Management accountants do much more than just crunch numbers. Also called industrial, corporate or private accountants, management accountants play a key role in guiding the financial health and profitability of the companies they work for.
Management accountants record and analyze the financial information of the companies for which they work. Responsibilities can include budgeting, performance evaluation, cost management and asset management.
Most of the time management accountants are part of executive teams involved in strategic planning or new-product development. They help analyze and interpret the financial information that corporate executives need to make sound business decisions.
“We work with the management of the company in establishing benchmarks and making sure that what we are doing is meeting the company`s goals and objectives,” said Alan Wall, vice president of accounting for Ergon Inc. and chairman of industry committee for the Mississippi Society of CPAs. “Every industry has different benchmarks they will look at. There are some pretty standard to all industries, but some are industry specific. Every industry will have their own benchmarks they will look at and will measure themselves against their competition.”
Management accountants are an important part of the team that helps companies come up with goals and business plans. They also spend a lot of time with managers to help them understand financial statements.
“We actually get behind the numbers and what they mean,” Wall said. “The managers may come from non-financial backgrounds such as marketing, and sometimes they require a financial person to help them analyze the financial reports.”
Management accountants are particularly important when a company is considering an acquisition. The accountants do due diligence, providing an in-depth analysis to see if the company being acquired can provide the return on investment needed to justify the expenditure.
“Before we go out and invest the capital, we are going to look at many different things,” Wall said. “We will have a marketing analysis and look at the risks involved in the venture.”
Wall finds the work rewarding, and evidently so do most of his management accounting colleagues who work at Ergon. Turnover is low with an average tenure for accountants there being more than 15 years.
“We have very low turnover here,” Wall said. “The good thing about our company is that ownership of the company has always put a value on financial reporting and the integrity of the numbers. As a byproduct, our turnover is low.”
Ergon is sometimes confused with the infamous energy company Enron implicated in one of the nation`s largest public company financial scandals. The two companies are not related.
What private accountants do isn`t as well understood as the role of public accountants.
“We may not get the attention that a public accountant gets, but what we do on the management side has a lot to do with what public accountants are doing,” said Scott Kersh, vice president operations, BancorpSouth Investments, Jackson, and a member of the Mississippi Society of CPAs industry committee. “We are working on the inside of the company to make sure the corporations are following the accounting rules and doing everything they are supposed to do. Then when outside auditors come in, whether representing an accounting firm or the state, everything is set up so they can do their jobs as quickly and easily as possible without problems.”
Kersh said private accountants are held to the same standards as public accountants. They just go at their job from a little different direction.
“I think all of us in the accounting profession are trying to achieve the same thing, which is provide financial information that is as accurate and transparent as possible,” Kersh said.
The work of private accountants helps non-accountants in the country see how the different pieces of the company are faring.
“We present information internally to show exactly how segments are doing, and how upper management can make decisions to make the company more efficient and profitable,” Kersh said. “It is a matter of helping whatever company you are with become more efficient.”
Jack Coppenbarger, executive director of the Mississippi Society of CPAs, said the general public isn`t aware of the diversity of the many different types of accounting specialties.
“Part of the image problem with our profession is that when people see the name CPA, they see people doing tax returns,” Coppenbarger said. “In fact, CPAs can do many different things.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.