Management Accounting - Report Example

Management Accounting Name Institution Week 1: why are the authors arguing about closing the gap between surveys and case studies? The researchers discuss the case of organizational management in context, whereas surveys, the researchers are engaged in a deep field based investigation into the ambiguous findings. The case studies, however, lack the connection and the explicit discussion of the theoretical base of management accounting. As Lillis & Mundy (2005) notes, the cross-sectional are very relevant in enhancing the credibility of the field-based theory refinement. A more comprehensive connection between the case studies and the surveys can be drawn on the basis of number of observations at a specific site, and, or the design of the phenomenon under study and the necessity to observe the patterns across the various cases. Due to the passive problems in modelling of an execution of management, it is relevant that the case studies and surveys are narrowed in as close similarity as possible. As discussed by Hopper, Northcott and Scapens (2007), the inability to identify the intervening variables in the relationships studied and lack of linkages between the areas of study as well as lack of proper understanding as to how organizational level attributes are linked with outcomes. These are technical problems prohibiting how research studies are modelled, and also pose a problem to how scientific phenomena that are essentially social can be studied. With the gap between the case studies and surveys narrowed, it will be easier define the measurement that are attributed to social and highly contextualized nature of the management accounting. Lack of research dialogue focused on the definition and measurement relations among key variables in the research is a huge pediment to the success of any research. Field studies would therefore offer a greater exploration of new areas of studies and surveys can be very relevant in the discussion of the new areas to greater depth. It is often found that there is little uncertainties raised by surveys researches regarding the definition and measurement of critical variables and their relationships in the field study. Week 2: Discuss the main contributions of Emsley (2005) research and how can it have an impact on management accounting practice/s. Emsley (2005) proposed that management accounting is very useful in calculating organizational performance for decision making in the firm. The use of such techniques such as cost allocation, transfer prices as well as performance measurement is very useful in the leading to the process of making decision in the firm. Emsley suggests that management accounting comes in very handy in quality management in the firm. With the knowledge of such techniques as just in time which is largely adopted by large organizations, it is easy for the organization to create a meaningful way of developing quality service delivery. Emsley also suggested the approach of lean manufacturing for organizations. Lean manufacturing aims at eliminating waste through careful utilization of resources. The approach of operation management is aimed entirely at integrating resources and personnel and factory beyond organizational boundaries aimed at meeting internal and external demands for the firm products and services. The approach of material requirement planning as suggested by Emsley aims at providing optimal stock of inventory for immediate products. It is managed by planning department of the organization. The just in time approach reduces the inventory size by reducing the input time and batch size by reducing the redundant components as well as overstocking which thereby reduce the wastage levels. Emsley discussed the aim of smart management system as able to capture the data about organization and must be able to inform the senior management about position the organization stands at any point in time. Week 3: Why is the author emphasizing the need to embed sense making into the management accounting practice/s. What are the main research findings? Management accounting is more interested in realizing the meaning of consumerism and what it demands. Management accounting aims ate meeting the complex inventory management at all stores and organizational operation points.Khajavi & Nazemi (2006) suggests that the management brings into light the proper ways of managing inventory by the introduction of technology into the operation system of the firm such as the introduction of software too mange the inventory thus replacing the manual system which is rather very cumbersome (Hopper et al, 2007). A business with an efficient system for retail management is very efficient in the keeping the amount of stock the meets the consumer demand. Retail price inventory method is very efficient in ensuring there is proper accounting for the goods which are entered into the accounting books of ten firms, instead of the retail selling. Management accounting brings into sense the inventory management at the point of sale terminals, job costing inventory system, barcodes and readers and electronic supplier product catalogues. All the above are a contribution of management accounting into making the operation more efficient (Khajavi & Nazemi, 2006). Retail inventory control is yet another efficient way of researching what to sell and by so doing ensuring there is the right amount of products in the store that would meet the customer demand. Retail control can be delegated to the various departments and by so doing allows the individuals in charge to have better understanding of the products in store and how it sells. Week 4: Discuss the framework of strategic management accounting in Cyber-value chains based on cyber-coordinating mechanism (fig. 2) The use of information technology has become a common case in worldwide operation of businesses. The invention of the internet, and communication software, the surface between IT and accounting has become a complex intertwined connection (Hopper et al, 2007). The main aim of management accounting is the creation of transparency and getting things done in the right manner by the assistance of the IT. The value chain management offers a clear framework and an elaborate network of how operations move from one end to the other in the organization. The cyber-value approach shows a clear flow of operation and processes in the organization from one department to another. The enterprise resource planning (EPR), which is a system of packages providing solution, is most efficient in creating a more understanding in the flow of processes in the cyber-value chain management. With advanced technology, an organization is able to transmit large amount of information from one department to the other and internally. The management is able to coordinate various functions within the organizations and thereby enhancing quality for better decision making in the organization. The cyber-value chain clearly elaborates how management accounting can be controlled in the organization by showing how process move from one stage to the other such as the out-logistic and the in-logistic (Hopper et al, 2007). The manufacturing and marketing departments are also integrated in the cyber cycle for the efficient management in the organization. Week 5: Why is the author suggesting that "there appears to be a negligible use of the term 'strategic management accounting' in organizations and practicing accountants have a little appreciation of what the term means. Discuss the main findings of the study. The management accounting is locked up in the global management of financial affairs of the various organizations. Management of production processes in the global platform and the processing as well. Management accounting however inculcated the use of corporate governance in the management in order to achieve quality service delivery in the organization (Kim, 2004). Corporate governance involves the contribution of the board of governance in the attainment of the goals of the corporation. The use of management accounting however remains a mirage in most organizations which have not adopted the approach of corporate governance in their operations at any stage of production. The lack of corporate governance has led to the fall of a number of large firms in the U.S such as the Enron Corporation and the MCI Inc.; leading to the federal governments in the U.S introducing Sarbanes –Oxley Act in the year2002 aiming at incorporating public confidence in the corporate governance (Fleming 2003). The centralization of operations in the organizations, product differentiation and national response strategies are some of the proposals advanced by the management accounting in the effort to bring responsibility in the operation of the organizations. Accounting practitioners however develop a polycentric attitude which is a preserve of local practices. The decentralization of operation when not managed properly may lead to the friction between the subsidiary and the parent organization. Therefore, the accounting practitioners ought to clearly understand the political and the cultural framework of the country of operation. Week 6: Discuss why the authors are indicating that strategic management accounting is not integrated into textbooks within a coherent, consistent framework. Main findings of the study. According to Hofstede (2001), culture is the programming of the mind to distinguish one group from the other. In his finding, Hofstede found a great similarity between people of a similar culture and similarly big difference between cultural aspects of people of different origin. However, there was no a definitely recorded aspect that would clearly distinguish the organizational culture of one organization from the other. Hofstede (2001) found out that power distance refers to the extent to which people accept power institutions in the political social or business dimension. In his discovery, he realized that people of higher societies readily accepts power inequalities attributed to the wealth, status or positions. Contrastingly, the finding showed that the people in lower societies accept egalitarianism. However, there exists administrative necessity and does not show the inequality between people at different levels (Kim, 2004). The lack of a coherent framework of incorporating management accounting in most organizations has led to the adoption of the principle of uncertainty avoidance (UA) in their operations in order to enable them stem the threats that may lead to stress in the operations. The adoption of long-term planning has been advanced at the expense of the short term plans so as to steer the organization towards a more reliable future or consistent orientation. The accounting practioners lacking the management ideas also have brought about multi-cultural composition of various organizations making it hard to operate efficiently. Hofstede (2001) proposes management control system for the organizations to help them attain their objectives. Week 7: Discuss how CFOs Determine Management Accounting Innovation. Main findings of the study. Management accountants are the organization’s professionals tasked with the responsibility to interpret of the organizations information as well as the decision making and control. The chief financial accountants (CFOs) produce, analyze and interpret management of accounting reports. The CFOs are crucial part of the organization as well as the mentor and controller of others performance. Their roles changed into that of monitoring performance and enhancing accountability of the various departments in the organization (Van der Steede, 2003). Van der Steede (2003) explains that the chief financial officers, also among other things, develop a proper model which determines the firms operation and chooses the path of expansion i.e. whether to go local or go global. They help the organization in the capture of overseas market. The CFOs develop a proper technology enabling them to manage the branches of the organization which are located overseas. The discussion into the roles of the management accountants realized a changing role of the CFOs which is related to the occurrence of scandals in the organization, vigilance and accountability and effective implementation of the regulations. They have developed a new trend for their respective organizations such as the mergers into forming big organizations. There are also a rising of hybrid accountants who are tasked with reporting standards for management accounting, increasing non-financial information in business and foster communication with people.Younkins (1999) writes thatthe CFOs also develop new skills which entails mastery of IT and broader business understanding and soft skills such as communication team work and leadership. Week 8: Discuss why the authors are suggesting "management accounting to play a major role during the strategy process." What are the important findings of this research? According to Hopper et al (2007), the concept of business strategy was borrowed from the military in the year 1982. In this development, it was realized the without proper planning, and good information no advanced strategy would be made and that an outdated information would have no impact on the strategy implementation. Gordon et al (1978) pointed to the fact that management accounting provides the right information for the business to make strategic decision in its market operation. In order to attain a targeted result, the organizations look at strategic perspective of strategy, management accounting (SMA), which shifts the focus to a forward looking strategy. According to Hopper et al (2007), the SMA looks to a competitive focus, financial and non-financial measure as well as performance relative to competitors. The management accounting provides the organization with information pertaining to weakness of the rivals, knowledge of the organizations customers and strategy of the competitors driving to success. The details are relevant in forming a proper framework for the organization to develop a more strategic approach in the market operation leading to the decision of either entry or exit. Porters (1980) suggest that the firm can strategically position itself in two main ways, either taking a stand of price leadership or even differentiating their products to eat those of their rivals in the market. The firms are able to create a competitive edge advantage by creating superior products, moving overseas, adopting models of mass production or beating the competitors at their own game, owing to the information provided from management accounting. Week 9: What are the management accounting techniques that were adopted in the reform of the post office (British postal system)? Were they effective? The British postal system went through a process of transformation which enabled it to advance its operation and offer batter services in the market owing to the management accounting information that it developed in its operation system. The corporation undertook a massive investment and acquisition of the e-business developed which had a huge impact on the future operations of the postal system. The management of the British postal undertook strategic investment from the government with financial commitments that lowered the levels of uncertainties in the postal services. The strategic investment decision was made by the accounting department of the postal office which ensured a long-term financial stability and offered a competitive environment for the operation. There was also a close alignment between strategy formulation as well as investment appraisal, which eliminated political bureaucracy in the management system of the organization. The reforms in the postal system, among other things provided for a balance scorecard which provided a framework for financial analysis tools and non-financial considerations for its customers (Hopper et al, 2007). The British postal system also developed a value chain strategic management strategy which brought to affront the idea of strategic cost management (SCM) for analyzing technology investment into the corporations operation. The value chain approach developed a more accurate way of identifying important value creating activities and enhancing a competitive strategy. The reforms in the postal system also introduced the real option analysis (ROA) which realized the need to have a flexible investment options. Week 10: Discuss the implications of "Accounting has always concerned itself with information production, processing and reporting while management accounting has sought to provide managers with information-based intelligence." Accounting as a profession is more concerned with bringing accountability in the various departments of an organization. The inter-organizational cooperation, better utilization and the tapping into others experience owing to improved production of the organization is attributed toa proper accounting system in the organization. A well framed accounting department is able to develop outsourcing relationships between firms as well as the research technology as well as supply chain best for the processing in the organizational operation. The accounting is enabled to provide the information owing to the new demands on managers, suppliers and customers. Accountants can develop a proper management structure that arises out of the new demands into the market. The other drivers of the organization as discussed by Hopper et al (2007) include the accounting information on logistics of supply and demand into the market of the products. The management accounting on the other hand is more intelligent at providing information on the management bringing insight into how operations should be run. Such include the time based management, total quality management, outsourcing of services as well as the customer relations management. The information accrued from the management accounting creates a whole new awareness into the way the operation is expected to be run to meet the new demands in tye market. Conceptualization of the inter-organizational framework as well as identification of boundaries for the firms operation is also realized owing to the management accounting ideas. References Emsley, D. (2005). Restructuring the management accounting function: A note on the effect of role involvement on innovativeness. Management Accounting Research, 16(2) pp.157-177. Retrieved from http://www.sciencedirect.com Fleming, G (2003). Corporate governance in Australia. Agenda, 10(3) pages 195-212. Retrieved from http://epress.anu.edu.au/agenda/010/03/10-3-A-1.pdf Gordon, L. & Larcker, D. & Truggle, F. (1978) Strategic Decision Processses and the Design of Accounting Information Systems: Conceptual Linkages. Accounting, Organizations and Society, Vol 3, 3/4, p. 203-213 Hopper, T., Northcott, D., and Scapens, R. (2007). Issues in Management Accounting.3rd Ed, FT Prentice Hall (third edition). Khajavi & Nazemi (2006). Innovation in Management Accounting: The Needs of World-Class Firms. International Journal of Academic Research 2(5) p320 Kim, L (2004). The effects of national culture on the design of management accounting information system. Journal of Comparative International Management, Retrieved from http://www.allbusiness.com/accounting-reporting/managerial-accounting/212009-1.html Lillis, A. M. and J. Mundy. 2005. Cross-sectional field studies in management accounting research - Closing the gaps between surveys and case studies. Journal of Management Accounting Research (17): 119-141 Read- Younkins, E. (1999). Technology, change, and the management accountant. The Journal of Technology Transfer. 18(1-2), pp 16-21. Van der Steede (2003). The effect of national culture on management control and incentive system design in multi-business firms: evidence of intracorporateisomorphism. European Accounting Review, 12(2), pg263–285. Retrieved from (http://www.informaworld.com/smpp/content~content=a714023142&db=all) Read More