Management Accounting and Innovativeness - Assignment Example

Running Head: MANAGEMENT ACCOUNTING Management Accounting Name Institution Date Management Accounting Question 1 According to Emsley (2006 p. 87), management accounting innovation is one of the core themes driving modern organizations since it has a big role to play as far as development in organization is concerned. At all costs innovativeness in management accounting should be encouraged in all of the organizations. Emsley (2005 p.45-6) argues that innovativeness gives an absolute consideration of the degree at which a management accountant is expected to innovate as opposed to examining just a single innovation. This is particularly good where the theory dwells on the reasons that propel the management accountants to innovate. Radical innovations have resulted into new practices that have encouraged the doing of things in a different manner. Through it such practices such as the introduction customer profitability analysis have proved to be very essential in the organization profitability (Drury, 2007 p.7). Howells (2005) says that non-radical innovations resulted into changes on the management accounting techniques that is geared to making or carrying out assignments in better ways than the existing manner. It has prompted the prevailing system of variance analysis to be improved upon. On his part Drury (2007) notes that to a large extent innovativeness has been used as an explanatory variable. The multitasking of the management accountants that include problem solving, attention directing and scorekeeping have been greatly embraced in the management of the organizations. The management accountants are the one to provide the much needed direction as far as strategic management is concerned. Their roles of being score keepers make them to be in a better position in understanding the various challenges that the organization has gone through (Emsley, 2005 p.71-2). The performance of the organization has to be greatly examined in order to discover the underlying strength and weakness of the organization in terms of performance. As the organization put in place the targets that it has to meet, it uses the information provided by the management accountants. According to Howells (2005 p.45), innovation in management accounting will also make the shortcomings to be quickly identified and immediate solution sought for. Innovation therefore in management accounting will make it possible for the management to know which direction to follow since the management accountant also plays the part of attention direction. If innovativeness in management accounting is embraced, the feedback system will also be improved making the concerns of the clients to be adequately addressed before they precipitate into a major problem (Emsley, 2006 p.104). Limberg (2008) reveals that more involvement by the user brought about by innovativeness will help in making the clients to be more loyal and participate in any enhancement programs proposed by the company. Management accounting innovativeness ensures that there is efficiency and accountability as far as management of organization is concerned for the realization of the optimal result. Hopwood & Chapman (2008) argue that the core themes of modern organizations are better realized where management accounting has been incorporated with in the management of the business. There is assurance that the business units within the organization will work well with each other and there will be grater coordination and cooperation in the departments that has taken up management accounting innovativeness. An idea such as activity based costing (ABC) has been extensively used as one of the practices of innovativeness in the advancement of management of business organizations (Emsley, 2005 p.56-8). Question 2 According to Sisaye (2001 p.46), the role of a management accountant has been adequate in driving innovation where there has been adequate support from the entire organization. Even at its minimal application level, innovativeness has been critical in the role played by the management accountant. Howells (2005 p.108) notes that activity-based costing is one of the innovativeness practices in management accounting that has dramatically changed the practices and costing systems of the organization that previously existed. Christiansen (2000 p.3) on his parts argues that innovations being radical and non-radical have been extensively used in the attainment of the objectives of the business. Emsley (2006 p.113-5) argues that non-radical innovations involve the refining of an existing practice while radical innovations comprises of a new practice being brought on board. Users of accounting information come to appreciate the innovativeness of management accountants since their interaction with the management is to a higher level enhanced. Management accounting innovation is the one that has made it possible for the different business units to effective co-ordinate with each other in the attainment of goals and objectives of the business (Sisaye, 2001p.58). Coombs (2005 p.34-5) argues that working relationships are strengthened so long as management accounting activities are gotten from business units that involve interaction of users with staff for a prolonged period of time. Even from the research conducted through the study it seems the level of innovativeness of management accountants was high. Studies have shown that strong micro foundations were provided where there were strong business unit. The development of innovation expands greatly on the local base where the interaction of users of management accounting information is able to flourish. Management accountants who have a basic upbringing inclined towards business unit spend a lot of time within the business unit and will get a profound empathy and understanding towards the information requirements of the managers of the business unit (Emsley, 2005 p.72). According to Christiansen (2000 p.121), the management accountants duly are required to report to the managers of the business unit who necessitate their performance appraisal. With this kind of arrangement then there will always room for innovation since the management accountant has to look for new ways of doing things in order to obtain efficiency. Consequently to some extent it can be agreed that the role of management accountant has been adequate in the driving of innovations so long as the required direction is provided and the management accountants are supported. Innovation is not a one person affair and there is more that is involved from the other departments of the organization. Management accountant being a vehicle for innovativeness requires the full support from the other units of the business (Coombs, 2005 p.29). Howells (2005 p.99) argues that there could be the spirit of innovativeness within the management accounting department but if it is not supported in terms of implementations and further research, their effort will be futile. Management accounting could be willing to bring out changes in the accomplishment of the objectives of the organization but if there is no support and an ample environment those recommendation will be unfairly shelved. The determining factor of success in innovations in management accounting it is not the management accountant themselves only but also the rest of the organization which also involves the availability of resources and adequate funding. The management accountants could innovate but their suggestions meet resistance from other department of the organization. Role involvement is important (Emsley, 2006 p.107). Question 3 Role involvement is expected to affect innovativeness in terms of knowledge about the appropriateness of innovations, acceptance of the innovation by the unit managers and incentive to innovate. This statement is very true. Emsley (2005) notes that concerning the knowledge about the appropriateness of the innovations, it is required that the management accountants should be well informed of the imminent innovation and how appropriate the information is to a manager of the business unit. Appropriateness and awareness should be dealt with independently from each other. Business unit nurturing makes it possible for management accountant to tell the appropriateness of an innovation. The never ending closeness or close contact with the business managers enable the management accountant to familiarize himself with the type of decisions made by managers of business unit (CIMA, 1998 p.21-4). Besides they are in a position to the information that is required for the particular decisions. As a result they will consequently understand the kind of innovations that will directly produce the information. According to Christiansen (2000), the information is supposed to demonstrate needs of business unit that are changing and management accountants inclined towards the business unit are not limited with the dictations of functional accounting and as a result they are likely to produce innovations that are radical. This is unlikely where the management accountants have an accounting function orientation. They will not be conversant with the kind of business unit decisions. Subsequently the functional management accountants may not provide the appropriate solutions to the needs of the managers of the business unit (Limberg, 2008 p.67). Considering acceptance of innovations by business unit managers, appropriateness a lone of the innovation is not sufficient enough to trigger innovations. Christiansen (2000) notes that the role of involvement of is also affected by the acceptance of the innovations by the managers of the business units. It will be seen that the innovations which occur with the initiation of the management accounting with a business unit upbringing are more likely to be accepted since there is reduction of uncertainty concerning the benefit that will be realized from the innovations, hence there will be less resistance. Where administrative innovations are concerned there will be resistance to management accounting innovations if the benefit cannot be demonstrated (Emsley, 2005 p.80). An innovation that will involve running a machine faster is easier to demonstrate as compared to administrative innovation like ABC. The manager of the business unit is required to spend enough getting familiar with the sort of information obtained from a particular innovation. Working together with the business unit manager will make the innovation of management accountant to be more trusted without much verification. This is a prior process before the manager accepts the usefulness of a particular innovation by the management accountants. The managers have to approve that the innovations are cost effective (Limberg, 2008 p.136-7). According to Hopwood and Chapman (2008), where the innovation is radical and more resources are required in the implementation the procedure is very essential to ensure only useful innovations are approved. Management accountants with functional nurturing needs to work harder and their innovations should be very convincing before they are accepted. This is because of less trust that exists between them and the managers of the business unit. The usefulness of their innovations may not be very obvious to the managers of the business unit. Management accountants inclined towards business unit upbringing are felt as part of the group as opposed to the management accountants with a functional nurturing who are considered as outsiders (Coombs et al, 2005 p.201). Incentive to innovate is another way of the management accountant role involvement in the advancement of innovations. The incentive may include rewards given to the management accountants and other foreseen opportunities that will bring about job satisfaction which is a sure way of providing incentive. The incentives always will be dictated by the management accountant superiors. In the case of a management accountant with business unit nurturing that office holder is likely to be the manager of the business unit. The management accountant will be more encouraged to do more innovations in the attainment of the organization’s goals and objectives. More relevant information is targeted and consequently produced where there are enough incentives to the management accountant (Howells, 2005 p.67). Functional innovations will be supervised by accountants who will stipulate the kind of information needed in line with the needs of the organization. The role of involvement will be directed by the innovativeness of the accountants. The management accountants are to be encouraged to produce the kind of information that is useful to the organization and enable the management to perform their functions. Innovativeness is affected by this aspect of incentives that are provided to the management accountants (Bhimani, 2006 p.2). Question 4 The management accountant can accelerate the innovation in the organization by focusing on a particular innovation without having many ideas that are only abstract and cannot be implemented. It can be seen that a management accountant can have several ideas and not implement any one of them could erroneously be classified as innovative. To accelerate innovation the management accountant should pursue his idea to the implementation stage. Moreover innovativeness is to be encouraged but the completion of an innovative single process is very important for making the innovation process complete. The management accountant should do thorough research to make sure that the idea that he has can be implemented successfully (CIMA, 1998 p.19). Both radical and no-radical innovations are very important. The management accountant are also encouraged to research generally so that among the many ideas that they have come across at least there will be some which are easy to be implemented. More importantly there will always be a project to be dealt with and in the long run the innovations will be accelerated. Attempting many innovations increases the change of the innovations being successful in future. Innovations being that they are not exclusively discovery of new things but also changes that can be done in the practices at the work place. They can also venture into other fields that are not just accounting oriented. As it is innovations should not only encompass management accounting techniques (Emsley, 2005 p.43). The management accountants should go out of their way to look for other alternative means of promoting innovations without merely dwelling on the management accounting side. Know how in business unit realm increases the chances of a management accountant innovation is being approved by the immediate manager. As it has been seen functional management accountant innovations have a problem when it comes to being approved by the managers who view them as outsiders. The management accountant can also work in groups where they can apply brainstorming. Many of the ideas being put forward by the individuals can be vetted to see their viability before serious work can be begin on them. It is apt for the management accountant to have a comprehensive explanation before his work is approved (Bhimani, 2006 p.30). Bhimani (2006) argues that simulation should be used where real situations are used to demonstrate the viability of a certain innovation. If the management accountant has many innovations to demonstrate then the changes of him improving on every innovation is very high. According to Bhimani (2006 p.200), when a number of innovations are studied the explanatory variable increases to a large extent. The management accountant can accelerate innovation by appreciating the workings of the organization synergy that is outlined in the contingency theory. The different functions of the organizations need to be analyzed because the management accountant looks at strengthening the efficiency of the working units of the organizations. Sisaye (2001p.193) notes that if the management accountant will analyze the relationship between the various working units of the organization he will come across the shortcoming that exists and therefore come up with ways of improving the efficiency of these units. From the definition given of innovations it comprises of production process technologies, new services r products, administrative systems or new structures, new programs or plans relating to member organization. According to Sisaye (2001 p.22), understanding these types of innovations by the management accountant is very important so that a variety of innovations can be realized and hence the process of innovation accelerated. Understanding the functioning of these different units is very important by the management accountant to give him a bigger circumference of operating in (Emsley, 2006 p.67). Hopwood and Chapman (2008 p.102) advices that from time to time the management accountant should inform the various departments what should be done in every department so that the chances of having innovation are identified and improved by the backing of the department. Further training in particular functioning of the units is very important to make sure the management accountant he is versed with which kind of innovations he has to come up with. Drury (2007) notes that innovations will go through different stages and it is imperative that the management accountant should have different ways of putting across his innovations s that he will not have any trouble in the demonstration of the innovations (CIMA, 1998 p.87). The management accountants have to report to someone superior and there for they should make sure there are good relationships that exist between them and their superiors. The managers are the one to authorize funding for the different innovations if they are adequately approved. The management accountant should be very close to the managers to accelerate the rate of innovations. The accountants should ensure that no rule is breached in their effort to come up with new innovations. This will make it easier for their work to b understood by the managers because it is easier to follow (Emsley, 2005 p.54). References Emsley, D. 2005, "Restructuring the management accounting function: A note on the effect of role involvement on innovativeness" Management Accounting Research, vol.16, iss.2, June 2005, pp.157-177, Emsley, D, 2006, Discipline of Accounting and Business Law, School of Business, University of Sydney, NSW 2006, Australia Bhimani, A. (2006). Contemporary issues in management accounting. London: Oxford University Press Hopwood A. G, &, Chapman C. S. (2008). Handbook of Management Accounting Research. NJ :Elsevier Drury, C. (2007). Management and Cost AccountingAuthorEdition7. London: Cengage Learning EMEA, Hopwood, A. G. & Chapman C. S. (2008). Handbook of Management Accounting Research. Sheffield: Elsevier. Sisaye, S. (2001). 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