Question

IDENTIFY & DESCRIBE what you think is the biggest / most critical challenge of today's cost accountants. You can relate this challenge to an example at your workplace or in any organisation that you can relate to. You also need to SUGGEST what can be done to overcome the challenge.

Answer 1

The biggest and most critical challenge of today's cost accountant is continuously meet the changing and evolving needs of management especially when business process are changing dynamically and also evolving.

Broadly the standard system & processes that are set up for financial accounting will remain valid & meet the requirements however same may not be true for cost accounting. e.g. The overhead allocation which is currently based on labour hours, if it is found that the machine hour and inspection hour would be more efficient basis -- it brings huge challenges for cost accounting team since it might be possible that the activity of machine & inspection hours is not at all being recorded so first step would be to set up such recording activity in the process and provide training and guidance to people involved int he process to ensure that they record everything properly.

From system perspective this brings another challenge, it is usually difficult to add something in already defined process and it may require significant effort in terms of time and money. The cost accounting is not flexible enough which can be applied to changing circumstance immediately without putting significant efforts.

The possible solution for this is to understand business dynamics in details before implementation of cost accounting system. Discuss with business leaders regarding varying requirement that they think which might arise in future. The cost accounting system can be designed with broader aspect to consider that the things which might not required for the time being but required in near future needs to be mapped out and considered while designing and implementing cost accounting system.