19th February 2014
Two leading accountancy bodies have launched a joint drive to improve management accounting practice globally. The Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) are proposing a comprehensive framework to bring consistency to management accounting practices.
The draft framework, Global Management Accounting Principles: Driving better business through improved performance, aims to help companies improve their management accounting processes and benchmark performance.
It includes guidance on how businesses should identify financial and non-financial information suitable for analysis and model scenarios for firms to work with.
“Management accountants have the ability and judgment to make objective, ethical decisions that consider the public interest. But the quality of management accounting remains varied,” said Charles Tilley, chief executive of CIMA. “By working together, we can contribute to a comprehensive system fit for our era of uncertainty that will, put simply, make business better.”
The draft also stresses the importance of integrated reporting, a development that has taken root in recent months with the launch of the first International Integrated Reporting Council (IIRC) framework.
Commenting on the CIMA/AICPA proposals, IIRC chief executive Paul Druckman suggested there is a strong link between the principles of integrated reporting and management accounting.
He said: “Great management accounting has long been a critical part of helping businesses and organisations deal with an ever-widening set of challenges.
“We should all support this plan to put in place a consistent global management accounting framework, which will help more and more organisations deliver value over the long-term.”
The proposals are already drawing support from businesses. Douglas Flint, group chairman of HSBC Holdings, described management accounting as “a critical aspect of the finance function”.
Shannon Anderson, professor of management at the University of California-Davis, also welcomed the draft framework, explaining: “Management accounting is not simply a collection of tools or practices, but a continual process of articulating, executing, and evaluating the strategy and business model for delivering value.”
Consultation on the proposals will last three months until May 10th and will span all 177 countries covered by the AICPA and CIMA.