CIMA and AICPA Plan Global Framework for Management Accountants
A proposed comprehensive framework designed to help CFOs, CEOs, and boards of directors around the world benchmark and improve their management accounting processes was unveiled on February 10 by the London-based Chartered Institute of Management Accountants (CIMA)  and the American Institute of CPAs (AICPA) .
The two organizations, which represent approximately 600,000 accountants and students through its Chartered Global Management Accountant (CGMA)  joint venture, developed the draft framework, Global Management Accounting Principles: Driving better business through improved performance , to help businesses around the world apply financial rigor to strategy, find new trends in operations, and provide insight from data.
“Our goal is to help management accounting professionals build higher-performing organizations that can power stronger economies around the world,” AICPA President and CEO Barry Melancon, CPA, CGMA, said in a written statement.
Business leaders are being asked to review the proposed framework and offer feedback  during a three-month consultation period that concludes on May 10. The consultation will span the CIMA’s and the AICPA’s footprint of 177 countries and include roundtables and meetings with employers, executives, and academics across sectors and locations.
“From this global consultation, we will deliver a blueprint for rigorous forecasting and decision making that meets the needs of business and provides a framework for enduring success,” Melancon added.
The centerpiece of the proposed framework is three global management accounting principles that “describe the fundamental values, qualities, norms, and features to which management accounting professionals should aspire and that represent best practices,” the AICPA and the CIMA noted. Those three principles are:
- Preparing relevant information: To ensure that organizations plan for their information needs when creating tactics for execution.
- Modeling value creation: To simulate different scenarios that demonstrate the cause-and-effect relationships between inputs and outcomes.
- Communicating with impact: To drive better decisions about strategy execution at all levels.
“Financial accounting, with its focus on past activity, is no longer sufficient,” the CIMA and the AICPA wrote in the framework’s introduction. “To be confident of a successful future, organizations must adopt a robust management accounting system that complements their financial accounting system. The principles will provide the forward-looking focus and ability to link different functions in a way that many organizations still lack.”
The CIMA and the AICPA noted the three principles are applied to an organization’s business model, and because management accountants have a thorough understanding of the organization, they are uniquely placed to contribute to sustainable success.
“Management accountants have the ability and judgment to make objective, ethical decisions that consider the public interest. But the quality of management accounting remains varied,” CIMA Chief Executive Charles Tilley, FCMA, CGMA, said in a written statement. “By working together, we can contribute to a comprehensive system fit for our era of uncertainty that will, put simply, make business better.”
The framework also includes the following twelve main practice areas (in alphabetical order) in which the principles are applied within the business model:
- Cost transformation and management
- External reporting
- Financial controls
- Investment appraisal
- Price and product decisions
- Project management
- Regulatory adherence and compliance
- Resource allocation
- Risk management
- Strategic tax management
- Treasury and cash management
“With a focus on value creation and relevance of information, there is synergy between the global management accounting principles and integrated reporting ,” International Integrated Reporting Council (IIRC) CEO Paul Druckman said in a written statement. “We should all support this plan to put in place a consistent global management accounting framework, which will help more and more organizations deliver value over the long term.”
But one organization whose support the CIMA and the AICPA does not have yet is the Institute of Management Accountants (IMA) . In an e-mailed statement to AccountingWEB on Monday evening, IMA President and CEO Jeff Thomson, CMA, said he is concerned that the introduction of these principles "could add to the existing clutter of frameworks and principles-based guidance."
"We will be seeking to understand how this framework sufficiently adds to frameworks already resident in the content body of knowledge for several accounting associations and how it adds to or complements the frameworks and guidance put forth by the IFAC [International Federation of Accountants] Professional Accountants in Business committee ," wrote Thomson, a former corporate CFO who since 2008 has lead the 65,000-member association that focuses on advancing the management accounting profession worldwide. "Principles-based guidance is often abstract and obvious in theory, not reflecting practical realities and choices, and this is another area for consideration in the consultation process. Finally, IMA is concerned about accounting bodies putting forth what is described as authoritative guidance, as that suggests bright lines usually reserved for compliance, audit, and attestation activities versus management accounting, which blends management judgment and accounting technical skills."
Integrated Reporting Framework Released by the IIRC