In a move that surprised many within the profession the standards company BSI has published PAS 1919, a best-practice guide to management accounting.
Sponsored by CIMA and with input from an international steering group that includes IFAC, the publicly available specification (PAS) is a voluntary guide designed to define what “good” looks like for in-house accounting.
The move marks BSI’s first foray into accounting, although the organisation previously published British Standards on organisational governance and behaviour. PAS 1919 aims to give companies a framework to support their decision making and contribute to overall performance improvement.
Introducing the standard, BSI head of market development for sustainability and services David Fatscher said: “CFOs have much more reporting responsibility than they once did and the management accounting function is now an integral part of an organisation’s strategic planning.
“PAS 1919 outlines the key principles and activities they have to deliver on to assure stakeholders of sustainable business performance.”
The guide is available to download at a cost of £80. Nick Fleming, market development manager at BSI, told AccountingWEB that organisations of “any type and size” could get benefit from the PAS.
“In terms of who it might be aimed at within the organisation”, said Fleming, “it’s going to be someone in a management accountancy function, someone in the senior management team. So we’re seeing this as a type of standard that would have strategic application.”
|What does the PAS cover?
PAS 1919 gives guidance for organisations on assessing the performance of the management accounting function. It covers the four management accounting principles:
AccountingWEB contributor and financial reporting expert Steve Collings said that he could see the use of the PAS in defining what “good” looks like and being able to compare one company to another in a more uniform way. However, he was concerned about how useful the standard would actually be, particularly to smaller or more complex organisations.
“While statutory accountants follow UK GAAP, management accounts can follow all sorts of internal policies,” said Collings. “They’re very much ‘entity specific’. Organisations have been doing management accounts for years – why would they change? There are just too many variables at play to make it a fundamentally useful tool.”
While many may be familiar with BSI’s British Standard kitemark for best practice and international ISO standards, the PAS is seen as a “fast-track” standard – a more agile way of getting a document into the market.
Although it is still developed through consultation by committees or steering groups from industry – experts, academics, government and so on – the PAS format can be developed for fast-moving areas or where there’s a real demand to get a footprint down in a market.
PASs are often seen as a first step towards attaining an ISO, but general interest is likely to dictate whether this management accounting standard makes the grade.
Do you think this standard will help your business establish best practice? If not, what could be included?
About Tom Herbert
Tom is acting editor at AccountingWEB, responsible for all editorial content on the site. If you have any comments or suggestions for us get in touch.