Management Accounting in Support Decision Process - Essay Example

The Percieved Role and Involvement of Management Accounting in Support Decision Process within the Union Carbide Prior to the Disaster While it has been named as one of the greatest environmental disasters to ever hit the world, its consequences were felt for a period of time that no one would dare under emphasize (BBC News 2010). It led to the exposure of over 500,000 people to methyl isocyanate gas and other chemicals. Bradford (1985) in his article, expresses the fact its effects were felt years later on. While the death toll was officially reported to have been 2,259, it’s the effect that it left on those who survived that was even more devastating. Bradford explains that for many more consecutive years, the number of children born with deformities related to same way too many of them even to be accounted for. Such was the extent too great that when a week after that more than 8000 other people died with gas related ailments which were also attributed to the disaster in the same period (Ingrid 2001). Some of the main management accounting issues that can be learnt from this prior to the disaster happening can mainly be attributed the fact that the courts found the management of the UCIL(Union Carbide India Limited), the parent company responsible to be liable for negligence. This lead to their ligation and consequently finding the ex-employees liable for negligence fining them $2000 each (BBC News,2010). There were a number of cost management issues that could be identified prior to the disaster. Ingrid (2005) notes that prior to the happening of the disaster, the demand for pesticides that are made from the gas had fallen. This is said to have attributed to the build up of the gas within the firm as there was reduced use of the gas for the pesticides’ manufacure. However, the firm could not reduce the amount they were manufacturing could be mainly be associated with the break even cost of the manufacturing. Manufacturing less as per the requirement at that time could have to increased cost and thus the company decided to continue producing at that that higher rate even when less of the gas was required. Ingrid (2006) says that prior to the disaster, there had been two trade unions who had been quoted to have been complaining about the pollution within the plant. This means that the plan had not put in place a proper waste and anti pollution policies within the plan. The result had been a worker losing life after the employee was splashed with phosgene while at work. Pollution management within any organization should be planned for and costed for by the management within the organization. While it is a cost that many organizations may find easy to ignore, the consequences are especially dire for the employees who spend a lot of their time within the organization. Organizations that do not have a priority for their employees’ safety stand to lose so much since the employees first are their main asset. Failing to recognize the employees as the number one asset who happen to very dynamic leads to the management being at loggerheads with them at all times. The effect is reduced productivity as the inter problems ‘eat’ in the productivity of the company and thus the profitability as well. Ingrid (2001) explained that while the business continued to grow, there were few expansion strategies put in place to deal with increased capacity that the plant needed to handle. This was mainly more so with the increased requirement as far as the storage was concerned. The effect was that the business was storing more pesticides within the same storage facilities and ended up filling them beyond the recommended levels. The business is also quoted to have been experiencing a shortage of experienced manpower. The plant management, however, did not bother to bring in more trained operators to deal with the various aspects of the firm. The employees who were working within the firm had not been undertaken through the proper training that are required for them to operate. Their relations were also not being looked into well as it is reported that promotions within the plant were rarely done on merit and the same had even been halted during the period leading to occurrence. Such activities could have led to decreased employee morale as their goals to work for even career growth had been shunned with the discontinued promotion. Staff management is a rather sensitive cost management issue that cannot at any time be under emphasized. They are the people for who make the money or e company and thus their issues and cost should also be forefront (Chouhan et.al, 1994, 2004). The other major problem regarded the management of the alarm systems that had been installed. They were reported that the system had not been working for four years prior to the disaster. While the management sat down, the same was never given much priority and thus it was not repaired (Chouhan et.at, 1994, 2004). While the system costed the plant a lot of money to be installed, having them just there while they were not functioning was an unreasonable cost altogether. Some of those that were operating had also not been serviced or a long time. Heir effectiveness as thus highly compromised as they had stayed for so long without he highly required service. Such costs are minor within any financial period, especially when servicing is done quite often yet they could the company great deal of money. However, it being an avoidable cost in the short run could have led the budget makers to avoid it in the short run creating heaps of problems with that issue. Simple repairs within the firm were also avoided, especially on the pressure gauge which was said to have reported faulty at least roughly once every week and such issue was still not addressed. Such were the problems that the management could have dealt with in their costing department hat could have lead to a reduction in the incidence or even at least a reduction of the effect of the disaster. Had he top management planned themselves fully in advance and managed heir activities properly, there were a few cost that had they been incurred the disaster could not have been as bad as it was if at all it still would have happened. This goes a long way to explaining that while cost cutting is important, it should be done in a way to compromise other objectives of the firm. B While the cost of lives lost during the disaster cannot be determined, the other costs of disaster stands at the following Litigation of 7 officials at $2000 each $1400 34 other settled law suits $200,000 U.S. District Court, total to date to $7 million Considerable relief had already been extended to the victims (Bhopal Gas Tragedy) $5 million Environmental cost Human life Human suffering Works Cited Bhopal trial: Eight convicted over India gas disaster". BBC News. 7 June 2010. Archived from the original on 7 June 2010. Retrieved 2014-12-25. Broughton E (10 May 2005). "The Bhopal disaster and its aftermath: a review". Environmental Health 4 (1): 6 pages. doi:10.1186/1476-069X-4-6. PMC 1142333. PMID 15882472. Bradford, G. (1985) We All Live in Bhopal available http://bhopal.bard.edu/resources/research.php Eckerman, Ingrid (2001). Chemical industry and public health. Bhopal as an example. Gothenburg, Sweden: Nordic School of Public Health. Bhopal trial: Eight convicted over India gas disaster". BBC News. 7 June 2010. Archived from the original on 7 June 2010. Retrieved 2014-12-25 Eckerman, Ingrid (2005). The Bhopal Saga—Causes and Consequences of the Worlds Largest Industrial Disaster. India: Universities Press. ISBN 81-7371-515-7. Eckerman, Ingrid (2006). "The Bhopal Disaster 1984 – working conditions and the role of the trade unions" (PDF). Asian Pacific Newsletter on occupational health and safety 13 (2). Chouhan TR and others (1994, 2004). Bhopal: the Inside Story — Carbide Workers Speak Out on the Worlds Worst Industrial Disaster. US and India: The Apex Press and Other India Press. ISBN 1-891843-30-3 and ISBN 81-85569-65-7. Bhopal Gas Tragedy The Economic and Legal Aspects available at http://www.lloydjones.net/Kalpana/Bhopal-3.htm Read More