Some individuals argue that accountants should focus on producing
financial statements and leave the design and production of
managerial reports to information systems specialists.
1) What are the advantages and disadvantages of following this
advice?
The one, and only, advantage that comes to mind is that an
accountant would have more time to focus on accounting specific
task. Realistically, this advice is harmful long term. While accountants
are not the only end users or subject matter experts when it comes to
financial statements and managerial reports, their feedback is crucial
to the information system (IS) design. This is supported by the Lean
Six Sigma Continuous Improvement philosophy. While the website
for Six Sigma (2022) states that "employees are closer to the problem
and therefore better equipped to solve it," the word "employees" can
be replaced with "accountants" and the statement is still the same
and true. As end users, accountants would have a better grasp on
what information is needed for these reports. Both best practices and
auditing standards require the information to be both reliable and
relevant. For this purpose, it can be assumed that the information is
reliable, but the question of relevance is raised. What information is
relevant for one user is going to be different of that of another.
Additionally, certain information might not even need to be included
on the reports, but is needed on the statements, and vice versa,
especially where non-financial information is concerned. This might
not be common knowledge for an IS specialist (unless they specialize
in accounting software and have significant experience. Additionally,
reporting laws are constantly changing, leading to the need to change
the statements or reports, and ultimately the IS. This is not something
that an IS specialist would have visibility on, but an accountant
definitely would. Accountants must provide constant feedback and
suggestions to IS specialist in order to create a top line IS.
2) To what extent should accountants be involved in producing
reports that include more than just financial measures of
performance? Why?
Accountants should be completely involved in producing reports that
include more than just financial measures of performance. These
measures are the part of the story that tell the "why" aspect of the
financials. Accountants, as specialist in a company's financial affairs,
need to be well versed on the reason the financials are the way they
are in order to provide reliable and relevant information and
statements. If for this purpose it is assumed that the IS specialist are
generating the reports, there would be no stops/checks in place to
ensure the information was accurate and necessary without
accountant involvement/oversight. This knowledge can help IS
specialist improve the reports and the reporting process, potentially
streamlining the process to receive quick results. This is key, as part
of relevancy includes timeliness. Reports that are not put out in a
timely manner become no longer relevant and therefore useless. If
investors want to invest in a company, they want to see the most up
to date and accurate picture of the company's financial health, not
something from two quarters ago that may house a different
situation.
References
CFA Journal. (n.d.). What are relevance and reliability in accounting?
Retrieved on November 9th, 2022, from
https://www.cfajournal.org/what-are-relevance-and-reliability-in-
accounting/#:~:text=For%20accounting%20information%20to%20b
e%20useful%20and%20produce,without.%20What%20is%20the%2
0Relevance%20of%20Accounting%20information%3F
PCAOB. (2020). Auditing Standards of the Public Company
Accounting Oversight Board. Retrieved on November 9th, 2022,
from https://pcaob-assets.azureedge.net/pcaob-dev/docs/default-
source/standards/auditing/documents/auditing_standards_audits_aft
er_december_15_2020.pdf?sfvrsn=5862544e_4
Six Sigma DSI. (n.d.). What is continuous improvement? Retrieved on
November 9th, 2022, from https://sixsigmadsi.com/continuous-
improvement/#:~:text=Six%20Sigma%E2%80%99s%20approach%20
to%20Continuous%20Improvement%201%20Define,5%20Control%
20The%20improved%20process%20and%20future%20performance
