Greg Weismantel, president of Epic Group, a management consulting firm and advisor on strategy for small and large firms and companies has written an interesting article on accountability in the US accounting website, here.
He says that, in discussing strategy and driving forces for the CPA (accounting) firm, the word “accountability” comes up several times but most partners and managers might not understand the difference between responsibility and accountability. He asks: How can partners manage the firm without understanding accountability? How can their people evaluate themselves if their people do not understand what the difference is between accountability and responsibility?
Not understanding accountability is the basis for a leadership management activity called “conflict resolution.” The truth is, according to Greg Weismantel, is knowing and understanding that the difference between accountability and responsibility is basic to managing a firm or company. Why?
Greg Weismantel explains:
- Normally the partner who is accountable for a particular client or brought it with a merger (we’ll call her Partner A) is accountable for all the work at that client. She, in this case, is the main contact point where all services and presentations must be approved first, or they are not provided to her client. However, not uncommon in most CPA firms, Partner A also has other responsibilities, and in this example she is also the partner in charge of compliance in the firm.
- She has the work or responsibility of ensuring that all the tax and audit and other services that are used by her client are fully implemented, with full authority to dictate which services are made available to her client. But she also has authority for all compliance issues and decisions within the firm for all clients.
- So you can see three key elements of accountability in this example. First there is the work or the responsibility that Partner A must undertake for her own client, along with the authority to fully make every decision about that work with her client. The third element of accountability occurred when Partner A agreed with the managing partner to accept the responsibility and authority for her client. But what about compliance?
The normal organisational structure of a CPA firm (and an accountancy firm in the UK) of any size is not a traditional functional type, but more of a matrix, where various other people are responsible for doing the work of tax, audit, accounting or compliance, but are not accountable for the client per se. Partner A is accountable for the client. Why? Because she has authority for any decision made for that client, and the various other people performing the work do not have that authority. Is she also accountable for the tax and audit metrics for the client?
… An interesting question. Simple answer: does she have authority to dictate the tax and audit metrics? And now you can understand the difference between responsibility and accountability within a firm.
By definition, “Accountability is the combining of the responsibility, the fixed duties or work, along with the authority given by a higher level to complete the responsibility, and agreed to by the individual accepting the responsibility.”
The author’s observation is that in most companies and firms, many managers and partners do not know who is actually “accountable” for every facet of management, and this is where most conflicts arise.
Let’s take the usual annual budgeting process in a CPA firm. Who is accountable for the tax and audit budgets for the firm, or the compliance budget? It could probably be assumed that Partner A would be accountable for the tax and audit budgets for her clients, but the partner accountable for tax or audit could also assume that he is accountable for the tax and audit budgets for the firm, and all the clients. Conflict.
When the managing partner says to a director or partner who is responsible for the construction industry, “Give me your next year’s forecast for profits for your industry,” the tax partner and the audit partner both have hours that they have projected for each construction client. Who is accountable for the forecast, the construction industry partner or the tax partner or the audit partner? Conflict.
This could start to get messy, and it usually is caused by the fact that partners and managers in the company or firm do not know, understand and practice the difference between accountability and responsibility. It can be the source for a lot of hard feelings toward members of the firm in other situations as well, but is easily resolved when each person understands the activity of accountability.
There is a simple solution to every accountability issue, and here’s a tip: trace the line of authority for each responsibility or work, and you will find out who is accountable for that work, and in this example, for the budget.
The good thing about knowing who is accountable and not responsible for a scope of work is that it allows self-evaluation to occur by the accountable individual, while allowing the managing partner to recognize great performance as well as taking action to improve inferior results by the accountable person.
In any firm or company, until clear lines of authority are established for any work or responsibility, you will always find conflict between partners, directors and managers.
But keep in mind, it does not matter “who” is accountable, it just matters that the firm “knows” who is accountable for a particular work. That is what resolves all conflicts automatically.