Management accounting change in a bank

Abstract

This is a longitudinal case study of the changes in the management accounting system and in particular, the management accounting reports, in a division of a large multinational bank. The initial contact with the Division was in September 1990 but, based on interviews and copies of reports, this case begins in 1989 when the Division had many financial reports but basically one management accounting report for managers. Pressures (such as new competitors, developments in information technology, bad debts experience, reducing profits margins and the introduction of new products) initiated the changes in the management accounting system. Both accounts and managers considered that a major change during the period of this case was the increased level of discussion and greater informal contacts between managers and management accountants. Changes such as the new cost allocation methodology, value-for-money exercise, new cost reports, competitive benchmarking and more participative budgeting process all increased the communication between managers and management accountants. However, many management initiatives (such as activity-based costing) either failed or were not implemented and one hypothesis from this case is that such failure is normal in organizations. Such failure became apparent because of the longitudinal nature of this case with its 'freeze-frame' approach. The accountants and managers all agreed that environmental pressures were the primary reasons for many of the changes but that internal factors were also important. The influence of individuals as change agents was particularly significant in this case. The Innes and Mitchell model (1990) of change with motivators, catalysts and facilitators' is developed to include barriers to change, leaders and momentum for change.