Pushing the Art of Management Accounting

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Managerial accountants have been in the role for over a century; however, the usefulness kept on changing with the passage of time. The latest model gives us the usage of Activity Based Costing, Balance Score Card, Benchmarking, Strategic Cost Management, Total Quality Management and Six Sigma. These developments had a vast impact on the overall usage of cost accounting.

Accountants have been found to be the first to resist change, and the failure to various ABC and scorecard projects has been linked to the unwillingness of accountants themselves to see the project through. Despite all the positive results in the past, it appears that the adoption of advanced management accounting practices has slowed. The reason for this is because there is pressure for management accountants to do less. Less than half of managers received role specific information to support ad hoc decisions.

Firms fail to attain the management accounting tools with their strategies, which means the daily activities at operations are different than what is supposed to be originally. New management accounting tools aren’t being adapted to organizational strategy or structure and cannot be used. An example of innovation failure due to implementation is the concept of Business Process Reengineering, because it is not applicable to numerous firms since it needs a thorough change in the firm.

Management accountants need to be more involved in the communication process. This process concludes that the management accountants can’t possibly observe, measure and report on everything. They must select from a wide field what to report, how to report it and when. Managers must also be able to correctly decode the reports they receive. They must therefore be familiar with the concepts used in the accounting models that are used to prepare the reports and understand what the variances in the numbers signify.

The communication process is highly important for any accountant to be successful in...
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