cost accounting cpe

cost accounting cpe

The Importance of Continuing Professional Education in Cost Accounting

1. Introduction to Continuing Professional Education (CPE) in Cost Accounting

Cost accounting is mainly interested in historical costs based on these cost standards. An unfortunate historic contribution to the art, if one can call it that, depending on the state and nature of a production or service condition, investigation the role of degrees in the cost built-up with the view to corrective action or decision making.

An issue of great importance to the cost and management accountant is the need for continuing professional education (CPE). This has become a concern of the relevant professional body in the United States, leading to the specification in the professional membership requirements and the provision of CPE units to accountants participating in such activities. Given the importance of the cost and management accountant to business, it is also important that a cost and management accountant maintain a high level of technical competence so that he can continue to effectively service his internal customers. The cost and management accountant is recognized to have expertise in three areas, namely, cost accounting, cost management, as well as management accounting.

2. Key Concepts and Techniques in Cost Accounting

In addition, cost accounting is used in the areas of planning, control, and decision making. As an aid to planning, it provides management with cost data in forms that are helpful in an important function: estimating. Accountants develop cost data series for the purpose of projecting future levels of operations and for providing control of current operations. The cost accounting techniques for planning include both the use of historical data as a basis for developing cost relationships and the use of cost engineers as a guide to the relation between the physical and monetary aspects of cost. Information obtained from cost accounting is useful to management in the areas of control and decision making. Accountants design reports emphasizing the same elements of cost that the organization feels to be significant in operation. The nature and form of these reports can be tailor-made to fit management requirements.

Cost accounting is the branch of creativity which involves the collection, classification, summarization, and interpretation of costs of goods and services. It is the process of accounting for costs from the point at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost units and cost centers. It is concerned with determining costs associated with various events, such as products, services, or operating conditions, and then developing a system for relating these costs to the events they affect. The information is designed for the benefit of management. In expressing this information, we use significant concepts and techniques in cost accounting.

3. Benefits of CPE in Cost Accounting

Many strength-and-weakness factors compel the practicing accountants’ employers and professional associations to emphasize the need for highly qualified professional accounting employees. A growing trend of decreasing interest in the cost accounting function offers opportunities for those who understand and desire to contribute. As the importance of the management accountant’s role in the cost accounting function continues to increase, a guidepost of skilled professionals also rises in value. Major strategic decisions are made in the cost accounting area, providing a critical feed of information into the critical decision-making events that occur throughout the organization. The management positions and their direction team concentrate their efforts on the performance of the organizations’ best interest, not just their own department’s governmental visibility. Practical training and a grounded in-depth knowledge of a rapidly increasing number of highly technical skills, however, rarely provides newcomers with the necessary background. Employers see the need for recent graduates to hit the ground running upon arrival. Alternative procedures to cope with the cost of education are used. Employers pay higher financial and workload cost factors to attract or retain qualified professionals as distance widens; their ability to train for the work environment reduces — thereby lowering the potential supply of recognized training professionals who could, by design, supply continuing staff competency development.

In response to the ever-changing business environment, educators and professionals across the disciplines are acknowledging that continuing professional education (CPE) should be an integral component of practicing in the profession. The success of the organization has made cost accounting an increasingly important function. Practicing accountants, however, are rarely exposed to the knowledge and skills which would enable them to function competently in this area. Matz and Harmon did an extensive study and reported on the top ten competencies needed by practicing management accountants at different levels of the management and cost accounting functions. The skills that relate to technical competence were, by far, the most frequent.

4. Challenges and Solutions in CPE for Cost Accountants

Nevertheless, to practice as a professional accountant in the cost and management accounting field anywhere in the world, being competent and knowledgeable simply earns one the automated status and title of the cost accountant, by virtue of having achieved a qualification and belonging to any accounting and financial membership body to earn a few letters behind one’s name, without the process being transparent, let alone being effective. While the continual updating of a knowledge base is accepted as an ongoing process that is necessary to maintain competence and further professional skills, the levels and types of contribution by cost and management accountants to professional bodies have, for far too long, been institution-specific, not fully justified, and to a large extent held under acute scrutiny or with limited flexibility. Yet, others may say that it is a lifetime subscription plan that you cannot cancel, and if you could, you would not dare, face various challenges that confound the required objectives.

Cost accounting is a dynamic profession and the only way to stay effective is to keep up with the unsurpassed related knowledge. The days of taking a four-year college course, and maybe cramming the last year, belong to another era and will surely not suffice to meet the needs and demands of the profession of a modern-day cost accountant. Not only are new technologies being developed all the time, which require one to keep in touch and up-to-date with current trends, but newer, stricter legislations and regulations are coming on stream that relate to one’s role as an accountant. It is well known that one of the most important aspects of any accounting professional’s life is the need to pursue continuous professional education (CPE).

5. Future Trends and Innovations in Cost Accounting CPE

This situation can be avoided if another concept of cost accounting is used – Activity Based Costing. However, because of the fact that the method is much more consuming, in terms of resources, than the traditional ones, this can be seen as an undesirable investment. Considering that innovation is the creation of value from ideas, the development of intuition by accountants can also be seen as an innovation in cost accounting. Therefore, the future is in the development of techniques that will lead us closer to what is ideal for each situation. All these changes will increase the importance of Continuing Professional Education (CPE) in cost accounting.

A crucial aspect in cost accounting is the correct allocation of common costs to the different products, services, divisions, customers, sales, etc. Different methods have been historically used, and none has been deemed to be the more appropriate. The best that managers can do is to apply the method that they think is the most accurate for each one of the situations. However, most of the times, the method is chosen in such a way that the profit reported by the different departments are the biggest ones.