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This is a guest post by Mr. V R Kedia B.com FICWA. He is a practising Cost & Management Accountant from Mumbai

Shape of the things to come

• Effect of LPG – Liberalisation, Privatisation, and Globalisation – Global competition, Fittest will survive, sub – optimal units have to die.

• Size, strong balance sheets and a history of achievements are no longer guarantees of continued success.

• Global competition – strategic alliance networks and massive engineering efforts place new demand on all professionals.

• Many of old hierarchies will be replaced by flat structures.

• Every organisation is undergoing a process of internal churning.

• Employees will be judged by their delivery of agreed output and level of services, not on spending 8 hours a day attending their place of work.

• Financial information will be considered as only one portion of the balanced scorecard of measures used in organisational decision making.

• Knowledge will replace physical and financial capital as an organisations primary resource.

• Knowledge and application of knowledge will create competitive advantage.

• People will have to be accustomed to work in permanent stage of emergency.

• More empowerment at the individual level.

• Adoption of team based organisation.

• Internet is rapidly transitioning businesses into real time.

Source: Megapixel

Present role of Management Accountants – Conceptions & Misconceptions

• Cost and Management accounting system had often become of little importance to managers. Many regarded them as minor routine belonging to the accountants, used to evaluate stocks and prepare monthly results speedily.

• There are all the obvious things to do: Statutory and Financial accounting, Taxation compliance, Funding, Management reporting and so on. All of this tends to be in the background; it just has to happen in any event. Management Accountants have not yet progressed more towards bridging the gap between managers and accountants and they have yet to concern more with looking towards the future – at where business is going and what is going to happen.

• Very few conceptual modifications have been brought in, in the cost and management accounting in the last 40 years.

• Cost is too important to be left to the cost and management accountant.

Futuristic role of Management Accountants

• Most of us will be doing the job, which we have never learnt and quite different from what we have been doing so far

• The illiterate of the 21^st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.

• We have to undergo the process of “Learning, Un-learning and re-learning” more frequently.

• Industry will be requiring “learning” professional rather than “learned” professional.

• Future will be “knowledge era”. So obsolesce of knowledge will be very fast and more visible among accounting professionals.

• Management Accountant must re-orient its capabilities, otherwise he will be overtaken by other professionals.

• Management Accountant has to be futuristic instead of provider of historic or current information. He should ask “how better” and help management in decision-making level and for performance improvement.

• ‘Imagination is more important than knowledge’. – Albert Einstein.

• The responsibility of the management accountant is less on forecasting the future and more on contributing to its creation.

• Management Accountant will more often play the role of a catalyst / changing agent rather than an accountant.

• Management accountant will have to be more adaptable to be a versatile professional rather than an accounting specialist.

• Quality of “leadership” will be more in demand than that of a “manager” or an accountant.

• Out –cost ascertainment, product costing and cost control. In –cost management, activity-costing etc.

• Re-positioning of the management accountant – make it more relevant and useful to the organisation.

• Management accountant to change the “Accountant” from their name to information manager/Cost manager.

• Shift from “informational” role to an “influential” role.

• To develop alliance with- finance, MIS/IT, industrial engineering, corporate planning.

• To actively participate along with managers in decision making and strategy implementation.

• Change in mind-set from product profitability to customer profitability analysis.

• No more a scorer of the cricket match – but to be manager advisor to develop appropriate strategy to win the match.

• Management accountant needs to lead the effort in training managers to use accounting information along with balancing it with other key data sources.

• FOREX and Treasury function will be important profit centres.

Training needs

• “If you want to remain employed, you have to remain employable” – Jack Welch, CEO-GE.

• Dilemma for the management accountant will be to either change or cease to exist.

• Management accountant must learn fast, forget even faster and focus on winning.

• Management accountant requires very different skills from those that accountants needed to fill the narrow role that has been adopted by many finance professionals over the last three decades.

• Continuing Professional Education (CPE) programme be made compulsory by the institute for skill upgradation and aquiring the latest technology.

• Able to work well under pressure.

• Development of multi-disciplinary skill.

• Good communication skill – oral, written and presentation and a team player.

• Ability and drive to work against strict deadlines and targets.

• Ability to work with minimum supervision and a busy and dynamic work environment.

• Ability to prioritise multiple urgent tasks.

• Possessing good public relations skill.

• Adding a new skill to executive skill-set, every few years.

• To develop expertise in new ‘Green Field’ projects like-

• Infrastructure sector (Energy, Transport etc.)

• Information and Communication sector

• Service sector

• Agro based industries

Source: National Geographic

Changes in tools and techniques

• Target costing v/s. Historical costing.

• Life cycle costing.

• Activity Based Costing (ABC) – ABM.

• Total Cost Management (TCM)

• Business Process Re-engineering (BPR)

• Benchmarking.

• Kaizen costing.

• EVA / CVA

• Total Quality Management / ISO.

• Cycle time reduction (time compression).

• Supply chain management (SCM).

• Just in time (JIT).

• Elimination of dysfunctional activities.

• Out sourcing and co-sourcing activities.

• Defect prevention v/s. fault rectification.

• Zero Based budgeting.

• Traditional budgeting v/s. New budgeting (comparative Table enclosed).

• Full year budget exercise v/s reactive rolling forecast (computer generated budgets are obsolete the minute they are printed).

• Dis-continuity of time cycle – month end and year end- and to invent information system to handle multiple time horizons simultaneously.

• Radical change in IT/MIS e.g.

• Integrated database that meet the total business requirements (like ERP Software).

• MIS that is accessible and easy to use by all staff.

• Rich supply of information in the form of a variety of report.

• MIS for decision-making.

‘It is never safe to look into the future with eyes of fear’. – E. H. Harriman.

‘My interest is in the future, because I am going to spend the rest of my life there.’ –

C. F. Kettering.

You can contact Mr V R Kedia on +9193241 80717 or email vrkedia@vsnl.com

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I was trying to analyze  the definition of words Profession, Professional Body and Professionalism on www.reference.com.  (These words are interchangeable used when the Accountants discuss among themselves.)

Profession:

A profession is an occupation, vocation or career where specialized knowledge of a subject, field, or science is applied. It is usually applied to occupations that involve prolonged academic training and a formal qualification. It is axiomatic that "professional activity involves systematic knowledge and proficiency." Professions are usually regulated by professional bodies that may set examinations of competence, act as a licensing authority for practitioners, and enforce adherence to an ethical code of practice.

Professional Body:

A professional body or professional organization, also known as a professional association or professional society, is an organization, usually non-profit, that exists to further a particular profession, to protect both the public interest and the interests of professionals. The balance between these two may be a matter of opinion. On the one hand, professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession. On the other hand, they may also act like a cartel or a labor union (trade union) for the members of the profession, though this description is commonly rejected by the body concerned.

Many professional bodies perform professional certification to indicate a person possesses qualifications in the subject area, and sometimes membership in a professional body is synonymous with certification, but not always. Sometimes membership in a professional body is required for one to be legally able to practice the profession; see licensure.

Professionalism

Oxford Dictionary: the competence or skill expected of a professional.

Graham Ward in IFAC website: Professionalism,  is about individual modes of behaviour that command respect and build trust. It is about excellence in service as measured by recognised standards.It is about delivering services or working to standards that meet the needs of and are expected by our clients.

Such behaviours are indeed a necessary part of belonging to a profession but almost any trade could be described as professional in these terms!

As any of us here knows, what separates the professionalism of members of a professional body from the behaviours of other types of so-named professionals, is the requirement to continually reinforce and demonstrate our professionalism, not merely assert it through a one-off qualification. And it is our membership of a professional body – one which embodies the distinguishing features I have defined – that confers on us the obligation to abide by professional standards and regulation.

Of the above three words, I had to search a lot on the word "Professionalism" to find a true meaning to suit  accountancy profession. Members of accountancy profession will be normally be expected to take actions that contribute to the public interest.

The Principle of Professional Conduct on AICPA, US website  summarizes Professionalism in a precise manner.

Section 51: These Principles of the Code of Professional Conduct of the American Institute of Certified Public Accountants express the profession’s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.

Section 52: In carrying out their responsibilities as professionals, members should
exercise sensitive professional and moral judgments in all their activities.

Section 53: Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.

Section 54: To maintain and broaden public confidence, members should perform
all professional responsibilities with the highest sense of integrity.

Section 55: A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

Section 56: A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.

Section 57: A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

I would like to see your comments and views on this topic. Please feel free to comment on the blog post.

Regards,

Santosh Puthran

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Cheers,

Santosh Puthran

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Recommendation

• ask business colleagues if they would recommend their accountant
• ask your bank manager or solicitor
• ask an adviser working for a Business Link (England), Local Economic Development Unit (Northern Ireland), County Enterprise Board (Republic of Ireland), Business Shop (Scotland), Business Connect (Wales) or the Chamber of Commerce.

Questions to ask the accountancy firm

• how many partners are there in the firm?
• how many clients does the firm have?
• who will undertake the work?
• what are the typical response and advice times to be expected?
• what are the scales of charges and rates for partners and staff?
• what is the firm’s estimate of fees?
• what expertise can the firm supply?
• is it possible to speak to existing clients of the firm?

Select a short list of firms

• arrange meetings with at least three firms
• present the requirements/shopping list and a brief summary of the business
• interview the firms; look for a firm that will add value to the business. Look for a firm that plans ahead, will look at future business development and will listen to and respond to business and personal aims
• having selected a firm it will then issue a letter of engagement. This document is a contract between you and the accountancy firm which details, amongst other things, your responsibilities, the firm’s responsibilities and the basis on which fees will be charged.

Source: Universe: A Matter of Perspective

Other pointers for selecting a Accounting firm for small assignments are:

1. First consider what services you might need from an accountant.
2. Determine the expertise you need, verses the knowledge you have.
3. Be realistic about your (or your organization’s) knowledge of accounting.
4. Accessibility and Service Levels. What’s right for you?
5. Don’t Underestimate the value of a Certified Professional.
6. Getting your Ducks in Line.
7. Examining your Options.
8. Make it Happen!

Source: Hunter Group

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Regards,

Santosh Puthran

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ACCA’s exclusive online channel for live and archived video presentations and podcasts. Click here to know more

ACCA - The world’s largest and fastest growing professional accounting body.

Regards,

Santosh Puthran

The ACCA Rulebook contains the bye-laws, regulations and the Code of Ethics and Conduct with which members are required to comply. Read more online.

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I got a very thoughtful greeting on the New Year. I would like to share it with you:

Life is like having a cup of tea.
You sit by the side of the window, lift the cup and take a careless sip,
Only to realize, somebody forgot to put the sugar.
Too lazy to go for it you somehow struggle through the sugarless cup.
Until you discover un-dissolved sugar crystals sitting at the bottom…

The last line really stirred me. My new year resolutions would be to

1. Stir Management Accountants to aspire like Dr D K Sarraf
2. Stir Management Accountants to participate in discussions and share their knowledge on their blogs.
3. Stir Management Accountants in practice to their own website.
4. Stir Management Accountants to become IT savvy - organise their calendar, address book, google reader, stumbleupon and bookmarks on the internet.
5. Stir Management Accountants to plan and travel around the globe for business and pleasure.

Is there anything more? Then I would like you to stir me up! You know where to post your comments .

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Regards,

Santosh Puthran

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