17th November 2014
New global management accounting principles have been released by the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) in order to create better and more organisational decision making.
The principles came about due to research commissioned by CIMA and the AICPA where a survey of 1,100 senior executives culminated in four new principles designed to “support organisations in benchmarking and improving their management accountant systems”.
Based on the research, the CIMA and the AICPA recognised that 73 per cent of companies are allowing workers to become more autonomous but only 36 per cent currently have a framework that would ensure quality decisions are made.
They also found, 91 per cent wish for their decisions to have more insight from financial and non-financial data, while 89 per cent believe a firm partnership with finance could benefit the management of their organisations in the future.
The new principles, formed from the research, will benefit decision making in companies, both public and private, while responding “appropriately to the risks they face” and will “protect the value they generate”.
The four new principles are:
Communication provides insight that is influential - to help you make and implement improved strategical decisions.
Information is relevant - following this helps plan ahead to acquire the knowledge required for the implementation of sound strategy and tactics.
Stewardship builds trust - this promotes the building of a trusting relationship in order to protect resources, assets and reputation in the long-run.
Impact on value is analysed - running through varied scenarios helps show the interaction between management accounting and the business model.
Following these principles should provide the framework for an effective analysis which you can apply at any level to any organisation.
Charles Tilley, chief executive of CIMA, believes a “dramatic improvement in the way decisions are made at all levels” is required due to decisions becoming much more troublesome because “complex information flows so much faster”.
He believes “these Principles will help CEOs and their teams achieve higher-quality decision-making across their organisations”.