Management Accounting Innovation - Essay Example

Management Accounting Innovation Name Institution Date Management Accounting Innovation Introduction Management accounting innovation is one of the concepts that has enabled organizations to prosper in terms of decision making. Innovations have been the core values of organizations’ growth and development. The concept mainly involves adoption of new ideas by organizations for the purposes of improving the accounting process (Naranjo-Gil, et al, 2009). The changes are unique as many changes have occurred in the management accounting concepts. The changes are usually unique and they particularly define the operations of the company when it comes to the management of finances. The profits of the organization are the driving force towards development of new ideas. One of the most important innovations in management accounting is the activity based costing. This innovation has been the core of decision making in most organizations. Activity based costing gives information about the cost of an organization and hence enabling the decision making process. The balanced score card is also an innovation that has led to the improvement of the performance of most organizations. The aim of the paper is to discuss the concepts of management accounting innovations as a theme driving modern organizations. Discussion Concepts of innovation in management accounting Management accounting innovation can be classified as the financial measures that help the managers during the decision making process. The measures are however, based on both the financial and non financial information within the organization. The concepts of management accounting innovations also involve a wide range of activities within the company. They entail both the radical changes and the administrative innovations that are useful in the management accounting and are beneficial to an organization. Some technical elements are also evident in the management accounting and are responsible for the improvements in the organization (Jazayeri, 2011). The analysis of the management accounting innovations should therefore be composed of both the administrative and technical aspects within the company for the purpose of creating a full analysis. The concepts of management accounting innovations also results to the direct benefits to the company involved in the implementation. The implementation process requires experts who are aware of the concepts. However, it is important to note that the benefits of the management accounting innovations can only be realized after the successful implementation. The organizational behavior in terms of accounting and management also changes once the innovative ideas are used by the company. The innovations should however result to positive change within an organization. The implementation of the management accounting innovation also has cost implications within an organization. This is because it requires the purchase of software that is useful during the operations of the concepts. However, the benefits are worth the initial costs once the concepts are successful (Rac, 2010). Management accounting innovations as a driving theme in modern organizations Activity based costing is one of the most important innovations in the management accounting. The concept is the driving force for most of the modern organizations as it enables the organizations to know the information about the costs within the organizations and hence making improvements. The concepts of activity based costing ensure that the company is able to determine the elements of cost overhead and thus leading to the improvements for the organization. It is also important t to note that the information about cost is important for an organization in terms of planning for the spending of the company. Improving the profitability of the company is an important aspect of any business. This is because the profits are important in terms of developing the organization. Through the activity based costing, an organization is able to monitor the total cost lifecycle and hence improving the performance of the organization. It is thus important to note that the activity based costing is a driving force for the operations of an organization. This concept has played an important role in the budgeting process. An effective budget can only be made once the organization has full information regarding the costs of the company. The relationship between the cost and the performance is important during the budgeting process. The establishment of different service levels is a concept that has been achieved by most of the organizations through the activity based costing which is an innovative concept in management accounting (Mouritsen, et al, 2009). Management accounting innovations also ensures that planning and control is done by an organization. This is due to the concepts that enable the planning process to take place within the organization. Continuous improvement is one of the most important aspects of the development of the modern day organization. Through continuous improvements, the company is able to make changes and hence eliminating the chances of an organization making losses. The concepts of continuous improvement are enhanced by the innovations in the management accounting. Total quality control is also an important concept that is enhanced by the innovations in the management accounting (Hopper, 2011). Total quality control is a driving force for the operations of a business. This is because it ensures that the activities of an organization are able to meet the required quality and standards. The achievement of standards in the management accounting enables the company to reduce errors and thus preventing the losses for an organization. Linking the corporate strategy to the decision making is important in terms of ensuring the growth and development of the modern companies. The link ensures that the management accounting is able to support the other operations of the company and thus leading to the growth and development. The role that innovations is thus important in terms of ensuring that the company is able to meet its goals and objectives. This is considering the role that management accounting plays in terms of enabling the success of the company (Malagueño, et al, 2010). Elimination of wastes is one of the main aspects of management accounting. Some of the costs are not necessary and hence wasting the funds of the organization. Through the concepts of innovation in the management accounting, it is possible for the organization to determine the costs that are not necessary for the company. The wastage of funds contributes to losses for an organization. The innovations in the management accounting is thus beneficial to an organization in terms of ensuring that the company is successful of an organization in terms of controlling the costs and thus reducing wastes. The pricing decisions are an important concept in terms of selling the products and services of the company. The pricing is determined by the costs incurred by the company in the course of its operations. Through accounting management innovations, an organization is able to ensure that the company is in a better position in terms of determining the best prices for the products of the company. The process of estimating the prices of the products of the company is also important and is enhanced through the concepts of management innovation and thus creating a driving force for the operations of the company. The management evaluation is also enhanced through the innovative processes of the company. The positive impacts of the innovations have thus contributed to the widespread of the concepts among most of the organizations (Birnberg, 2010). The use of the balanced score cards is also one of the most important innovations that has impacted positively on the accounting management. The use of the balanced score cards is important to organizations in terms of achieving the goals and objectives of cost management. On the other hand, the balanced score cards are also useful in terms of monitoring the operations of a company. The monitoring process enables the company top determine the costs being incurred by an organization in relation to the aims and objectives of the company. The concepts of monitoring the costs incurred by an organization are useful in terms of management accounting. This innovation has enabled most of the organizations to determine the directions taken by the company in terms of management accounting. An organization is able to achieve the organizational goals of translating the visions of the company into operational goals in terms of management accounting (Malmi, 2009). It is also through the use of a balanced score card that the organization is able to account for its operations and processes in terms of managing the accounting processes. The communication of the vision of the company in terms of financial implications and costs is an important concept of innovation. Through the innovative means, the organizations have been able to achieve the goals and objectives. Business planning also plays an import ant role in terms of ensuring that the costs incurred can be accounted for. It is through planning that the management of accounts can be achieved. This has also contributed to improvements in the company in terms of managing the accounts. Most of the successful organizations thus embrace the concepts of a balanced score card in the management of the accounts (Mowen, et al, 2009). The management accounting innovations has impact on the financial and non-financial processes of the company. The manufacturing organizations are also beneficiaries of the management accounting innovations during the non-financial business processes. A manufacturing company needs to remain competitive in its production in order to continue attracting customers. It is at this point that the concepts of management accounting innovations are applied. The concepts of management accounting innovations are able to support new manufacturing strategies of an organization and hence leading to the success of the organization. Strengthening the quality of the products requires the review of the inventory cost. This can only be through the management accounting innovations. In other instances, the manufacturing organization has to restructure the cash flow process so as to enhance the manufacturing process. This is a financial process that requires the concepts of the management accounting innovations. The performance of the employees can also be influenced through the management accounting innovations. This is through the non-financial processes of the company. Incentives are important in terms of boosting the performance of the employees. In some instances, the financial incentives are used for the purpose of motivating the employees. Such use of finances requires control measures. The control measures are thus linked to the management accounting innovations which offers a solution in terms of dealing with costs and finances within an organization. It is thus evident that the concepts of management accounting play an important role in the growth and development of a company as well as impacting positively on the performance of the employees (Ward, 2012). Conclusion In conclusion, it is evident that the concept of management accounting innovation has a lot of impacts on the operations of an organization. The concepts used are both technical as well as administrative and hence influencing the operations of the company. It is also evident that various operations of the company are affected during the process. The activity based costing is one of the most important innovations that have impacted positively on the operations of most organizations. An organization is able to achieve the aim of eliminating wastage in terms of costs through the utilization of the concepts of activity based costing. This is beneficial to a company as it ensure that the company is able to maximize on the profits. On the other hand, an organization is able to eliminate unnecessary costs through the activity based costing. The goals and objectives of an organization can also be realized through the balanced score card which is also an important innovation in the management accounting. The concepts allow the organization to concentrate on the deliverables in terms of costs. The quality of the products and services of the company can also be enhanced through the use of the management accounting innovations. This is because the concepts strive at maintaining good quality. On the other hand, the manufacturing companies can also benefit from the concepts of management accounting innovation. It is also evident that the efficiency of the employees is enhanced through the concepts of management accounting innovations. References Naranjo-Gil, D. et al. (2009). How CFOs determine management accounting innovation: an examination of direct and indirect effects. European accounting review, 18(4), 667-695. Rac, L. (2010). Interaction between management accounting and innovation in order to improve company's performance. Strategic Management, 15(3), 51-56. Mouritsen, J. et al. (2009). Short and long translations: Management accounting calculations and innovation management. Accounting, Organizations and Society, 34(6), 738-754. Malagueño, R. et al. (2010). The Role of Management Accounting and Control Systems as Antecedent of Organizational Creativity and Innovation Competencies. Birnberg, J. (2010). Extent and scope of diffusion and adoption of process innovations in management accounting systems. International Journal of Accounting and Information Management, 18(2), 118-139. Mowen, M. et al. (2009). Cost management: accounting & control. South-Western Pub. Ward, K. (2012). Strategic management accounting. London: Routledge Publishers. Jazayeri, M. (2011). The role of management accounting in new product design and development decisions. CIMA Research Executive Summary Series, 9(1). Malmi, T. (2009). In search of management accounting theory. European Accounting Review, 18(3), 597-620. Hopper, T. (2011). Management Accounting: Retrospect and Prospect. European Accounting Review, 20(4), 763-767. Read More