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‘Bean counter’ view of accountants is holding back entrepreneurs, says Nottingham Business School and CIMA

Some entrepreneurs and small businesses may be are holding themselves back by refusing to share information with their accountants who they sometimes regard as little more than “bean counters”, according to a new study.

There is a tendency to make decisions without adequate financial information or analysis, there is often poor cash flow management and time and opportunities are being wasted because some owner-managers don’t want anyone else to know their business, it concludes.

The report, compiled by Professor Malcolm Prowle and Glynn Lowth, from Nottingham Business School, part of Nottingham Trent University, the Open University’s Dr Michael Lucas and funded by the Chartered Institute of Management Accountants (CIMA), urges accountants to improve their image by refuting bean counter accusations and promoting themselves in business partnering roles.

The authors also call for further research into the way small and medium-sized enterprises (SMEs) reach critical decisions and into the psychological profile of executives, particularly owner managers.

“Given the importance of financial issues and the increasing need for enterprises to operate economically, efficiently, effectively, efficaciously and ethically, management accounting has potentially a crucial role to play in improving the quality of planning, control and decision-making,” says the CIMA report called Management Accounting Practices of UK SMEs.

Professor Prowle said: “Business owners do not always appreciate the value that management accountants can add. Accountants were sometimes regarded as little more than bean counters, rather than potentially having a business partnering role where they can advise and improve efficiency, not just keep the books in order.

“Some entrepreneurs, in particular, are reluctant to employ management accountants, expressing a desire to maintain control and have exclusive access to information they consider sensitive.

“They believe the process of crunching the numbers themselves gives them superior insights and greater control. This could effectively result in higher costs in terms of management time – time which might be better spent developing the business in other areas.

“It is up to organisations like CIMA and accountants themselves to educate business people and promote their advisory and consultancy capabilities.”

The report says its exploratory findings give important insights which should inform the development of further large-scale survey research into whether accounting tools were used and, if not, why not.

These tools include: Product costing; budgets for planning and control; standard costing variance analysis; cost-volume-profit analysis; responsibility centres; capital expenditure appraisal techniques; working capital measures; and strategic management accounting.

Professor Prowle is professor of business performance at Nottingham Business School and Mr Lowth, who is a former President of CIMA, is a visiting fellow at the business school.

This was posted in Bdaily's Members' News section by Chartered Institute of Management Accountants .