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Management accountants should be good jugglers

Management accounting is a real balancing act. One shouldn’t make decisions for the senior management but is expected to be a consultant, an IT expert, and much more. How can management accountants learn to master this balancing act?

We already have discussed the dangers of stultifying instruments that make up our minds for us. But there are also software tools that report information and show the complete picture in such a compact, concise way that executives can do all the brain work themselves. Personally, I think that’s a feasible approach for making standard reports. After all, there are dense ways to visualize data and I find the idea of sitting back and analyzing reports with my feet up very appealing.

If the goal of management accounting is to create an independent appraisal, then it must be bold enough to show uncertainty.

Unless you are a demagogue, it makes no sense to present “truths” in either black and white when the world consists of many shades of gray. Only those who dare document the boundaries of their conclusions can hope for a rational response. Here are some simple rules to bide by:

  1. Label reports by name. Reports are made by people – not software. When we take responsibility for our reports by marking everything we create with a signature, our reports become more believable and are less likely to be misunderstood. When we use data from third parties, we should also identify the person as a source. If there is none, than we should state this clearly (e.g. “N.N., United States Census Bureau”). I personally feel that when people simply use a famous institution as a source, they are manipulating the audience. At best, they were just acting without thinking. At any rate, the suggested credibility can fall back on us.
  2. Round out your numbers. If we take a closer look, it’s embarrassing to act as if we know everything as exactly as a 7-digit number suggests. If we write $5.6M, this is a clear signal regarding the general dimensions and not an affidavit that the value is 5,563,745 dollars and 23 cents. This pseudo-precision suggests a false sense of security. The point is if we have taken everything into consideration and if we are acting systematically – not what the exact number is.
  3. No adjectives. Leave opinions for the tabloids. Your numbers show that something has increased. You don’t need any further proof. Let the readers decide for themselves if a 23% increase is significant, moderate, dramatic or disappointing.
  4. Ignore corporate design. Management accounting is not a marketing gala. Your corporate logo and other “frills” have no place in a report. Your CEO knows which company he or she heads. When corporate design swallows over a third of a PowerPoint slide, I call that the visual self-fulfillment of the marketing department. Get rid of the backgrounds, frames, logos and other meaningless decorations. Corporate design makes everything look the same. You should only make something look equal when it truly is.