ACCOUNTANTS’ OUTLOOK

Grey River Argus, 15 December 1937, Page 12

ACCOUNTANTS’ OUTLOOK

increasing responsibilities. “Increasing complexities in methods of conducting business and added problems resulting from legislation make it necessary for head accountants or comptrollers to assume added responsibilities,” writes G. M. Pelton in “The National Accountant” (American). “In other words, the head accountant, or comptroller, should be the right hand of management; should think in terms of the management; and also of the owners. The head accountant should think with the head man, and should cover the entire field of the organisation and its activities. He should always have at his disposal the actual figures, and should be a party to making decisions covering improvements and extensions; new equipment; proposed expansion; costs and expenses, etc. He should be in a position to interpret the value of such changes, based on a conservative period of time. In short, he should be given an opportunity to assist the management in making sound decisions affecting not only the operating, but also the financial matters of the company.

“Illustrative of such service, he may assist the management in making sound decisions covering:—

(1) The avoidance of unwise expansion of fixed properties. (2) The avoidance of selling products and services at a figure barely equal to, or below cost, for the purpose of expanding volume, and in the cWlempt to obtain a dominating and unjustified position in the territory covered. (3) The development of a sound policy in the matter of extending credit.

(4) The avoidance of a burdensome and speculative inventory policy. (5) A conservative policy covering the handling and disposition of fixed charges of all kinds, such as interest, depreciation, and obsolescence, insurance, taxes, etc. (6) The elimination of guess-work, and the preparation of sound methods of figuring manufacturing costs. (7) The determination of correct selling and distribution costs and expenses, embracing also the activities covering sales promotion, warehousing, transportation, service, advertising, etc. (8) The maintenance of efficiency in all operations and departments. (9) The development of satisfactory financial, operating and merchandising ratios to guide the management in making decisions. (10) The elimination, wherever possible, of unsound and uneconomic activities of the business.

“The subject of accounting and cost finding is treated by too many concerns as a clerical matter, whereas it is an intensely practical business matter —such a matter as should engage the attention of the owners of any business. Ido not believe that the owners of most businesses can spend any more profitable time, if they do not have an up-to-date cost system, than to direct their attention, or the attention of their head men, to making a detailed study and improvement of the cost system in | use. This attention should be direct-1 ed strictly from a business point of view, and as a practical application of sound business principles. If costs are left entirely to the accountants, they will lack that vital touch with the" practicalities of the business, sucn as will greatly decrease their utility.”