management accounting tools for today and tomorrow
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Management accounting tools for today and tomorrow
CIMA gratefully acknowledges the assistance of Professors David Dugdale and Falconer Mitchell with the survey design and Rebecca Ryan and Deloitte DMCS Limited for reviewing the survey instrument. CIMA would also like to thank Ford of Europe and Dave Mack in particular for agreeing to pilot and to comment on the earlier version of the survey. In addition CIMA would like to thank all the respondents who have completed the 2009 survey.
Survey design by Ivan Kovachev; data analysis by Ivan Kovachev and Louise Ross; report by Louise Ross and Ivan Kovachev.
Management accounting tools for today and tomorrow
About the survey 4
1 Overview of results 6 1.1 Organisation of the finance function 6 1.2 The influence of organisation size 6 1.3 The range of tools currently in use 7 1.4 The tools most likely to be introduced soon 7
2 Responses by sector 8
3 Responses by region 9
4 Responses by organisation size 10
5 Operational tools 11 5.1 Costing tools 11 5.2 Pricing tools 13 5.3 Budgeting tools 15 5.4 Profitability analysis tools 17 5.5 Investment decision making 18 5.6 Other operational tools 19
6 Managerial management accounting 20 6.1 Performance measurement tools 20 6.2 Performance management tools 21 6.3 Reward systems 24
7 Strategic tools 25 7.1 Performance reporting tools 25 7.2 Strategic techniques 25
8 Conclusions 28 8.1 Number and variety of tools 28 8.2 Traditional versus new tools 28 8.3 Size and regional variations 28 8.4 Current issues for respondents 29
MaNageMeNT aCCOuNTINg TOOlS fOR TOday And tOMORROw4
The CIMa management accounting survey asked about current and intended usage of more than 100 management accounting and related tools, and was completed by 439 respondents in July 2009.
The survey covers techniques familiar to other management disciplines, and includes general approaches as well as the applied techniques suggested by the term tools.
About the survey
MaNageMeNT aCCOuNTINg TOOlS fOR TOday And tOMORROw
A selection of management accounting tools
The survey covers 11 categories of management accounting tools, split into operational, managerial and strategic groups. The number of tools in each category varies from five (reward systems) to 16 (strategic tools). use of the tools is not mutually exclusive for example in relation to the operational groups pricing tools category, different segments of the business may use different pricing strategies, or two or more tools may be used in combination (for example cost-plus pricing and transfer pricing between business units).
the importance of selection
Management accountants must choose the right tool for the specific context, a decision based on their technical knowledge, professional experience and judgement. While an accountant involved in financial reporting operates in a standardised environment that allows little choice, a management accountant must use a wide range of skills to choose the right tool for the job.
A healthy turnover
using the right tool for the right context means that practices change as organisations needs change, and also as new tools are introduced, proven and disseminated throughout regions or industry sectors. The management accountant should reassure users that such a turnover in the use of tools is natural and beneficial, and does not signify a sudden lack of confidence in a tool, or an admission that its former application was a mistake.
what the survey tells us
The survey asks respondents both about their current use of tools, and their intentions to drop or adopt tools. from this we can draw conclusions about the extent to which respondents have settled on their range of tools, or are searching for better solutions. The information captured by this survey represents practices and intentions from the surveyed population as at summer 2009, which can be compared to other relevant surveys, and act as a snapshot or baseline benchmark for ongoing CIMa research.
This paper identifies the most popular current management accounting tools in each category. further data from the survey will be published subsequently, to allow practitioners to identify those tools which most respondents intend to adopt within the next two years, which might therefore be worth investigating by non-users; the least popular tools, and those which current users most intend to drop results which may indicate that certain tools are becoming outdated, or are a source of disappointment to users.
Other management disciplines may be interested to learn about the range of tools (or functions) with which the management accountant is or can be familiar, and also about general developments in the discipline. This will be of interest too to relevant teaching and research academics. Consultants, software developers and other solution providers will be interested in the identification of popular and unpopular tools, and trends in their usage.
MaNageMeNT aCCOuNTINg TOOlS fOR TOday And tOMORROw6
The ten most used management accounting tools across the whole survey are shown in figure 1.
Figure 1: Most used tools (percentage of respondents)
1.1 Organisation of the finance function
It is interesting to note some of the responses in respect of the organisation of the finance function.
Just over 50% of respondents advise that their finance function is organised as a shared service centre which serves all business units.
26% of respondents advise that some finance activities have been outsourced.
1.2 the influence of organisation size
for most management accounting tools the size of the organisation is a factor: larger organisations are more likely to use each tool. This was seen even for simple tools for instance more of the very large organisations use payback, an unsophisticated investment decision making tool.
There were some areas where organisation size did not seem to influence usage strategic tools and, to a lesser extent, budgeting tools.
Net profit margin
Profit before tax
Financial year forecasting
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Performance measurement tool
Key P&L reporting line
1. Overview of results
1.3 the range of tools currently in use
Most organisations use a range of management accounting tools. an average for each category is given, but further research is needed to determine which types of organisation, or which region or industry sector, use most tools as this may suggest dissatisfaction with current techniques or a willingness to experiment.
1.4 the tools most likely to be introduced soon
as an indication of how the management accounting discipline is developing in the short-term it is particularly interesting to look at those tools which respondents intend to adopt within the next two years, as follows (figures in brackets are the number of respondents intending to introduce that tool):
1. Balanced scorecard (50) the tool most likely to be adopted soon, and already very popular.
2. Customer profitability analysis (36).
3. Rolling forecasts (34) already very heavily used, and apparently to become even more popular.
4. activity based management (aBM) (31).
5. environmental management accounting (29).
6. Product/service profitability analysis (28).
7. activity based costing (aBC) (25) although evidence from other studies suggests many users do not achieve full implementation.
8. Post completion audits (25).
9. Business process re-engineering (BPR) (24).
10. CIMa strategic scorecard (22).
8 MaNageMeNT aCCOuNTINg TOOlS fOR TOday And tOMORROw
Half of the surveys respondents are employed in the service sector, made up of professional services, financial services and other services (see figure 2). almost one third of the responses are from the manufacturing sector. Note that the sector labelled other comprises public and education and all other responses (from industry sectors such as retail and trade; IT and telecommunications; hospitality etc).
Figure 2: Responses by sector
figure 3 shows how the responses by sector are split across the five regions of the survey. This shows that in the asian and europe (other than uK) regions, more of the responses are from manufacturing in comparison to other regions.
Figure 3: Responses by sector within region
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
26% 47% 28%
30% 47% 23%
44% 44% 13%
45% 43% 12%
27% 53% 20%
Rest of World
Rest of Europe
2. Responses by sector
figure 4 shows that a large proportion (61%) of the respondents is based in the uK. almost all respondents are CIMa members who have been specifically invited to complete the survey, with a very small number of other respondents. The regional composition of respondents to the survey therefore reflects global CIMa membership, which is 75% uK based.
Only 12% of the respondents are from thos