China Management Accounting Practices: Ability and Future

According to a newly released report, there has been remarkable progress for management accounting practices in China over the past 20 years, yet improvement is needed if Chinese companies want to compete with global enterprises. The full report, “China Management Accounting Practices: Ability and Future,” co-sponsored by IMA® (Institute of Management Accountants) and EasyFinance, is available on IMA's website.

The 49-page report summarizes the conclusions of a recent survey of 565 financial and nonfinancial Chinese executives. The comprehensive study, conducted by the China Management Accounting Research Center of Excellence (CRCE), sought to identify the management accounting competencies and skills most used and needed in China. It also features interviews with 10 CFOs of well-known enterprises, who shared their perspectives and expectations about the future of management accounting in China.

Among the report’s key insights:

  • With respect to achieving organizational goals, the management accounting department was rated most effective for: (1) improving risk prevention; (2) strengthening internal controls; and (3) optimizing internal processes.
  • Three of the most significant obstacles to effective management accounting were identified as: (1) nonstandardized finance processes; (2) poor finance IT infrastructure; and (3) poor internal relationships with other functions.
  • Of 13 financial functions, the three rated most effective were: (1) dealing with tax issues; (2) meeting regulatory requirements; and (3) ensuring proper management of working capital.
  • Improving risk prevention and the ability to respond have become top priorities for management. The report also discusses why many enterprises’ internal controls are not sufficient.

According to report co-author Raef Lawson, Ph.D., CMA, CSCA, CPA, CFA, IMA vice president of research and professor-in-residence, “Given the transition of China’s economy from factory-driven to innovation-driven, there has become a growing interest in management accounting in China. This survey sought to assess the state of management accounting in China, especially the effectiveness of management accounting in achieving organizational goals. We hope that the results discussed in the report will prompt further discussions and can provide a blueprint for progress moving forward.”

The report is part of an effort by the China Management Accounting Research Center of Excellence (CRCE), which was co-established by IMA and EasyFinance in 2014. EasyFinance has partnered with IMA to provide mutual support for the research and dissemination of financial management best practices. You can learn more about EasyFinance here.

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