires, but were relegated to the humble office of scorekeepers. Their revenge for this

ignominy was to keep the score in such a way that neither the players nor the umpires could ascertain the

state of the game.”

R.G.A. Boland. Quoted in the Financial Times June 14, 2003

“Accounting systems are based on pre-computer thinking.” (Robert Mednick)

Accounting Today?

DraftClick to edit Master title styleRole of Management Accounting

What is Management Accounting Today?

Analytics for Product/Service Costing?More or less than Cost Accounting?

All skills of the accountant in Business?Where does traditional financial reporting fit?

Financial & Analytical Techniques to support the Efficient Employment of Resources


Unprecedented Opportunity

Suppliers

AuditorsCustomers

Value Creating Processes

Decision Support, Planning and Control

Inputs Outputs

External Reporting

External Market & Environment

Competition


The CMA adds a broad range of influence in the accountant’s value chain

Design Implement Manage Report Audit

ProfessionalManagement Accounting

Public Accounting

Accounting Foundation, Commitment to Ethics,Emphasis on Decision Support, Planning and ControlCommitment to Ongoing Continuing Professional Development

Inside


The CMA adds a broad range of influence in the accountant’s value chain

CMA Exam Overview

• Part 1: Business Analysis

- 3 hours, 110 multiple choice questions

• Part 2: Management Accounting and Reporting

- 4 hours, 140 multiple choice questions

• Part 3: Strategic Management - 3 hours, 110 multiple choice

questions

• Part 4: Business Applications

- 3 hours, 4 -7 Essay Questions

Exam parts 1, 2, and 3 may be taken in any order but must all be passed before registering for Part 4

DraftClick to edit Master title styleThe CMA adds a broad range of influence in the accountant’s value chain

Part 1 – Business Analysis

Quantitative Methods

15%

Financial Statement Analysis

25%

Business Economics

25%

Internal Controls15%

GlobalBusiness

20%


Part 2 – Management Accounting and Reporting

CostManagement

25%

ExternalReporting

25%

PerformanceMeasurement

20%

Budget Preparation

15%

Information Management15%


Part 3 – Strategic Management

DecisionAnalysis

25%

InvestmentDecisions

20%

StrategicMarketing

15%

Corporate Finance25%

Strategic Planning15%


Part 4 – Business Applications

• Must complete Parts 1, 2, and 3 first• 3 hours, 4-7 essays/problems• All content from Parts 1, 2, and 3 included• Plus: Ethics, Organization Management, Organization

Communication, and Behavioral Issues• Computer-based but no immediate scoring


• Massive fracture of accountancy profession– Finance professionals “inside” driving business performance through effective decision support, planning, and control - represent more than 90% of finance function professionals in the U.S. (U.S. Bureau of Labor Statistics)

– External audit (“checkers”) - represent less than 10% of professionals

Current imbalance – audit dominates public perception

• Sarbanes-Oxley 404 focuses on “inside” financial staff– Management accountants and finance professionals who design, implement, and manage an organization’s control systems to drive business performance

•Domain of IMA Members – finance professionals “inside”– “Building Quality In” vs. “inspecting quality in”– Provide strategic analysis and other highly complex services– Partner with other executives as value creators

Unprecedented Opportunity


Source: Bureau of Labor Statistics website (http://bls.gov/cps/cpsaat11.pdf).

Job DescriptionEmployment

in 2004 % of Women

% of BlackAfrican

American

% of Asian

% of Hispanics

Accountants and auditors 1,723,000 60.5% 8.6% 9.5% 6.7%

Bookkeeping, accounting, and auditing clerks

1,567,000 91.8% 7.4% 3.9% 6.9%

Financial managers 1,045,000 56.6% 7.8% 4.8% 6.9%

Management analysts 554,000 41.8% 6.9% 4.7% 4.3%

Loan counselors and officers 425,000 56.7% 10.0% 4.0% 8.2%

Personal financial advisors 331,000 26.6% 5.8% 4.1% 2.9%

Cost estimators 98,000 17.7% 2.5% 0.7% 4.5%

Insurance underwriters 98,000 71.2% 8.4% 4.2% 49.0%

Tax preparers 88,000 63.1% 6.1% 9.9% 8.1%

Tax examiners, collectors and revenue agents

81,000 63.6% 19.1% 4.5% 5.9%

TOTAL 6,010,000 63.7% 7.9% 5.8% 7.1%

US Market opportunity significant IMA present market share is 1% AICPA current market share is 6%


2003 E&Y Management Accounting Survey

Corporate leaders and decision makers said their “Number One” financial challenge today is getting

accurate and actionable cost information in a timely manner!

Cost Accounting Students – still think boring class lectures lack “real world” relevancy?

“Hey McFly! . . . Hello? . . . is anybody home?”


Enabler Decision Maker

Generating Cost Information 1 1

Cost Reduction 2 2

Improving Processes 3 4

Contributing to Core Strategy 4 3

Setting Standards 4 4

Reducing Risk 5 5

Automating Processes 6 6




• Cost Management is a key contributor to achieving strategic objectives.

• Need for “actionable” cost information a top priority

• Despite importance, cost information is often impaired

• Implementing new cost mgt tools & systems is low to medium priority

• Traditional mgt accounting tools remain in wide use.

• Decision makers require clear, quantified value proposition for new tools.

DraftClick to edit Master title styleTools of Today’s Management Accountant

TechnicalAnalysis, Process Control, Standard Practices, External

Requirements

Leadership/CommunicationListening, Presentation, Diplomacy, Change Management, &

General Management Skills

StrategicSystems Thinking, Strategic Cost Management Techniques,

Vision, Risk Management, Financial and Business Planning

EntrepreneurialMarketing, Networking, Influencing, Risk Taking

DraftClick to edit Master title styleLeadership & Communication Tools

Stereotypes

• Numbers, Measurement focused

• Conservative Mindset

• Inquiry, Problem Identification

• Technical thinking, Procedures driven

New Approach

• Big Picture

• Willing to engage unknown, Create & discover new oppty

• Solution & Outcome Oriented

• Integrated systems thinkers, Results driven

DraftClick to edit Master title styleLeadership & Communication Tools

Stereotypes

• Compliance Oriented• Command, Control

• Standards driven

• Linear, Numbers Reliant• Risk Averse• Formal, Report Driven

Comms

New Approach

• Value/Ethics Focused• Share Knowledge,

Collaborate• Innovative, Needs

focused• Strategic, Results driven• Responsible Risk

Taking/Management• Interactive, Persuasive

Comms

DraftClick to edit Master title styleStrategic Tools for Management Accounting

Developed Strategic Cost Mgt Applications

• Activity Based Methods• Target Costing• Capacity Mgt• Asset Mgt• Process Mgt• Extended Enterprise• Lean Enterprise• Theory of Constraints

Emerging Applications

• Enterprise Risk Mgt• Non-financial Performance

Measurement• Strategy Planning &

Execution• Customer Lifetime Value• Resource Consumption

Accounting


• Founded in 1919

• Mission: To provide a dynamic forum for management accounting and finance professionals to develop and advance their careers through certification, research and practice development, education, networking, and the advocacy of the highest ethical and professional practices.

• Vision: The world’s leading association for management accounting and finance professionals.

• Nearly 65,000 Members

85% U.S.

15% International

Institute of Management Accounting


• Advanced-Level Professional Certification Program

– Certified Management Accountant (CMA)

• Powerful Networking Forums

– Annual Conference & Exposition, Annual Student Conference, 250 local Chapters in 24 U.S. regions, online interest groups, email exchanges

• Professional Development Opportunities

– CMA Learning System, leading publications Strategic Finance Magazine and Management Accounting Quarterly

Benefits of Membership


• Valuable Career Resources– IMA Online Career Center

• IMA Research Center of Excellence (CoE)

– Provides actionable, practitioner based research in several topic areas: technology enablers, strategic costing, internal controls, risk management, performance management, and ethics.

– Research will enable management accounting and finance professionals to be more successful business partners in a fast-paced, technologically advanced environment.

Benefits of Membership


• Annual Leadership Seminar • Semi-annual or quarterly seminars• Annual Academic Roundtable• Monthly membership meetings• Student Chapters (why not form one here?)• Regional Student Case Competition• Annual Leadership-Ethics Roundtable• CMA Review and Certification

Benefits of Local Membership


“Rebalance the accountancy profession by building quality financial practices, ethical and responsible corporate governance,

and operational control from inside an organization.”

Paul Sharman, President and CEO, IMA

Today’s Challenge


IMA is “rebalancing” the accountancy profession

• Developing a significant group of professionals inside organizations who are properly qualified to drive ethical and responsible corporate governance, and decision support, planning, and control over value-creating operations

– Elevate Public Awareness of Advanced-Level CMA and CFM Credentials within Key Target Markets

• CPA is an entry-level designation (according to the website of the AICPA)• As many as 80% of those who enter public accounting eventually leave to work in industry

– Attract, Certify, Engage, and Retain Members• Professional Development• Professional Research• Students/Academics

Ethical Corporate Governance


• IMA’s Certified Management Accountant (CMA) certification best supports “inside” management accountants and finance professionals who drive business performance

–“Inside” professionals represent more than 90% of finance function professionals today

• Recently completed comprehensive benchmarking analysis of CMA program

– Results confirm the program is world class, incorporating advanced management concepts with cutting-edge industry practices and superior ethical standards

– No other finance or accounting credential lends itself more directly to today’s complex and changing business environment

– CMA as the appropriate worldwide standard for accountants working inside businesses

Certified Management Accountant


“The CMA has always been the appropriate, worldwide standard for accountants working inside businesses, who represent over 00 percent of all accountants today. This has now been confirmed* for IMA by an independent review.”

IMA Press Release March 1, 2005(*Based on an independent study conducted by Credentialing Services Group of McLean, Virginia)

“…accounting is truly the language of business and that of all the accounting certifications available, only the CMA touches every aspect of business and decision making. The CMA is a broad-based, international credential that is uniform across all parts of the globe.”

IMA Press Release March 1, 2005(*Based on independent focus group study conducted by Environics Research)

Role of Management Accounting


Management Accounting today exhibits Entrepreneurial Leadership in aggressively leading the way “to advance the management

accounting and finance profession, and ultimately achieve our goal of building quality financial and governance practices inside

organizations.”IMA Press Release March 1, 2005

Management Accounting demands competent professionals who embrace superior ethical standards.

The Institute of Management Accounting is committed to restore confidence in the marketplace, thereby improve the quality of all

communities.

SUMMARY

Management Accounting Presentation - The George Washington ...

Business

Transcript of Management Accounting Presentation - The George Washington ...