Is Management Accounting The Key To Surviving The Bear of All Bear Markets?
Management accounting is the art and science of collecting, managing, interpreting and applying financial information to business decisions, but like a proverbial Dr Frankenstein, have the management accountants created a monster that now has a life of its own? How much of the blame for the global meltdown can be laid at the door of these mandarins of global business?
It’s not all bad news though. The crisis that has so far seen off some of the leviathans of global finance has had a very limited impact on some businesses – even some large international banks. It would seem that not only has the quality of financial decision making been behind some of the worst excesses that led to our current troubles, but that those same processes, albeit with a somewhat more cautious and prudent approach, have been able to protect some of the worlds largest players.
Commenting on the importance of getting this financial analysis and subsequent decision making right, Darren Warner, CFO, Regional Head of Finance, Standard Chartered Bank, Global Markets, MENA and Pakistan said ‘The investment decisions taken by Standard Chartered Bank’s board are based on delivering disciplined financial acumen into strategic decisions that will support the bank’s sustainable growth agenda. The board focuses on in-depth analysis, no longer relying on pure numbers, which translates into commonsense business purpose that is pivotal to generate shareholders’ value’ said Daren Warner, CFO, Regional Head of Finance, Standard Chartered Bank, Global Markets, MENA and Pakistan.
Reflecting on the agenda of the GCC Management Accounting Forum, to be held in Dubai on the 14th of December 2008, John Petty, Representational Councillor of CPA Australia and past member of IFAC PAIB stated ‘As a business advisor to management, the management accountant of the future is in a key position to add value and make a difference. Using strategic business management tools such as the corporate scorecard, rolling quarterly forecasts and customer profitability analysis, the management accounting is stepping out into new areas of decision support. Predicting the future and making it happen, rather than reporting the past against an outdated budget, the new styled management accountant must think and act differently if they are to fulfil this new role.’
‘The management accountant is well placed to progress to be the CFO in the future: this forum along with the supporting workshops will demonstrate the skills and techniques that the management accountant must perfect to be a suitable candidate for that progression’, he added.
This is a view widely supported by the industry – at least the section of industry that are willing to speak out. Raza Chevel, Event Director of the GCC Management Accounting Forum, thinks that if more people had adopted the prudent approach embodied by Standard Chartered and others then we would not be a staring into the abyss of a long and deep global recession.
‘There are many examples of businesses that have consistently positioned themselves to be able to maximise their commercial opportunities and growth without over extending and getting into areas of risk that have no proved to be unmanageable. History will show that management accounting has marked the difference between those that have gone to the wall and those that are here to fight another day’.
The cream of the regional management accounting community are coming together in December in Dubai to discuss this issue and forge a road ahead through the current turmoil. Some, like Emirates Airlines, Saudi Arabian Monetary Authority, Emirates Bank and Saraya will be there to explain the strategies and systems that have seen them thrive while others in their industry went under. Others will be there to listen and hopefully take away some tips as to how they can improve their own management accounting processes to better withstand the still uncertain future.
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