Course coordinator: Dan Nordin
2010, 09, 29
MANAGEMENT ACCOUNTING THEORY AND USE
In this paper we have tried to focus as a base for our argument on the points explained mainly on the three articles “the role of accounting in organizations & society” (stuart, B. et al), “Ambiguity & Accounting: the elusive link between information & decision making” by James G. March and “Who needs budgets?” (Jermy Hope & Robin Fraser). On the first part of our paper we focus on theory and use of management accounting. On the second part we try to put our arguments and conclusions on the three articles we base. 1.THE ROLES OF ACCOUNTING IN ORGANIZATIONS AND SOCIETY When we talk about the theory of Management we found the article of Stuart et al and in their article they give emphasis on two important points: 1.The increasing industrialization of accounting craft
2.The growing abstraction or objectification of accounting knowledge The state has been an active agent both for continued development of accounting system in industrial and commercial business. Such extension of the accounting domain has had major implication for the development of both accounting thought and practice. Similarly the increasing domain for financial information made by the capital market, agencies of the state and organization with in the accounting profession itself has resulted in more extensive and rigorous approach to financial reporting and disclosure. The institutionalization of accounting has occurred at both the organizational and societal levels. Within both business and governmental organizations bookkeeping come to take on a new significance and influence as accounting became a more all embracing form of organizational practice. Implicated in budgeting and standard costing, organizational segmentation and control, planning and resource allocation the accountant came to be an increasingly respected member of the management cadre. Accounting departments were created, specialists staff recruited, emergent accounting system formalized, standardized and codified and links with other forms of management practice established. Moreover accounting itself came to be a more fragmented endeavor with the growing separation of the preparation of financial accounts from the presentation of internal financial information and the management of corporate liquidity and financial structure. (STUART B., et al 1980) 2. AMBIGUITY AND ACCOUNTING: THE ELUSIVE LINK BETWEEN INFORMATION AND DECISION MAKING Nowadays organizations use information for decision making. Contemporary theory of decision making has less emphasis to highlight base in estimation and inference and more emphasis complication in the use of information. For example, limited rationality is that not every thing can be know that decision making is based on incomplete information about alternative and consequence. The fundamental idea of conflict interest is that an organization is a coalition of individual and groups pressuring different goals. As a result information in organization is not innocent. (James G. March, 1986) The four observations about the ambiguities of organizational decision making (James G. March): 1.The ambiguities of preference: most of the time preferences are vague or contradictory. So that it changing as a result of experience and the decision process. 2.The ambiguities of relevance: problems, solutions and actions are frequently only loosely coupled or connected by their simultaneity rather than their consequentiality. 3.The ambiguities of intelligence in complex ecology: individual actors with in organizations often try to act intelligently by calculating the expected consequence of possible action. 4.The ambiguities of meaning: information is not always immediately...