Question

discuss and explain what accounting benchmark studies are and why they are important for an organization's management accounting systems. If you have participated in benchmarking your firm to your competition, please share your experience and what you learned.

Answer 1

In Benchmark accounting practices we compare our accounting practices, policies, and process with best accounting practices, policies, process of our industry. From this comparison, we get benchmark repot. From which we can learn that what is best accounting practices, process and how that can be achieved. There are some major key performance indicators that accounting benchmark include as follows:-

•             Average wage costs for the staffing categories.

•             Hourly charge out rates for the principals and all staffing categories.

•             Typical practice fees revenue between compliance services, business advisory and financial planning.

•             WIP and Debtor s comparisons.

There are following four step in benchmarking an accounting practice as follows

1.            Identifying problem areas

2.            Create/ purchasing a current benchmarking report

3.            Analysis the key performance indicators that produce superior performance

4.            Implementing new and improved business practices.

Benchmark accounting practices is beneficial to an organization because that is only one things from which organization can know the industry best accounting practice and all can improve his accounting process and practice as possible with available resources.

I used this performance improving technique in my product cost accounting. For this I got the cost sheet of similar products of industry. And then in benchmarking I found that my overhead cost allocation basis is wrong and differ than similar products of industry. And I use best practice basis for allocation of overheads in my accounting process.

From this benchmarking I learn following:-

•             Industry best accounting practice, policies, process.

•             How these organization and product achieving these results.

•             How my organizations can achieve this best practices and process.