Should Accountants Have a More Significant Role in Corporate Decision-Making

Only available on StudyMode
  • Topic: Decision making, Decision theory, Management accounting
  • Pages : 7 (2143 words )
  • Download(s) : 507
  • Published : August 31, 2013
Open Document
Text Preview
Should accountants have a more significant role
in corporate decision-making?

In the changeable world with dynamic economic situation and fluid market information, corporate decision-making is becoming increasingly difficult for many enterprises. Under these circumstances, executives and managers are expected to be equipped with accurate, related and real-time information and live up to expectations of strong profits and growth (Royaee, Salehi and Aseman, 2012). Accounting and financial information, which is becoming easier to collect and access, is widely employed by decision makers as the main resource of information in the process of managerial decision making. In other words,the primary purpose of an accounting report is to provide adequate and reliable data which helps managers to orientate the current situation and make decisions for sustainable development. This paper is going to argue that accountants and, in particular, management accounting should be valued more and should have a more crucial role in managerial decision-making. To establish the need for greater recognition, the essay will firstly elucidate the roles of management accountants and management accounting in a firm’s managerial process. Then, the rules of accounting decision-making will be presented to show their affectivity for a business. The pivotal influences of accounting reports in the process of decision-making are stated as a third step. The last section of the paper will examine the drawbacks of accounting decision-making.

Before illustrating the roles of management accounting in managerial process, to clearly clarify its importance in a company, it is imperative to understand the historical background of management accounting. According to the Institute of Management Accountants (IMA), management accounting (MA) is a profession that involves partnering in management decision-making, advising planning and performance measurement systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy. A decade ago, Ernst & Young (2003) and IMA conducted a survey which states that management accounting was not contributing to improve the applicability of costing information and perception into cost measurement. However, recently there was evidenced that the role of management accounting has significantly changed by contributing considerably to the cost reduction effort after a nine-year period when the “2003 Survey of Management Accounting” was reevaluated with new measurement approaches (Clinton & White, 2012).

In the past several decades, management accountants and management accounting have made great progress in improving the accuracy and effectiveness of accounting information in decision making. Firstly, the role of a management accountant is now important for deciding how a corporation operates. Cokins, Capuaneanu and Briciu (2012) state that has been changed significantly by a great shift in the demand of managers from just requiring what things cost (such as a product cost) and what happened in the past to a new need for specific information about what their future costs will be and why. In other words, the new influences of management accountants in a corporation are providing useful information, participating in decision-making process, and examining company performance. Cokins et al. (2012) also state that the job of management accountants is to provide efficient information, which is necessary for making decisions and reflecting the effects of risks and uncertainty, as well as the most likely results. In addition, they are expected to analyze and formulate information in a comprehensive format, collaborating with the decision makers and facilitating them to complete their decisions. Because decision-making aims at future management, which requires detailed information on future costs, management accountants must...
tracking img