Accounting Techniques: Louise Ross Discusses the Results of CIMA's Recent Survey of Financial Management Tools

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Last year CIMA introduced a new activity to monitor changes in our profession: an annual survey of the use of more than 100 management accounting tools and techniques. This survey complements our existing work on the future of finance and the changing roles of accountants in business.

Measuring both the current and predicted future use of a wide variety of tools enables us to track changes in practice and to identify the extent to which innovations are being adopted. This is especially important in our discipline because management accountants have to select and then use properly the right tools to perform their decision-support role--where financial accountants and auditors have fixed standards to adhere to, we have choice.

The importance of choosing the right tool was illustrated by a 2006 study by Accenture. This found that 87 per cent of respondents thought that applying appropriate tools and technologies was extremely or very important for them if they were to provide a high-performing finance function. Our survey has found that the most widely used tools are those shown in the chart below.

The average respondent uses 33 tools. Larger organisations use more tools and are more likely to apply each one. For example, activity-based costing, which is notoriously resource-intensive, is used by 22 per cent of small organisations (those with fewer than 50 employees), but by 46 per cent of large organisations (more than 10,000 employees).


The respondents are using a mix of traditional and newer tools, which suggests that our discipline is striking a healthy balance between enduring principles and creative reinvention. This is illustrated by the data for costing tools: traditional techniques such as overhead allocation and variance analysis are used by 66 per cent and 72 per cent of our sample respectively. Newer techniques have been less widely adopted: ABC is used by 29 per cent of respondents, target costing by 15 per cent and Kaizen by five per cent.

Budgeting is another area where it is interesting to compare old and new tools. Many theorists criticise traditional budgeting for encouraging game-playing, budget-padding and other sub-optimal behaviour, and because it's time-consuming. But the proposed solution known as "beyond budgeting" (used by three per cent of respondents) has a long way to go before it will match the popularity of budgeting's big three: financial year forecasts, cash forecasts and rolling forecasts (used by 85 per cent, 77 per cent and 65 per cent respectively).


We also asked organisations about their plans to abandon or adopt tools in the next two years so that we can track these intentions against trends in future surveys. The tools most likely to be introduced are:

* Balanced scorecards.

* Customer profitability analysis. …