Accountants and production of managerial reports
Some individuals argue that accountants should focus on producing financial statements and leave the design and production of managerial reports to information systems specialists. What are the advantages and disadvantages of following this advice? To what extent should accountants be involved in producing reports that include more than just financial measures of performance? Why?
Do more with less. “Virtually everyone, everywhere is being given that challenge, and I expect that will be an ongoing mantra far into the future.” (Duncan, 2014) Businesses typically strive to reduce expenses as a means to boost income. Labor expense tends to be an area of focus for many businesses looking to cut costs as labor tends to constitute a large portion of a firm’s expenditures. While some may argue that accountants should focus primarily on recording information and producing financial reporting for third parties and regulatory offices, firms can add value by incorporating its accountants in its managerial reporting efforts. It would behoove a business to incorporate its accounting workforce into other areas of the business in order to maximize returns on its labor costs.
The inclusion of accounting professionals in reporting generation for management professionals is nothing new. One of the main roles of a managerial accountant is to utilize internal data in order to provide decision makers with details that can be used in real time. “Sometimes, the (financial) accounting information that a company currently has may not be sufficient in solving a problem, so managerial accounting gives managers the option of requesting additional information with limited time constraints.” (Hutcherson, n.d.) Managerial accountants help to isolate relevant information for managers regarding things such as project costs and returns on project investments. This can help managers to decide if an over budget project should continue or if it should be scrapped.
The book outlines some key reasons why accountants should be involved in the business intelligence and information technology realms in assisting firms with organizing its data. With the prevalence of ERP systems increasing the amount of data available within the organizations, accountants can assist with providing meaningful information to decision makers. (Richardson, Chang, & Smith, 2017, p. 32) Because accountants are already familiar with practically all of the business functionalities due to maintaining the general ledgers, they are in a good position to provide insight regarding areas of opportunity for the business to address for process improvement purposes. From personal experience, I have seen situations when accountants were not involved in a project management ERP roll out of database functionality. Because the software and database engineers did not necessarily understand how certain design aspects impacted the accounting realm, it led to an inferior internal product that created numerous ongoing labor intensive work arounds. Certainly, this was not the goal of the project.