A paradox which continues to puzzle me is how chief financial officers (CFOs) and controllers can be aware that their managerial accounting data is flawed and misleading, yet not take action to do anything about it.
Read MoreHere is a fictitious story. But how true could it be?
Our company’s quarterly financial results were just announced. Our loss was unexpectedly double last quarter’s loss, and we have now been in the red each quarter for over a year. How can this be happening to us? Our company has been profitable for decades!
Read MoreThere is a widening gap between what the CFO and accountants report and what internal managers and employee teams want and need. This does not mean that information produced by the accountants is of little value. In the last few decades, management accountants have made significant strides in improving the utility and accuracy of the costs they calculate and report. The gap is being caused by a shift in managers’ needs – from just needing to know what things cost (such as a product cost) and what happened – to a need for detailed information about what their future costs and profits will be and why. Examples include driver-based rolling financial forecasts and true marginal cost analysis for what-if scenarios.
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