Cost accounting systems need improvement.

Management accountants perceived their cost accounting systems as inadequate, according to a survey of 420 members of the Institute of Management Accountants. Only a third of the respondents considered their systems adequate, while 42% characterized them as "poor" or "inadequate." Almost three-quarters were participating in projects to improve their organizations' cost management practices.

A similar survey in 1993 found that 42% of the respondents considered their cost accounting systems adequate, and only 25% believed them to be poor or inadequate.

The marked change over the course of one year did not suggest a decline in the quality of U.S. cost accounting systems, according to Jonathan Schiff, CIA, a professor of accounting at Fairleigh Dickinson University's Graduate School of Business in Teaneck, New Jersey. Rather, he said, it demonstrated financial managers were becoming more aware of the importance of cost accounting information as a competitive tool.

"At a lot of companies, success is driven to a great extent by the ability to be competitive in a cost framework," said Schiff. "Developing an effective cost accounting system is a task that management accountants have had to take on in recent years. The survey suggests they recognize something's wrong. This is a necessary first step to-ward improvement."