Report on Management Accounting Trends: Trends 2 and 3 Analysis

This report provides an analysis of management accounting trends, specifically focusing on Trends 2 and 3 as presented by Gary Cokins. Trend 2 explores the expanding role of management accounting with Enterprise Performance Management (EPM) and Corporate Performance Management (CPM), emphasizing the integration of various methods like strategy mapping, balanced scorecards, and customer relationship management to enhance decision-making and improve financial profitability. Examples of companies like Oracle and Volkswagen are used to illustrate the practical application of EPM. Trend 3 delves into the shift towards predictive accounting, highlighting the importance of future cost planning over historical expenses. The report uses Toyota as a case study, demonstrating how predictive accounting aids in cost reduction and strategic decision-making. The conclusion summarizes the benefits of implementing these trends for improved company performance and future cost planning.

Running Head: MANAGEMENT ACCOUNTING TRENDS
Management Accounting Trends
Name of the University
Name of the Student
Author Note

1MANAGEMENT ACCOUNTING TRENDS
Executive summary
This Paper aims to discuss the Trend 2 and Trend 3 of the management accounting which
delivered by Gary Cokins, CPIM and CEO of “Analytics- Based Performance Management
LLC”. The implementation of this Trends informs about the performance structure of a company
by applying various methods to make a decision and also cost planning of a company to predict
the future cost.

2MANAGEMENT ACCOUNTING TRENDS
Table of Contents
1. Introduction..................................................................................................................................3
2. Discussion....................................................................................................................................3
2.1. Management Accounting Trends......................................................................................3
2.2. The 7 Trends in management accounting.........................................................................3
2.2. a. Trend 2- “Management Accounting’s expanding role with Enterprise Performance
Management (EPM)”...................................................................................................................4
2.2. b. Trend 3- “The shift to predictive accounting”..................................................................5
3. Conclusion................................................................................................................................5
References....................................................................................................................................6

3MANAGEMENT ACCOUNTING TRENDS
1. Introduction
This Paper focuses on the Trend 2 and Trend 3 of the 7 Trends of management
accounting which delivered by Gary Cokins, CPIM and CEO of “Analytics- Based Performance
Management LLC”. Trend 2 discusses the Management Accounting’s Expansion Role with the
Enterprise Performance Management and Trend 3 discuss the Shift to predictive accounting in
the management account. Implementation of the above 2 Trends in a specific business will be
discussed.
2. Discussion
2.1. Management Accounting Trends
Trends deals with the networking related to customer’s profitability report, working on
enterprise performance method involving strategy charts, balanced scorecard, customer
relationship management, and driver-based financial forecast in existing accounting methods, to
improve control, team strategy and financial profitability to make a better decision.
2.2. The 7 Trends in management accounting
As per Gary Cokins, CPIM and CEO of “Analytics- Based Performance Management
LLC” discussed the 7 Trends in Management Accounting (Kluwer 2020). Trend 2, informs about
“the Management Accounting’s Expansion Role with the Enterprise Performance Management
(EPM)”. Here, Gary Cokins tells about Expansion in an accounting role with the Enterprise
Performance Management (EPM) and Corporate Performance Management (CPM) with its
integration in various methods. Combination of EPM and CPM with each technique help
business analysis in decision making to perform the business healthy. Trend 3 of management
accounting discusses the Shift to predictive accounting, which informs about the shift of the

4MANAGEMENT ACCOUNTING TRENDS
accounting process from historical accounting to predictive accounting as per companies cost
and management accounting methods. It gives a particular understanding of how all the expenses
will change in the future instead, thinking about where all the price will go. The expenses
involve sunk, fixed, step fixed, semi-variable, variable and discretionary, which will not change
as it uses in the form of predictive accounting, which will not change in future.
2.2. a. Trend 2- “Management Accounting’s expanding role with Enterprise
Performance Management (EPM)”
This Trend works with the EPM (Kluwer 2020) expansion role which integrated the
various methods to bring up a better decision making business by applying performance
measurement, balanced scorecard methods, strategy mapping and customer relationship
management to increase the profitability and improve the control measure (Appelbaum et al
2017). The strategy mapping and balanced scorecard help understanding the vision and the
mission of financial management, customer management, internal process, and Learning and
Innovation process. The examples can better explain the EPM role –
 Oracle is a multinational computer technology corporation, use the EPM role in
an organization to perform better in the business management and to achieve the
business objective. EPM manages the long term objective with improving
financial planning, forecasting by tracking multiple departments performances.
 Volkswagen (Volkswagen do Brasil: Driving Strategy with the Balanced
Scorecard 2010) uses the strategy mapping and the balanced scorecard to achieve
changes in financial and market shares. Strategy mapping uses to arrange
financial and project resources. It also motivated 20,000 employees, by
interacting the Strategy planning along with reward and recognition program.

5MANAGEMENT ACCOUNTING TRENDS
2.2. b. Trend 3- “The shift to predictive accounting”
This trend of management accounting deals with future cost planning to support the
decision making of the business to forecast its budget (Kluwer 2020). In predictive accounting,
the company should focus on future cost planning rather than the past. Because gradual
increasing or changing expenses as per the cost planning and this change in resource planning
which influences the decision making analysis. The management accounting shifts to predictive
accounting from historical accounting. To elaborate on this Trend will better explained with an
example of a company-
 Toyota (Martin 2020) is one of the leading Japanese company, manufactures
automobiles. Toyota focuses on reducing the cost, based on cost planning in the
beginning to achieve its objective. It uses predictive accounting to implement new
techniques from the design model to minimize the cost of producing the highest
profit. It removes variable cost that is wages and indirect cost and makes decision-
based on the change in the design model and production volume.
 In technology industries, predictive accounting is implemented through SAP
S/4HANA 1809 for incoming sales order which helps in extension ledger to store
the accounting values.
3. Conclusion
From the above discussion, it can be concluded that Implementing Trend 2 of management
accounting helps increase the company’s performance through various methods incorporated in
decision making and implementing Trend 3 of Management Accounting helps to focus on the
future planning cost rather than the past expenses of a company.

6MANAGEMENT ACCOUNTING TRENDS
References
Appelbaum, D., Kogan, A., Vasarhelyi, M. and Yan, Z., 2017. Impact of business analytics and
enterprise systems on managerial accounting. International Journal of Accounting Information
Systems, 25, pp.29-44.
Martin, J. 2020 Target Costing at Toyota, Maaw.info. Available at:
https://maaw.info/ArticleSummaries/ArtSumTanaka93.htm (Accessed: 24 February 2020).
Volkswagen do Brasil: Driving Strategy with the Balanced Scorecard 2010. Available at:
https://www.hbs.edu/faculty/Pages/item.aspx?num=39553 (Accessed: 24 February 2020).
Wolters Kluwer 2020. The Top 7 Trends in Management Accounting. Available at:
https://www.cchcpelink.com/top7trends (Accessed: 24 February 2020).