By Robert Moulin - IASeminars Instructor
When writing or training I’ll often remember times past from my own learning, various situations, examples and scenarios will come to mind. So, for anything costing related I’ll no doubt recall the lessons of a great teacher we had – we called him “Doctor Widget”.
The name, it was meant in very positive terms, quickly stuck with us all; examples described by The Doctor would invariably be related to the budgets, costs, variances, cash flows, apportioned central costs, allocated overheads etc. for the management of this seemingly indispensable manufactured item. We never did see in real life said widget but in our minds eye it was no doubt very small, manufactured by the millions and occupied so many many resources of the business. It all seemed so easy to account for – helped of course by DW’s teachings.
I took the 'widget theory' with me to apply in my first big management position. It was in a very big toy company. Oh dear, not a widget in sight; lots of spreadsheets, but not a single widget. Alas, this was not the only shock, for what also surprised the inexperienced me was the complete separation between the Management Accounting Team (“US”) and the Financial Reporting Team (“THEM”) – and the twain hardly ever met. So, when we had to meet our monthly 2:00am management accounts filing deadline, we were on our own for that one. Yet, when we heard “year-ending adjustments” it was a case of “Oh that’s so last year” – we of course were already well into managing the next one.
So, the next career move? – Management and Financial Reporting Controller; oh yes!
This combo role demonstrated brilliantly the importance of the two accounting functions working closely together. We prepared the financials, we worked with the operations team on logistics costings and we presented to the brand marketeers on discounted cash flow. We even endeavoured to demonstrate to the sales force the benefits of good receivables management – of course some jobs are more challenging than others! It was a great all-round experience.
Knowing what “US” and “THEM” actually do must surely be business beneficial – we are, after all, two elements of the same equation. The accountancy bodies certainly think so. All of the major institutes require a demonstration of sound skills in both accounting disciplines, whatever career path the trainee might end up following.
It seems that requirement to be able to think ‘holistically’ about finance is only going to increase, both pre and post qualification. And, whilst techniques and technology have undoubtedly moved on since my time in the accounting function, some things remain unchanged. Whether it’s knowing more about IFRS 16 or trying to rationally appraise a potential 20-year capital project, knowledge empowers. That applies both to the professional accountant and non-finance specialist manager. For example, when working with leaders and future leaders on finance for decision making, it’s so rewarding to see how knowing how to calculate the working capital cycle, or how to work out payback period, or how to analyse variances gives so much confidence. These management accounting skills can then be applied to those spreadsheets or in boardroom discussions. Add in some debits and credits and well, the sky’s the limit.
As I prepare for a trip to Africa to deliver one of those courses, I’m reminded of an earlier flight, delayed for take-off due to a technical fault. A voice came across the intercom – “This is your captain speaking – and I’m sorry to say we’ll be here for a quite a while yet - the maintenance team have gone and delivered the wrong widget”. Wow – pilot andmanagement accounting maestro – now that is a great combo role!