Management Account Innovation - Assignment Example

Issues in Management Accounting Name: Institution: Date: Word count: 1445 Words Issues in Management Accounting Question 1 Management Account innovation is a key theme driving modern organization since it results in development of important concepts that assist in efficiency like balanced Score CARD and ABC. Innovation in management accounting enables organizations to adapt successfully and maintain a competitive advantage over its competitors. Management accountants have the responsibility of providing managers with information that will enable the organization to keep up with the changing times. In a volatile business environment the organization has to look for ways of adapting in the changing times. Modern organizations have no option but to adopt suggestion from management accountants on the best way to innovate or implement innovation in the organization. Unpredictable future requires proactive means of keeping up with the pace of events and this can only be made successful if management accountant participatory fully in innovation (Hartmann & Schmeisser, 2010).They audit the existing system of operations and look for ways of improving performance. Question 2 The role of management accountant in driving innovation has not been adequate and it depends on how he is used in the organization and who does he report to. A management accountant with a business orientation working under the business unit and reporting to a business manager, find it easy for their suggestions or views adopted as compared to a management accountant with a functional orientation who is viewed as like an outsider. Therefore, the success of a management accountant will depend on his orientation whether functional or business and acceptability of his ideas to the management (Rahman & Ahmed, 2011). Good ideas from management accountants can be suppressed by the top management with regard to his orientation. The management accountants are not free to advance their ideas which may sometimes be branded as radical when they depart extremely from the old way of operation. Consequently, it is not accurate to say that the role of management accountants has been adequate when they are not free to come up with new ideas without fear of antagonizing the existing regime. The management accountant has a role of problem solving, score keeping and attention direction (Tillmann & Goddard, 2008). However, in most cases, management accountant are not given the chance to play their role adequately without interference from other units of the organization. The low success in implementation of management accounting innovations like the balanced score card and ABC cannot be termed as accountants playing adequate role in driving innovations in organization. The laxity in implementation of management accounting innovations has been termed as ‘accounting lag’. Attention directing and score keeping are rather compliance issues where as problem solving has do to do with proving business unit managers with important information for decision making (Zimmerman, 2009). The latter has not been executed well in organizations that are rigid to new ways or operations of performing their functions in order to adapt to the changing world. Question 3 Emsely (2005) suggest is predicated to affect innovativeness in terms of knowledge concerning the appropriateness of the innovations; the incentive to innovate and acceptance of the innovations by business unit managers. This is very true and well put by the author. The innovation by management accountants is greatly affected by acceptance of the innovation by business unit managers. In many circumstances, the role the management accountant has been reduced to that of supporting the decision by managers as opposed to problem solving role. Management accountants have to play the role of consultant within the organization and chart the way forward for the organization (Oades, 2008). However, the business unit managers have to support decision and innovations made by proposed by management accountants. The management accounts with the functional orientation are regarded as outsiders of the group if they are not business orientation. The ability of the management to innovate can be hindered or limited by the business unit under which he works. The business manager may refuse to approve a new idea or method suggested by the management accountant; and hence failure to innovate cannot be solely blamed on the management accountant (Emsely, 2005). The ideas that management accountants come up with have to be accepted by the business unit managers in order for them to be implemented. Knowledge concerning the appropriateness of innovations is also important for the management accountants. The management accountants have to have inside knowledge of the needs of the business unit manager. To be successful, the management accountants have to have full knowledge of the challenges facing the business unit. Management accountants who have a business unit orientation are in the best place to understand which innovation is appropriate for the business unit managers (Hill & Jones, 2007). Being familiar with the kind of business decisions that business unit managers make is an advantage to the management accountants with business orientation. The management accountants have to come up with something that fits the budget and the operations of the organization without stalling anything (Cadez & Guilding, 2008). Moreover, there should incentives to innovate. Innovativeness can be enhanced when innovators are rewarded or appreciated for their work aimed at increasing efficiency in the organization. Where management accountants are functionally oriented, there will be less motivation in achieving business unit goals. Regardless of their orientation, management accountants need space to work independently and their innovations implemented as a show of appreciation of their good work. When they are ignored or not budgeted for, they have their morale go down. Question 4 Management accountants have to look for ways of accelerating innovation within the organization. They have to consider the appropriateness of their innovations and making them to be aligned with the goals of the business unit of the organization. The management accountants have to get to learn and study both the short term and strategic plans of the organization so as to tell what will work for the firm. In coming up with their innovation, management accountants have to ensure that the innovations fit within the capacity and budget of the organization. Regardless of their orientation, management accountants have to establish a good rapport between them and the business unit in order to get familiar with the operations of the organization and what can be improved. Management accountants have to work to liaise with the business unit manager to ensure that whatever they come up with will be suitable and acceptable as far as the goals of the business unit are concerned. A management accountant may come up with something that business unit managers may find hard to accept since it has great implications on the operations of the organization (Talha, Raja & Seetharaman, 2010). Whatever they come up with should not stall the operations of the business but instead improve efficiency and reliability of the process. The management accountants should be aware of the economic circumstances of the organization in order to come up with something which is pragmatic to the organization’s situation. Some of the innovations may take time to implement because they were discovered at a time when the organization was unable to implement them. The management accountants have to be proactive as opposed to dealing with the situation after it has happened. Management accountants have to consult widely with the business unit managers in order to come up with innovations that add value to the organization. Internal research is needed to make management accountants know and understand how to come up with appropriate innovations. Management accountants have to come up with ways of dealing with resistance to change when something knew has to be implemented. References Cadez, S. & Guilding, C. (2008). An Exploratory Investigation of an Integrated Contingency Model of Strategic Management Accounting. Accounting, Organizations and Society, 33(7-8): 836-863. Emsley, D. (2005). Restructuring the management accounting function: A note on the effect of role involvement on innovativeness. Management Accounting Research, 16 (2), 157-177. Hartmann, M. & Schmeisser, W. (2010). Innovation Performance Accounting: Financing Decisions and Risk Assessment of Innovation Processes, New Mexico: Springer. Hill, C.W.L. & Jones, G.R. (2007). Strategic Management: An Integrated Approach, New York: Cengage Learning. Oades, C. (2008). Information Management Challenges for the Professional Accountant in Business, Business Information Review, 25(3): 160-164. Rahman, S. & Ahmed, U.J. (2011). An Evaluation of the Changing Role of Management Accountants, Indus Journal of Management & Social Sciences, 6(1):18‐30 Talha, M., Raja, J. & Seetharaman, A. (2010). A New Look at Management Accounting, Journal of Applied Business Research, 4: 83-95. Tillmann, K. & Goddard A. (2008). Strategic Management Accounting and Sense-Making in a Multinational Company, Management Accounting Research, 19(1): 80-102 Zimmerman, J.L. (2009). Accounting for Decision Making and Control, Boston, USA: McGraw-Hill. Read More