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In the early days when people started conducting trade they learned to arrange financial information in a systematic manner. As time progressed further the concept of accounting gained popularity and people introduced several changes to make it more effective and useful for maintaining financial records. Management accounting is a branch of the traditional accounting system that is used by the managers to obtain the valuable information about the business. Management accounting plays a vital role in the decision making process. Managers use management accounting to derive information while making business decisions.
With time the international business environment has undergone several changes. Due to the effect of globalisation, businesses have lost their geographical boundaries; therefore there has been a requirement of an accounting system that assists in understanding global business environments. The governments of the different nations are also more concerned in making the business activities more transparent by making the accounting standards stringent. Therefore, the management has to maintain an effective accounting system so that information regarding the external environment can be used to make the business policies proactive.
Requirement of an effective and advanced accounting system has resulted in the development of a strategic accounting system. In the given project a thorough comparison will be made between management accounting system and strategic accounting system. The main aim is to analyse how far strategic accounting system is effective in overcoming the drawbacks of management accounting system and to assist managers in developing a sustainable business environment.
Management accounting provides the information required by the managers for planning, controlling and decision making (Jiambalvo, 2007, p.2). In the process of decision making related to resources allocation, making
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Management accounting is considered to be useful when it properly displays an external image and a futuristic picture for an organisation. Strategic Management Accounting on the other hand can be distinguished from other management accounting activities through its extensive external orientation; this extensive external orientation includes focus towards customers, competitors, suppliers and all other stakeholders that get affected by the organisation’s normal course of business.
Performance measures can be considered as metrics for monitoring the success of an activity and competence of the workforce in utilizing the available resources. Competence can be attained by maximising the output with the minimum number of resources. Improvement in competence can be achieved by providing fewer inputs that can be used to produce a particular amount of output.
The two types of financial management differs in the sense that financial management can only provide the company a glimpse of where it is standing right now in terms of financial soundness. While strategic management enables a company to go beyond the boundaries of the normal financial management.
The project report then looks at the aims and objectives of establishing a management accounting system and the characteristics of information flow at the strategic level. It also analyse the effectiveness of SMA system in the provision of information to assist the senior management team in the achievement of the corporate objectives at Highline.
The analysis stops when additional complexity is not outweighed by additional 'actionable' insights." (Shank and Churchill, 1977. P 950-957).
Through this process, it is possible to determine areas in which the management accountability is low, or adverse and thus would require better control, and remedial measures need to be implemented so that the adverse variations could be checked and eliminated in the near future.
ds of 25 sizeable British firms serve as evidences for the statement that British entrepreneurs used standard costing methods even in pre-industrial period 1760-1850 (Fleischman and Parker, 1991), it is still considered that cost accounting began to attract wide interest of
Top Building Construction Ltd is well established company in the construction industry mainly focusing on building large industrial buildings, as well as offering maintenance services. This company has vast experience of more than 30 years, currently the
trategic management accounting which leads to evaluate an organization’s interaction between its product market and capital market, analyze the internal architecture of the company and its cost considerations so that it can be evaluated whether it is required to bring any
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