|GARY SIEGEL, CPA, PhD, is an associate professor in
the School of Accountancy at DePaul University, Chicago. He is
president of the Gary Siegel Organization, an opinion research
and behavioral accounting firm. He was project director of
several American Institute of CPAs studies, including the 1983
Practice Analysis of Public Accounting, and he was project
director of the 1996 IMA Practice Analysis of Management
C. S. KULESZA, CMA, CFM, is senior vice-president and controller of ITT Automotive in Auburn Hills, Michigan. A vice-president of the IMA, he is chairman of the IMA Consortium for Accounting Education Improvement.
JAMES E. SORENSEN, CPA, PhD, is a professor at the School of Accountancy, University of Denver. He was a member of the research team for this study.
How well prepared are accountants in business and industry for the new accounting—where the emphasis is on information analysis and strategy setting rather than on the conventional tasks of data collecting and historical reporting? And how well prepared are financial managers in public practice for their changing relationships with corporate clients?
More About This Study
This article analyzes only a portion of the data collected in the survey, which was sponsored by the Institute of Management Accountants (IMA). The complete report and the database are available on the Internet at http://www.rutgers.edu/accounting/raw/ima. The database can be imported into a spreadsheet so users can structure the data to compare their industry against others in the study.
The project is essentially a practice analysis—a study of the work corporate accountants actually perform or are responsible for and the competencies or skills necessary to do that work. The data, collected from random samples of accountants in business and industry, were drawn from the membership rosters of the American Institute of CPAs, the IMA, the Financial Executives Institute (FEI) and the Institute of Internal Auditors (IIA). In addition, interviews were conducted with accountants employed in nine U.S. companies.
Information on the format and structure of the data is in appendix F of the practice analysis report. Instructions on how to download the data are available on the IMAs home page (address above) or by calling the IMA librarian at 800-638-4427, ext. 235.
In an effort to answer those questions—and to help the profession prepare for the future—a practice analysis of management accounting surveyed some 800 CPAs and other finance professionals representing a broad segment of the profession. We asked them about the nature of the work they perform today and what they anticipate they will be doing in the future as the profession evolves from the traditional stereotype of number-crunchers or corporate cops to team members, business partners and decision-support specialists. (For more on this evolution, see "Finances Future: Challenge or Threat?" JofA, Apr.97)
The results of this practice analysis are of more than academic interest. Applied correctly, the information can be used to help
- Industry CPAs to arm themselves with the skills they will need if they are to succeed as true business partners, to operate their finance operations more effectively and to develop aids in performance evaluation, career counseling, recruiting and training.
- CPA Firms to develop new services.
- Accounting educators to develop new curricula that will better prepare students for work in corporate accounting.
In this study, the corporate accounting work was divided into 30 activities and 162 relevant areas of professional competencies. This information was compiled with the assistance of the Institute of Management Accountants committees on academic relations and management accounting practices and the American Institute of CPAs management accounting executive committee.
WHAT DO YOU DO?
Without a doubt, management accountants perform a wide assortment of tasks. Exhibit 1, shows how often accounting professionals in the survey perform each of 30 activities.
The accounting managers were asked to list and rank by order of importance the professional activities and responsibilities that their employers will probably value most highly in two and three years. The respondents named the following—many of which did not even exist just a decade or so ago:
- Customer and product profitability.
- Process improvement.
- Performance evaluation.
- Long-term strategic planning.
- Computer systems and operations.
- Cost accounting systems.
- Mergers, acquisitions and divestments.
- Project accounting.
- Educating the organization.
- Internal consulting.
- Financial and economic analyses.
- Quality systems and control.
In another part of the study, we asked the management accountants to list, on a scale of 1 to 5, with 5 being the most important, the activities they considered vital to their work and, using the same scale, to assess the knowledge, skills and abilities needed by entry-level accountants (see exhibit 2). By measuring the gap between the two, we were able to determine what successful CPAs must learn on the job or in continuing education courses. Or, put another way, the practice analysis reports the gap between what accounting students learn in college and what they actually need to be competent corporate accountants.
HOW TO USE THE DATA
There are many ways to use these data—depending, for example, on your companys industry, your role in the organization and whether you want to use it as a guide in hiring new accountants or in planning a professional training program for your staff. Because of space limitations, we are able to show only a handful of applications. We hope these examples spur your interest sufficiently to download the database from the Internet (see the sidebar), customize it to your needs and examine the information carefully. Were sure youll find treasures.
FINANCE vs. MANUFACTURING
The corporate cultures in which most management accountants work have many commonalities, but the differences from one industry to another can be significant. In this example, we compare manufacturing and financial services. As one might expect, exhibit 3, shows little difference in the percentage of manufacturing and financial service respondents who spent time working in accounting systems, accounting policy or consolidations. On the other hand, respondents in manufacturing companies were more likely to do cost accounting than those in financial services. And not surprisingly, respondents in manufacturing companies were involved in three work activities that are expected to increase in importance in the future: customer and product profitability, financial and economic analysis and process improvement.
The information from this part of the study can be used in many ways. For example, a finance executive in a manufacturing company might look at these data to determine whether her departments balance of activities is comparable to others in the industry. If her staff spends little or no time at all on process improvement, she may conclude that is a strategic error, since 60% of her counterparts in manufacturing companies were engaged in process improvement techniques. Therefore, it may be in her best interest to commit resources to process improvement in order to maintain or improve her companys competitive position.
Likewise, a chief financial officer in the financial services industry might conclude from the data that his counterparts in manufacturing companies are more likely to be involved in process improvement and customer and product profitability. And he could learn from them how his time and his staffs time should best be structured to perform this work activity.
A CPA in public practice may use this information to help corporate clients review their work activities and help them gear up for coming changes.
CUSTOMER AND PRODUCT PROFITABILITY
Accounting executives in both manufacturing and financial services companies generally share the belief that customer and product profitability will be a far more important work activity in the future. In general, however, those in manufacturing are more advanced in analyzing that information.
If you are a top-level accounting executive in a financial services company, exhibit 4, shows how your counterparts in manufacturing carry out particular work activities. Focusing on customer and product profitability, note that 45% of the top-level financial executives in manufacturing companies review the work of others, while 34% both review and carry out the work themselves.
If you are a top-level accounting executive in a manufacturing company, you could look at exhibit 4 in a different way: Compare your activities with those of your peers to determine whether your activities need to be revised. For example, in other manufacturing companies lower-level personnel are more involved than top-level executives in carrying out and reviewing this work. If you spend a great deal of time designing, maintaining and using systems to measure customer and product profitability, you may conclude that you should delegate more of the responsibility for this work to subordinates.
Download the database to determine if company size determines whether a manufacturing executive is more or less likely to do the work or review the work of others. Armed with this information, you can review your organizations staffing and consider changes that would improve organizational effectiveness.
A CPA in public accounting may use this information to suggest outsourcing possibilities to clients.
FINANCIAL AND ECONOMIC ANALYSIS
If you are a CFO in a manufacturing company and delegate most of the responsibility for financial and economic analyses to your subordinates, examine exhibit 5, at right, and ask yourself, "Do I need to be more involved in carrying out this work? Only 17% of my peers are involved in review only. It may be in my best interest to invest more of my time participating in these activities."
A CPA in public practice may use these data to develop new services that would help corporate clients make the appropriate work assignments.
As should be obvious, these data can be used by corporate accountants for recruiting, performance evaluation, career counseling, training and preparing for changes in corporate accounting. Furthermore, CPAs in public practice can use the results to help corporate clients in staffing, outsourcing and developing change strategies. There are literally hundreds of ways that the data can be segmented and analyzed to provide custom reports.
Will the database provide all the answers you need? Definitely not. But it does provide a solid basis for reviewing your work activities and competencies and comparing them to others either in your industry or in other industries. Programs and objectives can be reviewed, organizational and individual skills can be evaluated and actions can be taken to make sure your company has the right balance among these activities to ensure success.