Nashville, Tenn. (July 17, 2003) -- Garbage in, garbage out. The old saying about entering data into a computer also apparently applies to cost information, according to a new study of management accountants.
The Ernst & Young/Institute of Management Accountants' survey of more than 2,000 senior level financial executives found that 98 percent believe they're getting inaccurate cost information at their companies -- primarily due to overhead allocations, shared services, and greater product diversity.
Since the survey also discovered that cost management is a key factor in strategic decision making, and that identifying accurate and actionable cost information is the No. 1 priority of these executives (followed by cost reduction), the study pointed out a large gap at many companies.
"This survey was designed to assess whether or not American corporations have successfully adopted newer offerings in management accounting tools and methods," said economists Debashis Ghosh and Ashish Garg who co-authored the survey. "This topic has not been addressed adequately for over a decade."
Among the other findings: spreadsheets and traditional costing remain the preferred management accounting tools, and 80 percent placed a low or medium priority on putting new cost management tools into place due to the economic environment.
-- WebCPA staff
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