Do Management Accountants Perform Decision Analysis Better Than Accounting Students?
Victoravich, Lisa M., Management Accounting Quarterly
Traditionally, the role of management accountants has been described as that of a counter, recorder, and reporter of financial information. This role has recently shifted, however, from "bean counters" to business partners.
As business partners, management accountants are seen as organizational team members and are involved in both strategic and operational decision making. (1) This raises the question: "Do management accountants really excel at decision analysis and outperform accounting students who lack on-the-job management accounting experience?" This question is answered by comparing the performance of IMA[R] professionals to that of non-professionals at a universal task.
If management accountants are now indeed business partners, it is imperative that they acquire a broad knowledge base and maintain a skill set that enables them to add value to the organizational decision-making process. By adding value, management accountants will assist top management in running the business. This means providing relevant information, explaining how the information impacts a decision, and participating in the decision-making process. (2) In interviews, 300 management accountants who had greater than seven years of management accounting experience noted that they spend more time analyzing information and being involved in decision making and less time preparing financial statements than they did five years ago. (3)
Also recognizing this changing role, the Chartered Institute of Management Accountants (CIMA) created the Improving Decision-Making in Organisations Forum. The forum contains senior management accountants from top companies around the world and has set out to determine how the transformation to business partner improves decision making in organizations. The forum ascertains that key roles of business partners include framing a decision, supplying management with information, contributing insights, and analyzing alternatives. (4) It is apparent that, to be business partners, management accountants should excel at identification and interpretation of relevant information in order to make accurate and efficient decisions.
Assuming that management accountants are involved in gathering relevant information and making decisions, they should excel at these tasks. Despite the global attention given to this new role, no study has investigated the ability of management accountants to excel at a germane decision-making task. Examining their performance at realistic decision making will give firsthand insight into their abilities. This insight is complementary to survey- and interview-based research, which has only investigated whether the duties of today's management accountants are consistent with that of business partners. (5) Additionally, management accountants are likely to face competition from information technology specialists or production managers with strong financial bases. (6)
ACCOUNTING EXPERIENCE AND DECISION MAKING
Managerial decision making is often conceptualized as a process in which decision makers specify possible alternatives, identify the relevant costs and benefits of each alternative, and select the best course of action. (7) If management accountants excel at these tasks--and hence are active members of organizational decision making--they will participate in determining how resources are allocated to various investment opportunities. Thus, in determining how resources should be allocated, management accountants are likely to be responsible for collecting relevant information, analyzing alternatives, and making a recommendation based on that information.
Early research in management accounting found that years of general business experience does not improve decision making. (8) Although there have not been a large number of studies, a high level of management accounting experience has been shown to lead to integration of opportunity …
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Publication information: Article title: Do Management Accountants Perform Decision Analysis Better Than Accounting Students?. Contributors: Victoravich, Lisa M. - Author. Journal title: Management Accounting Quarterly. Volume: 12. Issue: 3 Publication date: Spring 2011. Page number: 28. © 2009 Institute of Management Accountants. COPYRIGHT 2011 Gale Group.
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