The popular New York City Broadway musical Hamilton has drawn attention to the founders of the USA who wrote the USA’s Declaration of Independence in 1776. Subsequently in 1789 the USA’s Constitution became the supreme law. The first ten amendments to the Constitution, known collectively as the Bill of Rights, declared specific protections of individual liberty and justice, provided guarantees of personal freedoms and rights, and placed restrictions on the powers of government.
Today the users of management accounting information deserve a similar “bill of rights”. Most users feel underserved by their CFO and accountants with flawed and misleading information and a lack of visibility and completeness in the information. Some managers and executives feel oppressed by their CFO and accountants.
To address this need the PACE task force team wrote a ”bill of rights for the users of managerial cost information”. You can view it in this link in the PACE website:
And here it is:
Bill of Rights for Managerial Cost Information
Definition: Managerial Costing supports decision makers tasked with optimally achieving their organization’s strategic objectives. Decision makers, at all levels of an organization, should be provided managerial cost information that:
1. Clearly reflects the causal operational relationships of resources, their capacity, and the processes that produce the organization’s outputs.
2. Calculates and reports reliable and actionable information on costs of processes, products, service lines, channels, missions and customers
3. Reflects the economic realities of the decision at hand, not unhindered by external regulatory accounting rules.
4. Is consistent with the organization’s creation of long- term sustainable value or the long- term execution of the organization’s mission.
5. Doesn’t lead to argument and debate about its usefulness and accuracy.
6. Is readily available, sufficiently detailed, and logically structured to improve visibility, facilitate analysis, and provide insights.
Resolution: Decision making is challenging in all circumstances. Decision makers, at all levels of an organization, must demand that those providing cost information for their decision making honor these rights that are essential to effectively execute management responsibilities.