The Top Seven Trends in Management Accounting

Abstract

Management accounting practices have become increasingly progressive since the 1980s. What are the trends? They include channel and customer profitability reporting, integration of enterprise performance management methods (e.g., strategy maps, balanced scorecard), driver-based rolling financial forecasts, applying analytics, and co-existing methods (e.g. lean accounting). Accounting professionals need mastery with these.Ultimately costing principles, such as the causality principle, must be converted into practical practices with supporting tools. This article examines how cost modeling has evolved over the last century. It describes the trends and obstacles that have helped or delayed developments.Finance and accounting professional are typically considered to be very quantitative. They are by nature number-crunchers. But collecting, validating, and reporting data is not the same thing as analyzing the information that can be gleaned from data. Most organizations are drowning in data, but starving for information.The CFO function is experiencing a shift from beyond financial reporting to dealing with and reporting non-financial information. Finance people are increasingly involved with creating and monitoring performance measurements. Their task should not be about what can be measured but what should be measured. And don’t stop there. This is not about just monitoring the dials of a scorecard or dashboard, but moving the dials. The decisions involved to improve performance require analytics of all flavors.Most companies are far from where they want and need to be when it comes to applying management accounting methods to support making decisions. Volatility and complexity are the new normal.