Managers are increasingly shifting from reacting to after-the-fact reported outcomes to anticipating the future with predictive analysis and proactively making adjustments with better decisions. Despite some advances in the application of new costing techniques such as activity-based costing, are management accountants adequately satisfying the needs of managers and employee teams for decision-based cost information? Or is the gap widening? That is, are the accountants still just counting the beans, or are they helping to grow them? There is a difference between what management accountants report and what managers and employee teams want. This does not mean that information produced by accountants is of little value. In the last few decades, accountants have made significant strides in improving the utility and accuracy of the costs they calculate and report. The gap is being caused by a shift in managers’ needs – from needing to know what things cost (such as a product cost) and what happened to a need for more purposeful information about what their future costs might be and why.
Contrary to popular beliefs that the only purpose of managerial accounting is to collect, validate, transform and report data, its primary purpose is first and foremost to influence behavior at all levels – from the desk of the CEO down to each employee – and it should do so by supporting decisions. A secondary purpose is to stimulate investigation and discovery by signaling relevant information (and consequently bringing focus to that info) and generating questions. The widening gap between what accountants report and what decision-makers need involves the shift from analyzing descriptive historical information to analyzing predictive information, such as budgets, cost estimates and what-if scenarios. Decisions can only affect the future, because the past is already history, but much can be learned and gained from historical information. Although accountants are gradually improving the quality of reported history, decision-makers are shifting their view toward better understanding the future. This shift is a response to an overarching move in executive management styles – from a command-and-control emphasis that is reactive (such as scrutinizing cost variance analysis of actual versus planned outcomes) to an anticipatory, proactive style where organizational changes and adjustments, such as staffing levels, can be made before things happen and before minor problems become big ones.
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