Existing Management Accounting Research Articles

Principles of Management Accounting: A Critique

This paper gives a critical evaluation of the five main sets of management accounting principles formulated in the accounting literature over the last eighty years. The aim is to problematize management accounting principles as a crucial research area that requires reconsideration and integration of contemporary achievements in science. The main weaknesses of the existing management accounting principles have been identified. These weaknesses are due to the theoretical foundations used or the inductive approach applied. They lead to the uncritical acceptance of the old imperative that, by definition, there is a direct relationship between management accounting information and the organizational value created. The moderating role of the human aspects remains somehow widely underestimated. These aspects make the creation of organizational value a behavioral problem that requires behavioral solutions. A possible behavioral solution is to further develop management accounting principles in the field of behavioral sciences and to work on the development of behavioral principles of management accounting. This general idea concludes the contribution of the paper to the existing accounting literature.

STRATEGIC MANAGEMENT ACCOUNTING A SANELEMENT OF STRATEGIC MANAGEMENT OF JSC «UKRZALIZNYTSYA»

Purpose. Ukraine's transport strategy envisages measures that require the creation of an effective management accounting system in JSC «Ukrzaliznytsia» in order to increase the efficiency and competitiveness of the company, strengthen cooperation between the public and private sectors, carry out the necessary reforms, including decentralization, which provides for the transfer of responsibility to existing and newly created centers of responsibility within JSC «Ukrzaliznytsia». The aim of the article is to analyze the system of strategic management accounting taking into account the world experience in order to identify tools that will increase the effectiveness of management decisions with a focus on the implementation of the strategy of JSC «Ukrzaliznytsia». Method. This work uses methods of comparison, scientific research, analysis, and synthesis to study modern tools of strategic management accounting. Results. The analysis of the existing management accounting system of JSC «Ukrzaliznytsia» is carried out. The general problems of management accounting of the railway industry and ways of their decision are defined. The essence of strategic management accounting and its role in strategic management are determined. Based on the analysis of international and domestic experience in the development of strategic accounting, recommendations are proposed for building a system of strategic management accounting in railway transport enterprises using its most effective tools. Scientific novelty. An algorithm for the use of strategic management accounting tools at railway transport enterprises has been built, which combines two traditional management accounting tools: a system of balanced targets and budgeting. Practical significance. The implementation of the proposed approaches will allow to transform the existing accounting and analytical system into a planning and regulatory system of management decisions, which is focused on the strategic development of JSC «Ukrzaliznytsia».

THE EFFECT OF CHARACTERISTICS OF MANAGEMENT ACCOUNTING SYSTEM INFORMATION (BROADSCOPE, TIMELINESS, AGGREGATION, AND INTEGRATION) AND DECENTRALIZATION OF MANAGERIAL PERFORMANCE

This study tested the hypothesis developed by Chenhall and Morris (1986) and aims to examine the effect of management information system characteristics of management accounting and decentralization on managerial performance. This study uses contingency theory as a grand theory because the theory of the contingency approach is based on the premise that no management accounting system is always appropriate for all types of companies. This study was analyzed using multiple linear regression analysis. This study used a survey method using a questionnaire with 41 respondents consisting of 5 area managers and 36 supervisors at one pharmaceutical company in Bali province. The results showed that the characteristics of management accounting system information in broadscope, timeliness, aggregation, and integration did not affect managerial performance. It is because managers and supervisors do not fully use the information of the existing management accounting system, so the information management accounting system does not contribute to decision-making that will impact managerial performance. The results of this study are not in line with previous research, but this research supports the contingency theory approach. The decentralization variable has a significant effect on managerial performance. These results support previous research showing that delegating authority from officials to lower-level officials can assist management in making decisions better to improve managerial performance.

EMERGENCE OF STRATEGIC ACCOUNTING IN THE MODERN ACCOUNTING SYSTEM

Purpose. The aim of the article is to analyse the existing scientific approaches and the formation on this basis of a unified approach to the emergence of strategic accounting in the modern accounting system. Methodology of research. General scientific and special methods were used in the course of the research, namely: analytical in the study of the normative component; the application of the method of classification makes it possible to differentiate the tools of strategic accounting, the use of the method of description reveals the tools of strategic accounting; the monographic method is used in the study of literature sources on the emergence of strategic accounting, and system-analytical in the processing of information. Findings. The necessity of using strategic accounting, which is conditioned by the necessity of the strategic management system, is proved. It is substantiated that strategic accounting will cope with all the criticism that has been presented in opposition to traditional management accounting. At the same time, it is established that the system of strategic accounting will bridge the gap that exists between strategic management and management accounting. We believe that strategic accounting will be able to help management accounting move away from just money problems and get closer to multidimensional business. Originality. As a result of the analysis of scientific approaches, the formation of a unified approach to the emergence of strategic accounting has been further developed. Namely, it is determined that the emergence of strategic accounting is due to the need for a system of strategic management. It is established that strategic accounting is not separate from the existing management accounting. In fact, both management accounting and strategic accounting offer similar functions at the operational level, but the latter is trying to develop these ideas and improve them in the future, to meet the requirements of a more optimal accounting system. Practical value. In our opinion, the correct definition of the peculiarities of the emergence of strategic accounting will outline further empirical research on the implementation and usefulness of the practical application of strategic accounting. Key words: accounting, accounting system, accountancy, management accounting, strategic accounting.

Modern Management Accounting Practices: Effect on Management Accounting System Performance of Listed Manufacturing Sector Organisations in Sri Lanka

Sri Lanka is facing challengers in achieving economic growth in the resent years. Contribution from the manufacturing sector is significant in this regard. This study was undertaken to answer the management problem of whether the addition of Modern Management Accounting practices improves the performance of existing Management Accounting Systems in manufacturing sector organizations. Adoption level of ten most prominent Modern Management Accounting practices were tested using a performance measurement construct to understand the level of Management Accounting System performance. Quantitative method of study supported by in-depth interviews and a further explanatory study was undertaken to explain the relationships observed. It was revealed that the adoption levels of all ten practices were below the previously known findings and the average level of adoption was at 54%. Analysis of the quantitative data showed that Management Accounting System performance level average of 74% for all the variables. Simple correlation analysis revealed that there was a fair positive association between the use of Modern Management Accounting practices and Management Accounting System performance in the sample studied. The explanatory study was undertaken using the contingency theory framework. And in conclusion it can be stated that the mix of contingency factors affect the level of adoption of Modern Management Accounting Practices and Management Accounting System performance can be enhanced by the adoption of Modern Management Accounting Practices in manufacturing organizations.

Application of the accounting information at higher education institutions in Slovenia and Croatia - preparation of public policy framework

Application of accounting reports' information for managerial purposes has been commonly denoted as management accounting. The studies focused on management accounting at higher education institutions confirmed the lack of high quality information and revealed that existing management accounting practice is primarily centred on complying with legal requirements regarding external reporting. Therefore, the main objective of this paper is to analyse the financial reporting systems at higher education institutions in relation to management accounting at micro and in relation to public policy framework at macro level in Slovenia and Croatia. The results revealed that exiting reporting systems at higher education institutions in observed countries is partially useful for decision making processes and that there are significant differences in the main elements of management accounting practice. Research findings could provide solid groundwork for the preparation of public policies and operative instructions.

Application of the accounting information at higher education institutions in Slovenia and Croatia - preparation of public policy framework

Application of accounting reports' information for managerial purposes has been commonly denoted as management accounting. The studies focused on management accounting at higher education institutions confirmed the lack of high quality information and revealed that existing management accounting practice is primarily centred on complying with legal requirements regarding external reporting. Therefore, the main objective of this paper is to analyse the financial reporting systems at higher education institutions in relation to management accounting at micro and in relation to public policy framework at macro level in Slovenia and Croatia. The results revealed that exiting reporting systems at higher education institutions in observed countries is partially useful for decision making processes and that there are significant differences in the main elements of management accounting practice. Research findings could provide solid groundwork for the preparation of public policies and operative instructions.

ПРОВЕРКА СОСТОЯНИЯ УПРАВЛЕНЧЕСКОГО УЧЁТА НА ПРЕДПРИЯТИИ

Now the heads of enterprises have understood that management accounting is important for the decision-making process. It has a particular importance when enterprises because of the specifics of their activities and optimization of taxation, consist of several business entities, for example, hotel-restaurant complexes. However, it may be a situation when there is management accounting at the enterprise but managers do not receive the necessary information. Then there is a need to check the status of management accounting. Audit of management accounting is expensive, so there is a need for cheaper ways to determine the status of management accounting. This confirms the relevance of this study. The purpose of the work is the formation of a procedure for checking the status of management accounting at the enterprise. To achieve the goal, the method of expert evaluation was used. First of all, the author selected objects for checking the status of management accounting for the understanding what to focus on. Next, the author analysed the main approaches to checking the status of management accounting and how they can be used at the enterprises of the hotel-restaurant complex. The author, on the basis of the analysis, formed possible questions about the assessment of the status of management accounting, which were evaluated by experts on the basis of the scale proposed by the author. Expert evaluations were processed and ranked by the author. The result was a questionnaire for assessment of the status of management accounting at the enterprise, with the allocation of various aspects of accounting for the consideration of different issues. The author also developed recommendations for the answers to the questionnaire and the scale for the questionnaire, which allows drawing a conclusion about the completeness of the management accounting system. It makes a conclusion that this procedure of checking the status of management accounting at the enterprise helps to understand what issues are covered by the existing management accounting system and to what extent. However, this approach does not give an answer as to whether management accounting is correctly conducted because the essence of the procedure is in checking of the system’s provisioning, organization, confidentiality, and not checking of the quality of management accounting, which is the direction of further research.

Structuration theory: reflections on its further potential for management accounting research

Purpose – This paper aims to examine the potential of strong structuration theory in management accounting research. Design/methodology/approach – The paper explains how the ontological perspective of strong structuration theory extends the work of Giddens and explores how the perspective overcomes a number of the limitations of existing management accounting research based on structuration theory. Findings – Strong structuration theory develops and extends the work of Giddens, providing greater insights into the role of agents, improves our understanding of the diffusion of accounting practices through organisational fields, adds to our knowledge of how artefacts are used in the production and reproduction of organisational life and improves research design. Research limitations/implications – Strong structuration theory provides clear guidance about management accounting case study research design, and suggests the potential for the accounting research community to engage more actively in debates about the development of structuration theory beyond the work of Giddens. Originality/value – This paper provides a clear explanation of the ontology of strong structuration theory, its implications for research design and how it holds the potential to overcome many of the limitations of earlier management accounting studies deploying structuration theory.

Accounting for war risk costs: management accounting change at Guinness during the First World War

This paper explores management accounting change at the St. James's Gate Brewery of Arthur Guinness & Sons Ltd brought about by the effects of the First World War (WWI). In particular, how additional war risk costs were accounted for internally is revealed. Using organisational routines as a theoretical backdrop, new management accounting practices are interpreted. These new practices allocated war risk costs incurred by head office (in Dublin) to other parts of the company. The key role of existing management accounting routines in the formation of new routines is also revealed. Although WWI was an exogenous driver of change, endogenous change also featured as existing practices guided the creation/adaptation of routines. In essence, accountants within the Guinness Company drew upon their existing knowledge to deal with a new and complex scenario (i.e. the war). Thus, change and stability went hand in hand. Although change did occur, it was moderate and more adaptive, which signifies that existing accounting routines were strong and adaptable to major drivers of change such as WWI.

Changes in management accounting practices in Malaysia

PurposeMalaysia has moved towards global competitiveness. As an important contributor to the Malaysian economy, this change makes manufacturing companies in Malaysia need to ensure that their business operation and management cope with the current changes. To do this they need to reconsider their existing management accounting practices more than ever. Therefore, this study is carried out to determine how changes in management accounting practices in Malaysian manufacturing companies took place in response to a changing business environment and the effect of changes on performance.Design/methodology/approachA structured questionnaire survey is used to collect the data from various manufacturing companies in Malaysia. The Federation of Malaysian Manufacturer Directory is used as a sampling frame.FindingsThe results show that the level of changes in management accounting practices increased over the five year period from 2003 to 2007. The changes mostly occurred through the introduction of new practices, replacement of existing practices and modification of the way existing practices were used. Findings in this study also reveal that there are no significant differences in management accounting practices among local and foreign companies, or between small and medium, and large companies. This study also support previous research in terms of the positive relationship between changes in management accounting practices and performance.Originality/valueTaken together this research outcome has contributed to the existing management accounting change literature especially in a developing economy setting.

Activity Driven Budgeting of Software Projects

There are numerous forecast models of software development costs, however, various problems become apparent in context to practical application. Standardized methods, such as COCOMO II have to be calibrated at an individual operational level on the basis of the underlying database. This paper presents a new activity based approach that is based on business specific cost data that can be easily integrated into existing management accounting systems. This approach can be applied to software development projects based on the unified process in which activity driven budgeting promises several advantages compared to common tools in use. It supports enterprise specific cost forecasting and control and can be easily linked with risk analysis. In addition to the presentation of a conceptual design model, the authors present a framework for activity driven budgeting and cost management of software development projects combined with concrete implementation examples.

EVA and Innovations in Decision-Making and Financial Management

The economic value added (EVA) of a company is currently acknowledged as the single, most appropriate internal measure of corporate financial performance. Its appeal lies in the fact that it is conceptually sound as it reflects the true economic profit of a company after taking into account the full cost of capital, including the (opportunity) cost of equity. This study investigates how existing management accounting and financial management techniques can be adjusted to incorporate the EVA perspective. It also applies these adjusted techniques to a company listed on the JSE Securities Exchange South Africa.

EM BUSCA DO ENTENDIMENTO DA FORMAÇÃO DOS HÁBITOS E DAS ROTINAS DA CONTABILIDADE GERENCIAL: UM ESTUDO DE CASO

RESUMO Tendo-se em vista a tendência da estabilidade das rotinas da contabilidade gerencial e a dificuldade da introdução prática de novas abordagens conceituais, este estudo tem como objetivo identificar características fundamentais de hábitos e rotinas da contabilidade gerencial. A pesquisa buscou estudar os hábitos e rotinas existentes, bem como novos hábitos e rotinas surgidos a partir da instalação de um processo de mudança nos sistemas de custos e preços de uma empresa comercial familiar de porte médio. Considerando a necessidade de entendimento da situação da empresa antes do processo de mudanças, durante o processo e após a implantação, optou-se pela metodologia de pesquisa-ação. A busca por respostas às questões levantadas durante as observações deu-se com base no arcabouço das teorias institucional e da contingência. Em relação aos resultados do caso estudado, destacam-se: 1. a análise dos impactos de contingências ambientais, tornando ineficazes os hábitos e rotinas de contabilidade gerencial existentes; 2. a dificuldade de mudança nos velhos hábitos e rotinas institucionalizados, empregados de forma inconsciente; 3. o emprego de diferentes estratégias para a institucionalização dos novos conceitos gerenciais.

Fitting Management Control Systems to Competitive Advantage

SUMMARYRecent publications suggest that existing management accounting and control systems prevent business unit managers realising their desired competitive advantage. Although the concept of competitive advantage has already been thoroughly discussed in strategy literature, it has not yet been integrated in the management accounting and management control frameworks. Only a limited number of researchers have concentrated on contingency research in this area. Contingency theory simply states that organization structure, process and management control systems are contingent upon various internal and external factors, such as industry, technology, size, culture and strategy (Anthony and Young, 1988; Anthony et al., 1992).This article is an attempt to identify and investigate the management control – strategy relationship. We report the results of our exploratory field research in 18 companies (32 business units). Based on our results, we formulate some hypotheses on the observed characteristics of the management control process in case of low‐cost strategy, differentiation strategy in a standard product environment and differentiation strategy for customized products (make to order, engineer to order).

Accounting For Quality

Examines the theory and practice of “cost of quality” and whether it warrants a place in management accounting. Discusses the assertion, supported by research, that the indirect costs of poor quality are several times the direct measured costs of scrap, rework and warranty. Looks at a survey of attitudes and systems in Japan comparing the Japanese companies with their American counterparts. Describes the quality costing system in a British company and charts its attempt to account for quality by reference to BS 6143. Concludes that as an ongoing addition to existing management accounting, quality costing does have a major role to play in monitoring and controlling the drive towards quality improvement.