The poor management accounting has been recognised as the reason behind the collapse of many Small Medium Enterprises (SMEs) in Botswana.
A fellow at Chartered Institute of Management Accountants (CIMA), David Cropper said during the media engagement on Friday that in most cases small and medium entrepreneurs lack the expertise in various fields across the company and the owner will hold all the positions within raging from being a Human Resource Manager to the finance officer.
Identified as the most integral part of booming economies all over the world and important growth, it is a different scenario locally where small entrepreneurs are still at an infancy stage with most still struggling to come out of that stage.
Unlike the mainstream employment system, SMEs are said to be the backbone of many economies in terms of employment as they are capable employing more people that most of the sectors. Cropper said Botswana needs more SMEs because other sectors such as mining cannot employ many people at the same time.
While Cropper was giving an overall overview about the importance of Management accountant in any organisational setup, he hand-picked the SMEs as a classical example of what happens when there is no proper managerial accountability in place.
As a remedial measure to the collapse of SME’s and to ensure that they play the part in growth of economy, he suggested that SMEs can engage experts on management accounting on consultation basis.
He said small entrepreneurs should be trained by the government on Management Accounting with a view of passing knowledge to fellow entrepreneurs on how to develop their business. Cropper explained that the role of Management Accountant cannot be overlooked in the company as they give the company the direction it intends to take.
“Mostly the Management Accountants have to deal with the risks and how to manage them which in most cases are political-social risks,” Cropper said. The role of the Management Accountant, Cropper said, is more diverse more than any other position within the organization and as such should be treated with the same.
Meanwhile, CIMA Country Manager, Letus Chinyepi, said in most cases people tend to confuse Financial Accountant with Management Accountant.
He explained the difference between the two that the financial accountant looks where the company is coming from while the Management accountant gives it the direction.