Aone Diagnostic Equipment is a listed company that manufactures sophisticated diagnostic machines to aid medical professionals. The company has three production divisions: Ultrasound, MRI and Miscellaneous Machines. Top management has analysed the company’s financial results for the last three years and is interested in exploring new domestic markets and is also planning to expand the operations of the company in different countries. The management accountant of the company is assisting management in analysing demand for its medical equipment in the potential markets and the existing competitors in those markets. The management accountant presented the results of the analysis to the corporate board and shared concerns about the outcome of the expansion plans. The major concerns are the faster growth rate of the remuneration of the executive directors than the growth rate of the company and the increasing ratio of an executive director’s pay to an average worker’s pay. The non-executive directors are alarmed by these findings and have approached you for an independent analysis of the financial position of the company. As stated by them: ‘Our company is a leading manufacturer of diagnostic machines in the market, and we are planning to expand our operations. We need you to look into the financial growth of the company and, additionally, the growth of the remuneration of the executive directors. We would also like you to suggest process changes so that the prevailing trends of the business are communicated in a timely fashion to the non-executive directors.’

Required
1. Briefly explain the role of a management accountant in an organization. Refer to the Higgs Report (2003) and suggest additional processes that can be introduced to increase the role of management accountants and better equip the non-executive directors to manage the corporate governance of Aone Diagnostic Equipment.

2. The non-executive directors feel that the data generated by financial accounting is too late and too backward looking and is not of much use for effective corporate governance. Briefly explain the alternative approaches to measuring performance that can enhance the ability of non-executive directors to improve corporate governance.