Q1
The comment above was made by an uninformed manager who does not know the potential benefits of having an accountant hired within a business. Crucial information can be obtained from an accountant to help make future business decisions. An accountant is used to make sure that financial records are kept up to date to make sure that business procedures are lawful and accepted policies on the corporate level (Davis, 2019) and so that the information can be used in different areas of business operation. An accountant can be anything from a simple bookkeeper to a strategic adviser, interpreting financial information for senior decision makers in the business (Davis, 2019). Accountants can also be beneficial to organizations where third parties are involved such as vendors, investors, customers and/or banks. Medium to bigger companies would benefit the most from an accountant because they have different laws to abide by and are in a different tax.
Managers have an obligation to understand financial information; money is the reason that businesses operate today. Without understanding the micro/macro of financial decisions, it is hard to understand why a business is operating and how it profits. Businesses need managers who understand finances so that there are no mistakes in data reporting. In addition, a manager should be aware of the allocation of resources as this can affect daily, weekly, monthly and annual decision making. A company can become more sustainable if their finances are fully controlled. Its also much easier for a manager to make decisions that affect the future if everything is controlled and accounted for financially. If a manager doesnt know how much supplies/equipment they are going to need on any given occasion or basis, it will be hard to gauge how much they can afford to allocate towards other parts of the operation. When making strategic decisions about which products and how much to produce, managers must know how revenues and costs vary with changes in output levels (Datar & Rajan, Pg. 49). Managers must be able to distinguish between variable costs and fixed costs.
Lastly, a manager should be able to understand why differences between actual and planned performances/costs arise and to use the information provided by these differences as feedback to promote learning and future improvement within (Datar & Rajan, Pg. 49). Managers use this data as well as defect rates and customer satisfaction ratings, to control and evaluate the performance of different departments, divisions, employees and managers (Datar & Rajan, Pg. 49).
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Q2
Accounting is a means of providing information about an organizations financial performance. Users of accounting information employ it to make numerous investment and financing decisions. Such users include creditors, suppliers, investment analysts, media, and government entities (Adam, n.d.). The comments made by the manager, show how much they were unaware of what an accountant is and their job responsibilities. By being more aware of what others do, could have possibly made the managers job easier rather than harder. One believes that there are three keys statements that help accountants valuable. The income statement provides information about the profit and loss. The balance sheet allows for clear picture on the financial position of the business on a particular date. The cash flow statement is a bridge between the income statement and balance sheet and reports the cash generated and spent during a specific period of time. As an accountant, they are responsible for keeping records as well as finical records of how the business stands. Also, accountants keep track of various expenses, gross margin, and any and all possible debt a organization has. Being an accountant isnt just about knowing numbers but also understanding the different law and regulations within the state such as sales tax, income tax, VAT (value added tax), pension funds etc.
As a manager, it is important to understand ones role and responsibilities. According to (Perryman, 2020), a financial manager responsibility include:
- Providing insights on the financial health of the organization.
- Ensuring the business meets all its statutory and compliance obligations, including statutory accounting and tax issues.
- Keeping track of market trends.
- Looking for cost-reduction opportunities.
- Developing relationships with external contacts such as auditors, solicitors and HM Revenue & Customs.
- Supervising staff
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Q3
My conversation would involve gaining trust from the manager that our accounting department is there to support the managers. The plan would be to work together to focus on efforts on productive management accounting reports that give the management team knowledge well beyond the profit and loss (P&L) statement. In a past company, I worked for we constructed the P&L, but we did not always have the specific knowledge needed for effective decision making. Knowing the relevant information about cost, projections and reports that provide needed education would allow the management to become more financially aware of both the macro and micro numbers. If an organization does not provide this information for managers, then it becomes a challenge for a manager to know where to focus their efforts.
The following is an example of how this conversation might be approached.
Thank you for expressing your opinion on how you view accounting. This means that I have an opportunity to educate and demonstrate how our accounting department can provide you with useful information to assist you in doing your work. There is no doubt that you and the operations team work hard. My hope as the new controller is to provide you with tools such as cost objects that will give you a competitive edge. Cost objects are anything for which a measurement of costs is desired (Datar, 2014). For example, we can target products, service provided, estimate project cost and even give you a breakdown on your customer costs (Datar, 2014).
Our accounting department does indeed pay the bills, track the expenses and yes, pay the taxes. Yet, you need to think of us also as management accounting designed to give you knowledge that supports the organizational goals. We have a vested interest in your success by learning what information is valuable in order to gain a strategic advantage over our competitors. We can provide you with value chain reports based on your needs such as research and development (R&D), design of products and processes, production, marketing, distribution, customer serviced or even numbers to motivate your team (Datar, 2014).
Thus, working together to identify what information and reporting is needed could influence and benefit your future decision making based on actual cost analysis (Meyer, 2013). Though I hear your apprehension, I believe that our accounting team can be a solid source of relevant information that works with your operations team on a daily basis. We look forward to working with you.
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