Managers are increasingly shifting from reacting to after-the-fact outcomes to anticipating the future with predictive analysis and proactively making adjustments with better decisions. Despite some advances in the application of new costing techniques, are management accountants adequately satisfying the need for better cost planning information? Or is the gap widening?
There is a widening gap between what management accountants report and what managers and employee teams want. This does not mean that information produced by management accountants is of little value. In the last few decades, accountants have made significant strides in improving the utility and accuracy of the historical costs they calculate and report. The gap is caused by a shift in managers’ needs, from just needing to know what things cost (such as a product cost) and why, to a need for reliable information about what their future costs will be and why.
Despite the accountants advancing a step to prioritise the increasing needs of managers, the managers have advanced two steps. In order to understand this widening gap and, more importantly, how accountants can narrow and ideally close the gap, let’s review the broad landscape of accounting as described in Chapter 4, ‘A Taxonomy of Accounting and Costing Methods.’
Contrary to beliefs that the only purpose of managerial accounting is to collect, ...