and its importance in a managing accounting context
5th May 2010
A management consultancy firm is in the business of offering knowledge based professional services and is required by law to keep a detailed account of its engagements on projects which is evidenced in its overall financial accounts. However, financial accounts are a snapshot of a consultancy’s performance at a particular moment in time or in other words it is based on historical performance. Quite the opposite, management accounting is concerned with the provision of providing real-time (or very near) information to decision makers within a consultancy to help make better financial decisions to improve the efficiency of ongoing processes (Drury, 2010).
Management accounting and the financial data it provides to a business is critical to its success. This is especially accurate for a management consultancy. A management consultancy spends time on client assignments which are component managed and reported on daily, weekly or monthly in management reports. Details on the progress of projects, resource v outsource decisions, resource utilisation, costing and budgeting are captured on each and every client assignment which assists with the decision making process. It is this level of detail that allows a consultancy to understand if it is on target against an initial job costing, project strategy, whether additional resource is required or if resource should be pulled and used elsewhere in the business.
The aim of this paper is to understand consultancy project planning, to critically analyse and interpret the application of a relevant costing model, to understand the importance of budgeting and the decision making process around resource utilisation. The overall aim of this paper is to understand the importance of data capturing in the consultancy sector and the importance of management accounting as... [continues]
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