A lack of understanding from the wider business
community and inefficient use of technology is preventing the
management accounting profession from reaching its full potential.
Institute of Management Accountants chair Sandra Richtermeyer tells
Carolyn Canham about ways the profession can move
forward.

Sandra Richtermeyer

Management accountants are being
prevented from focusing on some of the ways they can fulfil
management’s needs for decision support, planning and control
because they are too worried about external facing activities.

So says the new Institute of
Management Accountants (IMA) chair Sandra Richtermeyer and there
are few better placed to discuss management accounting and its role
in business.

Richtermeyer has worked in business
and public practice and now chairs the accountancy department at
Xavier University in Ohio. She is a certified management accountant
and a CPA, with academic qualifications, including a PhD and an
MBA.

Lack of
understanding

The management accounting profession is gaining momentum around
the world, with internationally focused organisations such as the
IMA and national bodies growing in popularity among people wanting
to pursue a business accounting career. But holding the profession
back is the fact that non-accounting professionals in the wider
business community often underestimate the complexity of the
management accounting role, Richtermeyer says.

“Management accounting
professionals may spend about 75% of their time on activities
related to external reporting or compliance-type issues, which
means they can be left with little time to really focus on
accounting issues that help their internal customers with their
needs in decision support, planning and control,” Richtermeyer
says.

“This can leave the management
accountant quite stressed as they may strive to play a more
strategic role in organisation-wide initiatives, but run short on
time and then consequently cannot be as thorough or complete as
they would like.”

Richtermeyer has also observed that
management accounting may not be given enough “face time” in
governance-related activities.

“When we examine boards of
publicly-traded companies, we commonly see separate board
committees that are charged with oversight regarding the external
audit, investments or financial disclosures,” she explains.

“It seems that many boards do not
have a governance structure that recognises the importance of how
and when to focus on internal accounting analysis– the side of the
equation that can really help them monitor and provide oversight on
the company’s strategic performance.

“This can contribute to less than
optimal decision-making or misdirection by the board.”

Quote from Sandra Richtermeyer, IMATechnical
challenges

Richtermeyer also believes management accounting best practices
are often missed because of a lack of understanding about how to
deploy these practices using existing technology.

“Many organisations have up-to-date
enterprise systems or emerging technologies already in use, but
they resort to familiar techniques such as spreadsheets to do a
great deal of the analysis needed to produce management accounting
information,” Richtermeyer explains.

“This leaves us with challenges in
information flow, information integration and internal control. It
also leaves the management accountant with more time-consuming
tasks as they work around the challenges and spend a great deal of
their time in information gathering mode

“There are many well-documented
best practices in management accounting and some great case studies
on emerging trends, but frequently the technology we have in place
makes it very difficult to support them or integrate them properly.
This may be due to a lack of understanding on how to use the
technology, a lack of time to get proper technology training or
just the use of outdated technology.”

Richtermeyer believes that finding
new ways to collaborate and share accounting information, and
learning how to empower users more, are key ways for management
accountants’ roles to become more strategic, allowing them to
operate at a higher level of sophistication.

Coping with
upheavals

Richtermeyer also believes the role of accounting associations
such as the IMA is to help professionals respond in a healthy way
to dramatic changes in the business landscape.

When dramatic regulatory or
compliance requirements, such as the Sarbanes-Oxley Act, are
introduced, the accounting tends to go into upheaval for one or
more operating cycles, Richtermeyer explains.

“Our professional development
models in accounting may not focus as much on process change or
continuous learning as they do on just learning new rules,” she
adds.

“Any new regulatory or compliance
process brings about new rules, but with a continuous
process-improvement philosophy, the changes can be less
dramatic.

“Those types of challenges are going to happen all the time so
it is important we look at how we build it into our model of
continuous adaptation and continuous improvement.”