What’s the definition of an accountant? Some may say they are people who solve a problem you didn’t know you had in an way you don’t understand. Along these lines, it is also said that “accounting will prove anything, even the truth”. Yet, these slightly derogatory views, miss the extremely important function of accounting generally and performance management accounting specifically. However, in order to obtain business success and value creation, goals which the ACCA (Association of Chartered Certified Accountants) believes are at the heart of a sustained economic recovery, corporations must use the “language of business”.
The ACCA is a global body for professional accountants whose principal aim is to provide business relevant, qualifications and professional development. These aim to give all the essential knowledge that underpins the function of management accountancy and also the skills with which to put it into practice. The primary qualification is composed of fourteen examinations and papers. From these, performance management accounting, F5 paper, which has its own microsite, is probably most pertinent.
This examines the concepts which are fundamental to an innovative body of new and dynamic practices in business accountancy. Throughput accounting,for example, is indicative of this change in direction. This notion makes clear the increasing interdependence of the various functions in an organisation and reveals one of the principle costing methodologies for performance management and decision making. In addition, the mechanics and execution of behavioural budgeting is taught. This modern way of budgeting is something of a departure from the traditional quantitative approach and provides an appreciation of how budgets can be used as objectives to motivate aspirational business performance.
The value of professional accountancy and its place at the head of the body corporate, is exemplified in research recently conducted by the ACCA and Mercer, a human resources consultancy, entitled ” Generation Y:Realising the Potential”. The objective of the survey was to reveal the outlook of the youngest layer of professional accountants in employment and can be viewed on the ACCA website. Amongst many other findings, the research confirmed that this echelon of goal orientated and clear sighted professionals “see(s) the accountancy qualification as a great step to a broader business career….”. Additionally, Chris Johnson, Mercer’s UK Head of Human Capital stated that “Value creation is key for organisations in the future. Increasingly human capital will be the primary source of competitive differentiation.”
So after all then, accountancy really is no joke.
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Filed under Accounting, Bookkeeping by on Sep 25th, 2010. Comment. 
The “language of business” is sometimes how accounting is described. It gives a structure of practice, regulation, governance and concepts, like performance measurement, around which corporate entities can build effective and successful operations. Yet businesses now exist in an ever changing ecology, presenting new challenges for an accounting profession that wants to continue to be the lingua franca of corporate life.
Through its “Accountancy Futures” programme, the ACCA, (Association of Chartered Certified Accountants) seeks to consider the issues that are vital to the profession in the future. The programme focuses on four main areas, access to finance, audit and society, carbon accounting and narrative reporting. In respect of the latter, the ACCA hopes that it can stimulate debate and so improve the value of narrative reports for stakeholders in terms of their decision-usefulness, reliability, comparability and relevance.
Established in 1904, the ACCA is the biggest and fastest growing global professional body, with a principal aim of delivering business relevant, qualifications and professional development. Brendan Murtagh, ACCA President, recently stated that “accountants who have the benefit of a sound professional education are central to the development and ongoing success of all economies”. A number of the ideas considered in the “Accountancy Futures” programme are the mainstay of performance management accounting, paper F5 of the body’s primary accounting qualification.
This comprises fourteen areas of study with an exam for each. Of these papers, nine are described as “fundamental” and a further five as “professional”. The Syllabus of F5, provides accounting professionals with the capabilities to determine whether an entity is working, and most importantly, the skills to make changes and rectify the situation if it isn’t. It covers in depth, practical concepts such specialist cost and management accounting techniques such as target costing, decision-making, quantitative and behavioural budgeting, standard costing and even performance measurement and control.
In its article on the connection between corporate social responsibility and cost control the ACCA contends that business reporting is the vital link between sound environmental practice and strong financial performance. Narrative reporting provides a means for businesses to properly demonstrate and measure their social, environmental and sustainability agendas; factors at the forefront of the fast changing corporate landscape.Businesses with the human capital qualified to meet these demands will endure and do well and ACCA trained accountants have all these skills in abundance.
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Filed under Accounting, Bookkeeping by on Sep 12th, 2010. Comment.
Without accountancy, business cannot survive. Effective performance management accounting, is not at all the domain of the stereotypical bean counter, but allows management to make good decisions and is the lifeblood of all sound business operations.
The ACCA, is the premier organisation for professional accountants throughout the world. The aim of the qualification is to provide the core knowledge needed for management accountancy and also the skills to utilise this learning in the workplace. The qualification is built on a set of fourteen exams, nine mandatory “fundamental” papers plus five professional papers. In addition, there is a separate, compulsory, professional ethics module. Examinations occur biannually, in June and December. Yet, this is not a dull, academic programme of study but a springboard to making an effective contribution to the profession and business.
Sometime in the 1950s, an educational psychologist highlighted six areas of cognition relating to learning. In ascending order of cognitive difficulty, these were knowledge, comprehension, application, analysis, synthesis and evaluation. These are amalgamated into three levels by the ACCA syllabus. Knowledge and comprehension are represented by Level 1. Level 2 represents application and analysis, demanding evidence of analysis for problem solving, recognition and interpretation of subtle information and the ability to infer and draw conclusions. The concepts of synthesis and evaluation are captured under Level 3.
This approach is brought into sharp relief by reference to the F5 paper on performance management accounting. Level 2 capabilities are demanded as this is a “skills” based topic. Lifecycle costing for example, is covered in Part A. This states that in order to determine whether a profit will be made, total revenues should be set against total costs, whenever these are incurred. The course requirement to understand how to calculate lifecycle unit cost, and analyse and apply the results, gives the practical ability to control rather than just measure, business performance.
Furthermore, the compulsory, three year, practical element of the qualification confirms the need for the practical application of the skills and learning. Students must meet thirteen performance objectives within this timeframe. Several objectives in respect of the budgeting process can be found under the performance management option. If selected, students will not only need to understand quantitative and behavioural budgeting but must use these in the planning, producing, controlling and monitoring of the budget. The theory alone is insufficient either to be a successful accountant or an ACCA student.
Filed under Accounting, Bookkeeping by on Sep 6th, 2010. Comment.
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