Accounting in Organizations - Example

Critical Evaluation of the Political Implications of the Decision Making Function of Management Accounting By Student’s name Code+ course name Professor name University name City, State Date Introduction Management accounting can be described as the process of measurement, identification, accumulation, interpretation, analysis, communication and preparation of information that helps executives in fulfilling a firm’s objectives. In other words, it is the formal method for communicating and gathering information for the ends of coordinating and aiding collective decisions in light of the general objectives or goals of a particular organization. As such, accountants play an essential function in offering information for making financial and economic decisions. Those decisions are crucial aspects of an organization. Decision-making on the other hand, is the procedure of identifying and selecting substitute courses of acts in a way suitable to the situation’s demand. The action of selecting implies that substitute courses of acts ought to be weighed up and weeded through sharing. This paper critically analyses and evaluates the political implications of decision making function of an organisation’s management accounting. Critical Evaluation of the Political Implications of the Decision Making Function of Management Accounting Economic development policies are subject to alter and can be customized by cultural, economic and political decisions (Sisaye 2006). Interested groups in a country can demand for the passing of laws to stop the development of particular manufacturing industries which are environmentally destructive. For instance, the air legislation and the clean water acts have forced businesses to become socially responsible and put measures in place of reducing water and pollution (Sisaye 2006). Essentially, a political ecology structure has widened the concern for issues of environment to a wider political effort, where geographic/regional conservation as well as maintainable development is relatable to economic and social justice. Some researchers have integrated ecology approaches and political economy approaches in the natural selection structure of organisations. The argument is that the concern of political economy regarding limited resources and its potential of creating environmental conflict among members of an organization, the managers’ tendency to base their options on political rather than reasonable economic decisions and the incessant environmental alterations and hostility corporations come across in their activities of operation are innermost to organizations’ selection studies (Sisaye 2006). As such, the management accounting is sometimes forced to make some decisions, like, closing down some departments due their effect to the outsiders that do not always bring profit to the organization. Such decisions sometimes affect the workers in an organization either positively or negatively. The management accounting function is sometimes forced to close down some departments due to political pressure from outside thus, dismissing some employees. Some lucky employees get transferred to other departments that they were not used to before, a decision that makes them feel uncomfortable. On the other hand, the organization also begins getting lower profits or even losses due to closure of certain departments. My opinion on management accounting is that they should form a good relationship between the government of the day and environment in which their organisation surrounds. Importantly, to avoid conflicts with the outside community and making of bad decisions due to situation at hand, management should first consider the consequences of the company’s manufacturing processes before its setting up. On the other hand, the domestic and international political environment, the bureaucratic and internal organizational dynamics of the management branch, and the president’s, management strategy, political strategy and leadership style are all elements in structuring the decision making process (Newmann 2003). The manner in which domestic and international political environment affects the process of decision making appear obvious. Global events, public opinion alterations, and/or congressional pressure might all bring about new requirements on a management accountings’ process of decision making (Vollmer 2009). Bureaucratic and organizational dynamics place same pressures on standard interagency processes. Those bureaucratic and organizational forces turn to be the basic reality of the management branch, but can merely bring about changes within the process of decision making if some feature of bureaucratic and organizational competition is restarted, reshaped or settled as a result of domestic or international political pressure (Newmann 2003). Thus, an organization’s accounting management get affected by the present local political environment. In this case, the domestic political environment might be acting in disfavour of an organization’s policies, goals and culture. As such, the accounting management decision making function get affected in a certain way which on the other side affects the employees. Additionally, international political environment also affects the accounting management in decision making function. In this scenario, the other countries also affects the management accounting decision making function through several ways, like, asking their citizens not to buy products from a certain company from another country. Similarly, other countries during electioneering period bring down their economies in search of votes thus causing companies exporting their products there to suffer losses. Furthermore, corrupt practices in some countries at certain moments of the year also affect an organisation’s accounting management functions. In this case, some organisations are forced to comply with particular rules after bribing the government of the day just to topple or punish others. This affects the management accounting function as certain measures requires being taken to stop or lessen the losses being experienced. I would propose that the management accounting be ready to look for alternative markets for their products in case of unexpected arise of change of country’s laws and deflation. On the other side, noticing that the contemporary knowledge state prohibits either an authoritative or a comprehensive account of the manners through which accounting information get implicated in the procedure of an organizational decision making, this analysis is grounded on the moderately specific apprehensions of decision making within organizations devised by Tuden and Thompson (Macintosh & Hopper 2005). While exceptionally simple, their viewpoint nonetheless added to the customary view through characterizing different uncertainty states, and as a result, diverse latent approaches to the decision making. By so doing, it offers a background for deliberating at minimum, a number of the different ways within which management accounting interests arises from the procedures of organizational decision making. The time that aims are apparent and undisputed, and the results of action assumed to be identified, Tuden and Thompson painted by computation, the latent for decision making (Macintosh & Hopper 2005). However, the moment the effect and cause relationships become more doubtful, the computation potential reduces. Just like the introduction of doubtfulness in the specification of the results of action yielded a diverse approach to the decision making, the debate acknowledgement or doubtfulness over the objectives themselves also did the same (Hoskin & Macve 1998). With effect and cause relationships assumed to be known, Tuden and Thompson thought that uncertainty and disagreement over the action objectives would yield in political instead of computational basis for the process of decision making. Different interests in action get expressed within such incidents and the decision making as a result, appears to be typified by compromise and bargaining. The moment constant patterns are doubtful; Tuden and Thompson asserted that decision making appears to be of a motivational nature. With only a little known in advance basis for action were viewed as coming within the decision making process course itself. Actually, with transparent objectives, but doubtful causation, the circumstance becomes more complicated. In my opinion, I think that decision making by management accounting requires only a little known facts. The most acceptable decisions appear to be political as they call for collective compromise and bargaining. The environment of an organization, its characteristics together with attributes of particular decision all act together to have an effect on accounting management strategic decision making. In this case, (Boland & Pondy 1983) asserts that at high echelons, an organisation performance possesses a direct effect on the tactical decision procedure while at low echelons; the performance’s effect on the tactical decision procedure is arbitrated by actions of stakeholders. Steady with others, the text propose that decision-particular factors, like, decision complexity, decision urgency as well as the organization’s environment, like, munificence, complexity and uncertainty direct causes effect to the decision-making process of management accounting, like, rational or political. The text proposes that the process of decision making determines the outcomes of decision for instance, commitment, speed and quality (Boland & Pondy 1998). Eventually, those decision-making processes results determine organizational results, like, performance. Nonetheless, the organizational outcomes and decision process results’ difference relationship get moderated by ecological favourability. According to my opinion, the political activity goes low when the organisation’s performance is high. On the other hand, the political activity goes high when the firm’s performance gets low. Thus, accounting management managers ought to rely on rational processes in the changing environments, but they should be less realistic in stable ecologies. Management accounting managers tend to be more rational on within munificent environments in comparison to the environments with little resources (Ansari 1991). On the other hand, accounting management managers utilise decision-making procedures which are both highly political and highly rational the moment firm performance is low as well as the moment the environment is munificent and dynamic. Munificent and dynamic environments provides managers higher discretion levels which can be utilised to satisfying external constituencies through using political process whilst still sustaining a high echelon rationality for making appropriate decisions. The moment that an organisation’s performance is lofty, the ecological munificent and dynamic, political-decision making procedures are low; therefore rationality stays high. Additionally, accounting management strategic decision making becomes highly political the moment that the organization performance gets low, the ecology remains steady, when resources are limited. In that environment the accounting managers’ posses little caution so rational processes appear pointless and endeavours get directed toward the political procedure to pacify the firm’s stakeholders (Ansari 1991). If the firm’s performance stands high within a steady environment with little resources, the utilisation of both political and rational decision making processes stands low as no exterior constituencies exists exerting pressure to the makers of decisions. On the other side, politics influence account managers in decision-making through various ways. First and foremost influence of politics is equity. As a matter of fact, leaders require engaging in politics for the purposes of achieving goals (Armstrong 1994). However, the litmus test ought to be the reason for them using politics. If political approaches are utilised to advance causes within an organization, that act to benefit each and everybody equally, hence, they are more probably to be viewed as meaningful and legal. Politics, power, and influence possess some effect on each of an organization’s member and therefore on the whole organizational entity. Grounded on the equity hypothesis and on the notion of social reciprocity and social exchange, the encouragement to do better work and the building of positive workers behaviours and attitudes, depend on the exhibition of same positive behaviours and attitudes by the members of the accounting management (Vollmer 2009). Several scholars argue that the association between organizational outcomes and organizational politics is an imperative one that calls for careful and dramatic investigation and one that possesses the latent to advance our apprehension of several elements of performance. The other influence of politics is promotion. Interestingly, promotion resolutions have constantly been found to be one of the major political acts within organizations. The opportunity for advancement or promotion stimulates individuals to contend for little resources and attempt to influence positively the decision result (Macintosh & Hopper 2005). Accounting management uses politics in this scenario to propose who is going to be promoted. This is judged by how employees involve themselves in working hard and offering ideas and solutions to problems. Bad politics affect accounting management and other employees negatively in some instances. First, politics decreases output of individuals and ultimately affects the organization’s productivity. In some cases, the employees involve themselves in back biting and leg pulling. The other negative effect of politics is concentration (Hoskin & Macve 1998). As such, some individuals fail to concentrate on the job when they are involving themselves in politics. Such individuals makes more mistakes as their minds are focussed somewhere else. The other implication of politics in account management is change of attitude of the accountants. As such, the accountants lose concentration on job and goes to office just because they have to. Conclusion Critical analysis and evaluation of political implications have been carefully made. Various political issues cause various effects to organisations. The issues are either international or national. The accounting management strives to maintain proper management where it also applies some politics. However, bad politics makes employees performance to move downwards. Bibliography Ansari, S, L. & Jan, B, 1991, Symbolism, Collectivism, and Rationality in Organizational Control, Accounting, Auditing & Accountability Journal, 4. 2, 4-27. Armstrong, P. 1994, The Influence of Mitchel Foucault on Accounting Research, Critical Perspectives on Accounting, 5. 1, 25-55. Boland, J. & Pondy, L, R. 1983, Accounting in organizations: A Union of Natural and Rational Perspectives, Accounting, Organizations and Society, 10. 1, 3-28. Hoskin, K, W. & Macve, R, H, 1998, The Genesis of Accountability: The West Point Connections, Accounting, Organizations and Society, 13. 1, 37-73. Macintosh, N, B & Hopper, T, 2005, Accounting, the Social and the Political: Classics, Contemporary and Beyond. Amsterdam; Boston: Elsevier. Newmann, W, W, 2003, Managing National Security Policy: The President and the Process. New York (N.Y): University of Pittsburgh. Sisaye, S, 2006, The Ecology of Management Accounting and Control Systems: Implications for Managing Teams and Work Groups in Complex Organizations. Westport, CT: Praeger Publishers. Vollmer, H, 2009, Management Accounting Change: Approaches and Perspectives, London, New York (N.Y): Routledge. Read More