Management accounting, like many fields, is being disrupted by new technologies, including big data, predictive analytics, artificial intelligence, blockchain, machine learning, and robotics process automation. Established accounting and finance professionals wondering whether they have the critical knowledge and abilities to advance their careers in this new practice environment, new professionals seeking information about the core technical and soft skills they need to tackle their current roles, and accounting students contemplating a career in finance and accounting can all benefit from using the Institute of Management Accountants’s (IMA) newly updated Management Accounting Competency Framework to help identify today’s essential skills.
The Changing Role of Finance and Accounting Professionals
Accounting and finance teams have traditionally concentrated on value stewardship, financial reporting, and compliance. Research conducted by the IMA and others, however, has documented an ongoing transformation of the finance function, which is becoming more strategically oriented and shifting to higher value–added, strategic activities and away from lower value–added, day-to-day operational ones. The evolving responsibilities of finance now include creating value, providing business insight, and serving as strategically oriented business partners. These are critical competencies and focus areas globally, as organizations look to gain market advantage in an increasingly competitive and commoditized business environment.
In order to succeed, management accountants will need to employ more sophisticated analytics. In the past, management accountants were asked to provide descriptive and diagnostic statistics. As shown in Exhibit 1, the profession must move to the higher end of the analytics continuum—to predictive, prescriptive, and adaptive analytics.
Impact of Technology and Analytics
Accountants and finance professionals have always been at the heart of data-related work. Now, as the data revolution causes huge shifts in the landscape, the very nature of finance is being significantly affected. While technological change will provide challenges for management accountants’ careers, it also presents opportunities. Finance professionals will increasingly become free from rote, repetitive tasks such as billing, management reporting, and general accounting. They will spend less time collecting and organizing financial data and more time evaluating, analyzing, and interpreting it. They will be able to spend more time looking at trends, developing insights, and connecting with leadership.
The Growing Importance of Ethics in the Digital Age
As organizations deploy new technologies, ethical business practices will need to grow and evolve in step. Issues such as how much privacy employees and customers are entitled to, the extent to which technology can be used to gain insights regarding competitors, and the extent to which employers should monitor their employees’ electronic activities are becoming increasingly critical. In a time when organizations’ value increasingly consists of intangible assets such as brand value, the failure to prescribe and follow ethical practices has increasing potential to affect organizations negatively.
In keeping with finance’s traditional role of putting policies and procedures in place to safeguard organizational resources and of overseeing compliance efforts, the profession is often looked to as an ethical leader. Technological advances will only increase the importance of this role. As management accountants move away from compiling and reporting information and assume more strategic roles, they will increasingly encounter complex business situations requiring an understanding of how to act in an ethical manner. Management accountants will need to conduct themselves in a way that reaffirms the profession’s ethical guidelines and values.
The Management Accounting Competency Framework
With the changing state of the business environment, the IMA recognized the need for management accountants to acquire new skills and proficiencies in order to achieve career success. Its recently updated Management Accounting Competency Framework (http://bit.ly/2KX2u0S) presents the skills management accountants will need to protect their careers. The framework is represented visually in Exhibit 2.
The updated framework organizes the essential competencies for management accountants into six knowledge domains. Exhibits 3 and 4 contain descriptions of the domains and their competencies. These domains differ from those in the prior framework in important ways, as discussed below.
IMA Management Accounting Competency Framework Knowledge Domains
Strategy, planning, and performance. Strategic management includes activities such as competitive analysis, forecasting and budgeting, operational decision analysis, enterprise risk management, and innovation.
Reporting and control. With robotic process automation (RPA) increasingly being used to automate accounting processes, management accountants will need to be able to evaluate the efficiency and effectiveness of accounting processes and make recommendations to optimize them. They will also need to implement sophisticated costing techniques and procedures to ensure data security, protect assets, and meet legal and reporting requirements.
Technology and analytics. As big data matures, management accountants will need knowledge of data extraction tools for mining structured and unstructured data. They will need to be able to employ data analysis tools that collate, manage, and analyze this data, as well as create data visualization and storytelling.
Business acumen and operations. Business acumen includes industry-specific and operational knowledge, as well as quality management, continuous improvement, and project management skills.
Leadership. Soft (personal) skills in areas such as motivating and collaborating with others, communications, change management, talent management, relationship management, negotiation, and conflict management will remain critical for management accountants.
Professional ethics and values. The evolution of technology and analytics raises new ethical dilemmas that must be addressed by accounting and finance professionals. As management accountants get more involved in the strategic planning process, there will be a greater need for professional skepticism around the inputs and assumptions in that process.
Knowledge Domains and Competencies
Strategy, Planning, and Performance
This domain includes the competencies required to envision the future, lead the strategic planning process, guide decisions, manage risk, and monitor performance. It includes competencies that were in the prior framework’s Planning and Reporting and Decision-making domains. Pulling all the competencies related to strategic planning and performance together into one domain reflects the evolution of the role of management accountants and the increasing importance of strategy formulation, validation, and implementation.
In keeping with the increased emphasis on strategic management, the Cost Accounting and Cost Management competency in the prior framework was split into two parts: Strategic Cost Management and Cost Accounting, with the former included in the new Strategy, Planning, & Performance domain in recognition of the essential role that cost management plays in strategic decision making.
Reporting and Control
This domain includes the competencies required to measure and report an organization’s performance in compliance with relevant standards and regulations. As such, it relates to management accountants’ traditional role of providing oversight and hindsight. Even as the role of management accountants evolves, however, these responsibilities remain important and are themselves evolving.
While incorporating many of the competencies in the prior Framework’s Planning and Reporting domain, this new domain also includes new ones, including Tax Compliance and Planning and Integrated Reporting. This reflects the changing external reporting environment and stakeholders’ demand for enhanced performance disclosures across multiple dimensions.
Technology and Analytics
The greatest change to the framework is the addition of the Technology and Analytics domain. While the prior framework included a Technology domain, the rapid advance of technology and the deployment of advanced analytics required its complete reexamination.
This domain now includes the competencies required to manage technology and analyze data to enhance organizational success. It takes a holistic view of data and includes competencies related to data acquisition, data analysis, and the presentation of that analysis, all while ensuring the integrity and security of the data.
Management accountants will need to learn new competencies in this area in order to succeed. They must be able to successfully extract and analyze the immense amount of information at their disposal while acquainting themselves with the latest methods of data governance, query, analytics, and visualization. Combining knowledge of technology with strategic and leadership skills will enable finance and accounting professionals to decipher and communicate the story the data is telling.
Business Acumen and Operations
Included in the prior framework as Operations, this domain has been expanded to encompass the competencies required to contribute as a crossfunctional business partner, assisting in the transformation of company-wide operations. While an understanding of an organization’s operations remains a critical competency for management accountants, the scope of this domain has expanded.
In keeping with the advancing technological environment, management accountants will need to understand the impact technology will have on business risk, processes, and models. This includes how current and expected technologies will affect the way business is conducted and measured. Management accountants need to be able to evaluate outcomes within the proper context by “asking” large amounts of data the right questions to form business decisions and make judgments, and to obtain better insight into the overall operations of a business.
Leadership encompasses the competencies required to collaborate with others and inspire teams to achieve organizational goals. Its standing as the only unchanged domain reflects the importance of this competency for management accountants. The ability to serve as an effective leader, both within the finance function and across the organization, will be an increasingly important competency as management accountants strive to become business partners within the larger organization.
Professional Ethics and Values
A major change to the framework is the addition of the Professional Ethics and Values domain. While professional ethics was included in the prior framework as part of the Decision-making domain, the addition of this domain to the new framework recognizes the critical importance of professional ethics and values to the practice of management accounting. The presentation of this domain in Exhibit 2 underscores the importance of competency in this area. Professional ethics and values need to underlie and permeate all that finance and accounting professionals do, and their importance will only increase with time.
What does this domain consist of? First, it includes the ability to personally exhibit professional ethical behavior. This is defined as the ability to comply with a set of guiding principles that govern a person’s behavior in the workplace. It also includes the ability to recognize ethical conflicts and lapses in the workplace and take appropriate action. Finally, it includes the ability to execute an organization’s strategy with integrity while complying with the laws, regulations, and standards in the regions in which an organization operates.
In order to recognize and resolve unethical behavior, management accountants need to be able to apply professional skepticism in the work-place. While the concept of professional skepticism is well established in public accounting, it is a fundamental characteristic that is applied in the work of all professional accountants, including those who work in business. Given their professional status and influence in the financial reporting supply chain, all professional accountants should apply professional skepticism regardless of where they are employed.
The importance of management accountants exhibiting professional skepticism has been noted by several International Federation of Accountants (IFAC) committees and boards. IFAC’s Professional Accountants in Business (PAIB) committee notes that it “strongly believes professional skepticism is a fundamental ethical obligation applied in the work of all professional accountants, including professional accountants in business, and is a key distinguishing element of the profession.” Similarly, IFAC’s International Accounting Education Standards Board (IAESB) notes that “professional skepticism is an integral part of a professional accountant’s skill set, and adopting and applying a skeptical mindset is ultimately a personal and professional responsibility to be embraced by every professional accountant. As a result, IAESB members agreed that the concept of professional skepticism in the [International Education Standards] should continue to be interpreted to apply to the broader context of the role of professional accountants and not just auditors” (“Importance of Professional Skepticism to the Competence of All Professional Accountants,” IAESB issue paper, October 2018). Finally, IFAC’s Small and Medium Practices (SMP) committee “supports the concept that professional skepticism should be applicable to all professional accountants.”
The IMA Management Accounting Competency Framework reflects the competencies needed to succeed in the rapidly changing practice environment. The IMA’s approach to competency building is unique in that it does not stop at the framework level in defining essential competencies, which is helpful at the broad level of the profession. Instead, IMA directly connects this framework to what it means at the individual job role level. The CareerDriver tool on the IMA’s website identifies the level of competency needed for 46 individual job roles for each of the competencies in the framework (http://bit.ly/2L9YPM6). Newly updated to reflect the changes in the framework, CareerDriver enables users to self-assess their current skills, identify short-term skill gaps or long-term learning opportunities, and fill those gaps with specific IMA and public courseware.
It is time for accounting and finance professionals, especially management accountants, to make sure their competencies are at the highest level possible. Only then will they be ready to forge ahead in any endeavor.