The changing role of management in business
Management accounting is 'the process and technique that focus on the effective use of organisational resource to support managers in their tasks of enhancing both customer value and shareholder's value' (Langfield-Smith et al. 2009).
Compare to the financial accounting, management accounting information is created and use by the manager in the organisation rather than being aim at use by shareholders, creditors and public administration bodies. It focuses on the forward looking rather than looking at historical data because in a practice organisation incident happens randomly and unpredictable, but timeliness of information is required. The information usually classified and use by management rather than publicly reported. And it is computing using management information system accordingly to the needs of management no need to follow accordingly to general financial accounting principles and regulations because information is generate to satisfy managers' information needs.
Management accountant is experiencing the revival of response of technology change, globalization and the continuously growing risk management issues. 'In these challenging times, management accountant help"steady the ship" by acting as their organizations' interpreters, sage advisors, and ethical "keepers of the numbers" (Sharman 2006).
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Management staff understands of good business results from the program, the dynamic process of and practices that are well designed and properly implemented and managed. Certification Management accounting is to help them achieve good qualification with Manager lead business because they get an advanced certification solved inside the Organization all the important aspects of accounting.
The management accountant plays an important role in the marketing strategies in the organisation 'by contributing formulation and implementation of strategy and by helping managers to improve organisation's competitive advantage' (Langfield-Smith et al. 2009). For example when a new product begin to introduce to the market, management accountant need to collect information, analysis, strategy planning, implementing plans, controlling, costing goods and service.
Response to the change in the business environment
When changes in the organisation take place, there will be a new management accounting technique, strategy and approach to cope with the changing in the organisation, the firm need to increase their competitiveness. I.e. 'change in the business environment: Deregulation of the service sector - banks, communications, and utilities. Organisational responses Employee empowerment, team bases structures and computerised. Management accounting responses: measures of shareholder value and strategic performance measurement system, such as benchmarking' (Langfield-Smith 2009).
The global financial crisis began with sub-prime loans in 2008, with the breakdown of several large US financial institutions has been collapsed. Such as Lehman Brother is a global financial services company, recently declared bankruptcy in 2008, participated in the commercial investment banking, research, and trading, equities and fixed income sales, private equity and private banking and investment management,. This is a major primary dealer in the U.S. bond market.
In the September 15, 2008, 'the company filed for Chapter 11 bankruptcy protection' (Mamudi 2008), its employees and customers, a substantial loss in its stock, and depreciation of its assets by credit rating agencies. Lehman Brothers Inc. will shut down with more than '600 billion U.S. dollars more in debt' (Mamudi 2008) - in the largest bankruptcy in U.S. history.
Lehman's collapse arises from the sub-prime crisis has led to U.S. financial crisis, which in turn exacerbated this volatility. To analyze the reasons for Lehman bankruptcy, it is necessary to understand America's sub-prime mortgage crisis, asset securitization has been referred to as sub-prime crisis.
Asset securitization is the lack of liquidity, but with a stable revenue stream of cash to bring together the assets, through the structural reorganization and changes in credit enhancement that can be sold in the financial markets and circulation of securities.
After the fear of global financial crisis, the markets have fallen the exporters founds that due to a drop in demand in the international market slowing down overseas orders or the overseas buyers having trouble in obtaining appropriate credit. In contrast, the decline in the currency value, then products more cost competitive global market.
Management accountant may focus on retaining existing customers, when experiencing business difficulties that loyalty matters concerned by keep in touch with customer base and continuously to provide excellent services; looking for new opportunities and to build up the growth sectors in the changed market conditions; to observe of new target customers such as those companies to withdraw from the market opportunities; reconsider marketing message to fit into the current business environment to compete with competitors; to take care of firms core high performing staff.
In order to cope with the change of business environment, management accountant required to forecast demand for the next 12 months or more of the firm and to recognize probable capacity and the way to reduce cost of resources (to improve by using of casual labour schemes).
To cutback of spending of a firm by asking discounts from supplier, this could save a lot, when facing a recession. 'When asking for discounts with suppliers, use the guarantee of volume to promote a win-win perspective rather than taking an adversarial approach; upstream and downstream, businesses are facing similar industry conditions' (CPA Australia 2009).
To cut down the waste of resources, this is the simplest thing to do and save money, which help the environment by recycling the papers, consumable controls, reduce energy consumption by create an energy saving program or using renewable energy source.
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'Cost controls - to recognise how external factors that may affect your business and its cost structure' (CPA Australia 2009). Need to focus on those controllable costs. It is better to close off those with less success than expected division.
At the enterprise and economic decisions - understanding the decisions will impact the overall business structure. To develop a model that able to adjust accordingly to different conditions, that will help you make good strategic decision making. 'Industry analysis explains firms' position in the market; this analysis will help to highlight areas of competitive advantage or potential areas of concern' (CPA Australia 2009). It assists to comprehend the global economy and the downturn effect of the economies.
Cash flow control plays an important role in the business operation, better control of cash flow is more important than growing the business; Better control in order to expand the business and meet the demands of the market and reducing the stress of funding arguments.
Performance management system - is an essential tool to identifying and evaluating the work performance of an organization, department, employee and many other areas. A fine performing business is mainly focus on maximizing its operational efficiency and to obtain advantage from using the system by screening the work performance of the business in order to achieve the targeted goal and identify performance requirement with the aim of improving management control.
Reduce costs for customers are not simply to cut back any and all expenses randomly. The goal of reducing costs for customers is paying the right price for a good fortune. In a good business, the manager should able to understand you customer and how the products and services are able to reducing the cost for customers. This will let you to discover the challenges that customers and the business sales are likely to face. In addition, it can also cause prompt to the customer loyalty.
An activities of Management Accountants, including forecasting and planning, execution, analysis of variance review and monitoring of the operations inherent in the cost of those who have the financial and operational team dual accountability. Accountability may be more meaningful, and corporate finance departments of the corporate management team of task example is costing actions research, business-driven metrics, sales management, scorecarding and client profitability analysis of new product development. On the contrary, certain financial reporting and reconciliation of the source system, risk and regulatory reporting financial data would be more useful in the corporate finance team, they are charged with aggregate certain financial information from all parts of the company. A widely held view and financial accounting of the progress career path is financial accounting, management accounting. Consistent value creation concepts of management accountants to help drive business success and strict financial accounting is more compliant and historical.
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