Management Accounting Creates Long-term Sustainability For Business, Says CIMA MD
To remain relevant in the business climate of the 21st century, accountants must be able to add value to organisations and businesses beyond measuring the past. They must help build business sustainably for the future by embracing integrated reporting which de-emphasizes fixation on financial and short-term gains.
Andrew Harding, Managing Director, Chartered Institute of Management Accountants (CIMA) shared this insight at the 2015 members’ dinner of the institute in Lagos.
According to Harding, “The biggest challenge facing the accounting profession at the moment is how to remain relevant and to add value to business. More often than not, traditional accountants look backwards; they tell companies how much profit they made last year and how much tax they need to pay. But that’s merely reflecting the history of the business. It adds no value. What we need to be seeing from accountants is a forward-looking strategy. It is for this reason that CIMA strongly advocates integrated reporting – using narrative reporting as well as financial reporting to tell the whole story of an organisation’s value creation”.
Making reference to the global financial crisis of 2008, the CIMA MD said the economic meltdown was a result of the failure of business leaders who were intoxicated with short-term profits and were not keen on properly managing risks. He disclosed that for businesses to succeed, it is essential that business leaders make decisions to create and preserve value for the short, medium and long term for the business. He also added that there is the need for decision makers to connect the dots, bring together the information they require and understand precisely, the concepts of cost, risk and value.