As the Bob Dylan song of the 1960s warned, "The times they are achangin'." Management accountants certainly can attest to the sagacity of those lyrics. But how exactly will the changing times affect CPAs in the years ahead?
Change is not new to management accountants. After all, they are expected to be jacks-of-all-trades and to leap nimbly from one priority to another--handling accounts receivable one day, payables the next, human resources a week later, closing the books at the start of each month and--most demanding of all--dropping whatever they are doing to provide instant information and analysis on everything from inventory to cash flow.
But as Yogi Berra put it, "The future ain't what it used to be." While it's clear that the frantic pace of management accountants will continue, and it's equally clear that the business role these CPAs will play in the years ahead will be significantly different, what is less clear is how many of today's accountants will be willing--or able--to adjust to what many in the profession are now calling the New Accounting.
What is the New Accounting?
An anecdote will help with the definition. Some years ago, when a Fortune 500 company was seeking a new chief financial officer--a search that went on for more than half a year--the president kept rejecting candidates even though they showed ample skills and experience with traditional financial tasks: digging into balance sheets, trimming costs and managing money with sophistication. He even rejected candidates who qualified as so-called business partners--those who understood how the business ran, including marketing and production, and could provide shrewd business advice to top management. "Sure, I want a business partner," the president said, "but I also want someone who can be more than that. I want someone who can help me accelerate change in this organization. I want a change agent."
The new accountants are change agents and more--much more. It's the more that creates problems for many management accountants. But before defining what the more is, some historical perspective.
The most significant shift in the role of management accountants began in the 1980s, triggered largely by the introduction of the personal computer (PC). Top management recognized that the PC could do more than just warehouse data: It could be an analysis tool, generating what-if scenarios ("What if we lowered the price of widget X but boosted the price of widget Y?"), data searches ("How did widget X sell in St. Louis in February?") and real-time reporting ("How many widget Xs do we have in the warehouse today?")
So, in addition to all the traditional tasks of the finance department, the PC--the tool that was supposed to make a CPA's life easier--suddenly added new burdens. From then on, accounting was launched on a new journey, but it was a journey into unchartered waters by professionals without a compass and trained to steer a quite different course. What was very clear was that the columnar pad was dead--long live the computerized spreadsheet! And now accountants were being asked to do more than record historical financial records; they were invited--sometimes ordered--to get out from behind their data, become analytical and proactive, look into the future and join with management in making and taking responsibility for all those tough decisions. Further, top management expected the accounting department, in addition to its demanding role processing transactions, to serve as the central information hub and purveyor of all sorts of data stored on the computers.
While all this was going on, the culture of American business was undergoing a sea change, too: Competition among business enterprises was becoming keener--thanks in large part to the efficiency and data-analyzing power of the computer. To stay competitive, top management generally realized that just selling more goods and services was not enough. So it added two new priorities: Improve the quality of products and services and increase productivity. As a result...