There is a widening gap between what the CFO and accountants report and what internal managers and employee teams want. This does not mean that information produced by the accountants is of little value. In the last few decades, management accountants have made significant strides, such as with activity-based costing (ABC), in improving the utility and accuracy of the costs they calculate and report. The gap is being caused by a shift in managers’ needs – from just needing to know what things cost (such as a product cost) and what happened – to a need for detailed information about what their future costs and profits will be and why. Examples include driver-based rolling financial forecasts and true marginal cost analysis for what-if scenarios.

Despite accountants advancing a step to catch up with the increasing needs of managers to make good decisions, the managers have advanced two steps. In order to understand this widening gap, and more importantly how accountants can narrow and ideally close the gap, let’s examine the broad landscape of accounting. more