Cost accounting means keeping up with the times
A six-week series on the Certified Accounting Technician programme
Cost accounting plays a vital role in helping companies and organisations plan, innovate and control business processes. Darwin Li Wing-fai, vice-president of account/finance of McDonald's Restaurants (Hong Kong), said cost accounting served the ever-changing needs of management.
Mr Li said the guiding light for cost accountants was usefulness. Cost accounting helps management to plan, control operations and make decisions. A wide range of data must be accumulated, classified, interpreted and presented in ways that are useful to managers for decision making.
'Today, cost accounting is not just a basic inventory measurement system, it involves monitoring and providing information to make value-added decisions that impact short-term and long-term revenues and expenses,' said Mr Li.
For example, cost accounting can be used to look into the resources invested in a product's development measured against its market demand and selling niche.
'No company today can afford to overlook cost accounting if they want to control inventory cost, minimise inventory investment and determine the cost of each product or service,' he said.
Technological changes and management innovations are drastically changing the nature of costs. These developments are interesting and exciting, but they are also challenging cost accounting systems to provide reliable, useful information and data that can be used to keep a company efficient and, most of all, competitive in the global market.
'Cost accountants, like other accountants, cannot afford to live in a vacuum. They need to work with all departments in a business and develop a real feel and understanding for the business,' Mr Li said.
In the same manner, no two people are the same and no two businesses operate in the same way.
A combination of experience, on-the-job training and professional education is required to fully appreciate how different business models operate.
Cost accountants also need to develop strong communication skills and enjoy working as part of a dynamic team.
He said the Certified Accounting Technician (CAT) programme offered by the Association of Chartered Certified Accountants (ACCA) provided a well-rounded introduction to cost accounting.
'The programme provides an excellent entry-level introduction to professional accounting. It also covers the financial and management areas that accountants must understand to carry out their work effectively,' Mr Li said.
Those who are enrolled or have completed the CAT programme would have a head start when applying for entry-level jobs or moving up to further professional training.