Development of the Management Accounting Research in the Past 30 Years - Example

Advances in Management Accounting research over the last 30 years Table of Contents Table of Contents 2 Introduction 3 Review of Management Accounting Research 4 Critical Evaluation of Strategic and Performance Based- Management Accounting Systems 5 Conclusion 8 Recommendations 9 References 10 Bibliography 12 Introduction The field related to management accounting research is continuously evolving, which creates a requirement for observing latest trends and patterns in order to ensure best accounting practice. Management Accounting Researches assists an organisation to mitigate the problems related to its diversified areas. Management control is a part of management accounting that facilitates budgeting, organisational control and performance evaluation among others. Additionally, cost accounting is also associated with management accounting research. On further researches, it has been determined that effective practice and research of management accounting facilitates plans and methods to mitigate few problems. Application of management accounting helps in gaining an accelerated understanding of the latest financial techniques within an organisation. It also helps in gaining an in-depth understanding of the impact, which the prevalent financial practices may lay on the organisational performance. Furthermore, research on management accounting fosters effective communication related to financial findings amidst the practitioners (Elsevier Ltd, 2010). This study intends to discuss about the development of the management accounting research in the pasts 30 years. On further note, the study also discusses about management control and cost accounting as the concerned areas of management accounting research in details. Review of Management Accounting Research Corresponding to the management accounting research, it has been determined that these researches accelerate the applicability of the programs, course work and text books among others. Apart from the increased applicability management accounting research also accelerates the consulting opportunities (Harris & Durden, 2010). According to the views propounded by Maelah (2011), management accounting is considered as science for providing theoretical solutions to the practical problems. It has been further ascertained that the field of management accounting research has been a part of interest of both the private and public organisations (Maelah, 2011). On further discussions according to the statements given by Vaivio (2008), it has been observed that qualitative research is required as an inclusion within the management accounting research. He have also laid emphasis over the application of management accounting within the organisational context in order to mitigate two major problems i.e. rational decision-making along with rational control. Furthermore, Vaivio (2008) has also considered management accounting as a functional technology that greatly assists in the making of rational decisions. In this respect, in-depth analysis has revealed that calculations being involved within the management accounting basically drives the organisational initiatives. Similarly, Shotter (1999) discusses about the relevant development of management accounting. Information related to the origin of management accounting reveals about its emergence in the period of industrial revolution. During the era of industrial revolution technical inventions have entered the manufacturing world. Management accounting has undertaken a vast change within the past centuries (Shotter, 1999). According to many researchers, management accounting has been defined differently. Management accounting research encompasses within it management control and cost-accounting among others. In accordance to the management control, it basically identifies few vital components that assist in the evaluation of management accounting effectiveness. Budgeting, organizational control and performance management are the dedicated components of management control. The aforesaid factors depict the application of management accounting in various fields within the past few years. It has also been identified that management accounting also entails different strategic position and assist in measuring the strategic performance. Considering the diversified areas being impacted by the implementation of management accounting, two areas are taken into concern. The two areas i.e. strategic management accounting and performance management accounting have claimed major developments than others (Inman, 1999; Shotter, 1999). Critical Evaluation of Strategic and Performance Based- Management Accounting Systems Traditionally, management accounting has been considered as an aid to managers for deriving information. However, during 1980’s and 1990’s significant changes in the business environment were recognised and thus, the concept of strategic management was evolved to mitigate the requirements of the changes witnessed in the strategic management accounting. On further note, it has been assumed that with the increase in the competition within the organisational environment has basically shortened the product life-cycle. In this aspect, it has created a pressure on the organisation to earn profit within a very short period. Application of strategic management assists in mitigating the challenges, which an organisation faces with the increase in competition (Goodfellow publisher, n.d.). Further researches revealed that strategic management has undergone a major development in year of twelfth century. As claimed by Soljakova (2012), ‘attribute costing’ mainly forces the accountants to derive strategic information for apparent results. In accordance to activity-based costing, it is mainly applied to derive information, which is required for the decision-making process. Another vital importance of activity-based costing is that, the information being derived are accurate related to the actual costs being incurred (Drury, 2008). Eventually, strategic management also depicts the relationship between strategies being undertaken and the management control systems. The techniques being involved within strategic management is applied within the organisational context for an appropriate result. Few of the strategic management techniques entails competitor cost assessment, benchmarking, life cycle costing and quality costing among others (Cinquini & Tenucci, 2007). In accordance with the application of strategic management accounting, it provides emphasis on differentiated areas associated with the organisational context. The various areas within organisation, which requires a special attention on part of management accounting entails the porter’s five forces (Inman, 1999). Another area of management accounting that has experiences major development within past thirty years is performance management accounting. It has been discussed that performance management accounting has become a part of government sector also. The emergence of this particular area of the management accounting has greatly introduced advanced management systems within government sector. In the similar context, it has been revealed that performance management has accelerated the cost awareness that has greatly accelerated the operational efficiencies of the public as well as private organisations. Moreover, it has also been ascertained that performance management accounting is applied for the performance appraisal and mitigate the performance targets being fixed for improved operational activities. Basically, this technique is applied to derive results about the operational performance along with the performance effectiveness (Ministry of Finance, 2006). In relation to the performance management process, it has been ascertained that it is mainly applied to standardise the entire administrative process for accelerating the performance effectiveness. The effective execution of performance management as a process results in the maximisation of staff performance and eventually overall productivity of an organisation. In the similar context, it further results in the optimum utilisation of the employees for achievement of the pre-established organisational goals and objectives. Besides, performance management result in the efficient, transparent and flexible work processes. It also further promotes succession management and engages employees all the year round, thereby reducing the attrition rate (Cornell.edu, n.d.). In-fact, the development of the performance management process has contributed towards greater flexibility within this particular area. The presence of flexibility has given the organisation a new level to survive amidst the highly competitive market scenario. On further note related to performance management accounting, it has also identified that performance standard has been outlined for the organisational operational set up to execute various operation of an organisation effectively and efficiently. Another field that has been developed with regards to the performance management accounting is fairness along with equity. Fairness frames an important factor within an organisation, which has been greatly improved with the application of performance management techniques. The diversified areas under this particular technique being developed are managerial and employees’ roles among others (American National Standards Institute, 2012). Further researches have revealed that performance management accounting is not only being applied within the organisations, it is also being implemented in the development of the academic field. In this regard, it has been revealed that effective management of performance has also provided academic professionals with new sets of opportunities for goal setting along with self-reflection. This further reflects the development of performance management accounting within the diversified areas within the societal context (Nexus, 2009). Conclusion The aforesaid study discusses about the development of the management accounting in the past thirty years. It has been depicted that the application of journal ranking has contributed in forcing the accounting department to follow the main stream norms. The research related to management accounting greatly encourages the researchers to involve in deriving creative along with innovative results. Management accounting as a part has given the organisations a new way to formulate results related to cost. In-fact it has been revealed that the emergence of management accounting has taken place in the era of industrial revolution. The two broad areas related to management accounting that has shown major developments are strategic management accounting and performance management accounting. These two areas frame an important part for the survival of any organisation in the highly competitive business environment. Recommendations Relative to the application of management accounting, it can be recommended that while assigning specialised team with the task of management accounting will probably not reveal desire outcome. It is thus suggested to include employees so that they are able to grasp the underlying opportunities and improve their performance through innovative skills. Apart from focusing on the major development areas, the researchers can direct their focus on the other submerged areas of management accounting as well. Moreover, the practice of management accounting need to be aligned with the strategic goal of organisations and adequate control measure should be designed that would facilitate in better management and competitiveness along with increasing profitability of organisations. References American National Standards Institute, 2012. Performance Management Standard. Documents, pp. 3-29. Cinquini, L. & Tenucci, A., 2007. Is the adoption of Strategic ManagementAccounting techniques really\strategy-driven"? Evidence from a survey. Munich Personal RePEc Archive, 1-27. Cornell.edu, No Date. Performance Management Process. Home. [Online]. Available at: https://www.hr.cornell.edu/life/career/performance_management.html. [Accessed February 06, 2014]. Drury, C., 2008. Management and Cost Accounting. Cengage Learning EMEA. Elsevier Ltd, 2010. Management Accounting Research: 20 years on. Management Accounting Research, Vol. 21, pp. 278–284. Harris, J. & Durden, D. C., 2010. Directions in Management Accounting Research: An Analysis of Contemporary Issues and Themes. Conference Paper, pp. 1-21. Inman, M. L.,1999. Strategic Management Accounting. ACCA. Maelah, R., 2011. Research in Management Accounting: Malaysian Environment. Cambridge Scholars Publishing, pp. 7-205. Ministry of Finance, 2006. Handbook on Performance Management. Governance and Accountability, 1-140. National Treasury, No Date. Management Accounting. Explanatory Note, 1-8. Nexus, 2009. The Performance Management and Development of Teachers in Australian Schools. Resources, pp. 1-36. Shotter, M., 1999. The Origin and Development of Management Accounting. Meditari Accountancy Research, Vol. 7, pp. 209-235. Vaivio, J., 2008. Qualitative Management Accounting Research: Rationale, Pitfalls and Potential. Qualitative Research in Accounting &Management, Vol. 5, No. 1, pp. 64-86. Bibliography Atkinson, A. A. & et.al., 2001. New Directions in Management Accounting Research. Journal of management accounting research, pp. 79-108. Beekes, W. & et.al., 2010. The use and consequences of performance management and control systems: a study of a professional services firm. Research executive summary series, Vol. 6, Iss. 10, pp. 1-6. Hoffjan, A. & et.al., Comparative Management Accounting – Literature Review on Similarities and Differences Between Management Accounting in Germanic and Anglophone Countries. Document, 1-37. Jakkula, V. & et.al., No Date. Challenges Of Practically Relevant Management Accounting Research – The Scope And Intensity Of Interventionist Research. Cost Management Center, pp. 1-21. Rao, T. V., 2004. Performance Management and Appraisal Systems: HR Tools for Global Competitiveness. SAGE. Strumickas, M. & Valanciene, L., 2010. Development of Modern Management Accounting System. Engineering Economics, Vol. 21, Iss. 4, pp. 377-386. UNISA, No Date. The History and Development Of Management Accounting. Chapter 2, pp. 10-44. Read More