Management accounting - Essay Example

But, desirability and effectiveness of accounting for organization control is a critical issue because accounting procedures consists of few integrative devices of organizations where business activities are not only drawn together by values but those are integrated in a quantitative manner. So, accounting is most efficient tool of organizational control system where standard qualitative procedures are followed to evaluate qualitative performance of the organizations for management control over the organizations.

These facilitates other external stakeholders of the organizations like investors, creditors etc. for their valuable financial decision making which are highly depends on actual performance of the organizations. So, this study analyzes the effectiveness or relevance, desirability, faithfulness or reliability of accounting information for management control over organizations. Introduction Organizations show stable and consistent types of behaviour in interaction with the business environment which is consistently changing.

They have wide range of external influences from external business environment but have enough capability to change internally to protect their integrity. This stability and flexibility of organizational internal behaviour and control possess through effective and integrative control mechanism. One of the most important control mechanisms of organizational is internal accounting system. This consists of integrative process of accounting for implementation of accounting information in management control.

So, management accounting systems has major importance in organizations as it consists of some integrative mechanisms that are capable for summarizing the qualitative effect of organizational actions or activities in quantitative values. This study review the major functions of accounting information that helps the management in the area of integrative process of organizational control. Efficient accounting provides integrative language for analysing the impact of diverse internal and external influences on organizations that have substantial positive or negative impact on organizational performance.

Nature of organizational control with respect to implication accounting information is qualitatively reviewed in this paper to assess the necessary conditions for control. These conditions are derived and applied in management control. Main objective of accounting policy is to produce fair valued accounting information that is highly reliable and relevant to the purpose and objectives of financials statement (WBS, 2012). The extent of desirability and effectiveness of accounting information are analysed with respect to management control and strategic decision making process.

Further, scope of faithful or reliable accounting information on organizational control by management is also analysed. Again, measurement process of organizational performance both quantitative and qualitative is analysed with reference to the implication of relevant and reliable accounting information in organizational performance measurement and essential internal reconstruction with respect to change in external business environment. Desirability and Effectiveness of accounting information for organizational control There are two broad purpose of accounting information, external and internal.

External purpose includes the investment decision making by the shareholders and potential new investors of an organization, credit