Revolving role of management accountants in the digital era

Management accounting is a role within the finance department, and its main purpose is to provide strategic support and identification of key business performance drivers and timely resolution of significant deviation from planned objectives.

A management accountant will be reporting directly to the head of finance so that he or she can maintain independence and objectivity in the role. However, he or she will have dotted reporting line to business head that he or she supports on daily basis.

And in practice, you will find a management accountant is more inclined to the business head rather than head of finance due to the nature of the role which requires maximum collaboration with the business heads.

In performing this role, the management accountant is expected to contribute to the understanding of economic and financial dynamics; developing corporate plan, strategy, budgets and forecasts.

With highlights from the foregoing, it is obvious that the person performing this role should have relevant knowledge, experience and skills to effectively execute this function. In addition, the candidate should possess/acquire the following skills: ability to think creatively and develop innovative solutions, have excellent interpersonal, communication and presentation skills.

In this regard, business heads expect the management accountant to provide detailed analysis of financial performance; explain to them the impact of changes in internal drivers or market forces; provide accurate forecast of monthly, quarterly and yearly performance; responding to their query with speedy and accuracy to facilitate decision making; participate in strategy formulation, advise them on what course of action to take to achieve business targets; and challenge their assumptions so that business can have more realistic targets and plans. These expectations are not exhaustive. Mmanagement accountants are expected to deliver beyond that.

The expected performance identified above may sometimes cause expectation gap because management accountant may feel that he or she is stretching beyond his or her job description whereas business heads think their business finance partner is not doing enough to support the business.

The gap can be real or perceived, but what is required is to address it so that organisations can attain desired prosperity. The resolution to this issue can be reached through various ways depending on the nature and set up of the organisation. I recommend digitisation, which is the current and future trend in finance function, as one of the solution to reduce or eliminate the expectation gap.

Examples of digital transformation already initiated and or implemented by some organisations include automating most of operational and repetitive manual processes (through robotics, artificial intelligence and/or centres of excellence). With enough time and less operational activities, the management accountant will become forward looking, apply data analytics and market intelligence in advising, shaping and driving the business.

This way, digitisation will surely enable the management accountants to be more helpful by moving away from traditional commentaries that in real sense explains what business heads already know, and step up the analysis to the level that elaborate what factors business heads need to consider in their decisions going forward, and point out implication of those decisions to the business well in advance.

For digitisation to be successful, it is important to appreciate that a lot of transformation and investment needs to be done for individuals and respective organisations at large. Individuals require a mindset shift, readiness to learn new things and embrace new ways of working to deliver at higher levels while organisations’ management must have visions, plans and provide leadership to oversee implementation of digital invention and innovations.

As 2018 unfolds, for management accountants to remain relevant, they should take bold decisions to completely transform their career in line with inevitable disrupting innovations and inventions brought by digitisation.

Written by George Radonde