The Impact of Contingencies on Management Accounting System Development.

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TABLE OF CONTENTS

ACKNOWLEDGEMENTii

TABLE OF CONTENTSiii

1.0 INTRODUCTION1

2.0 Contingency Theory on Management Accounting SYSTEM1

3.0 THE IMPACT OF CONTINGENCIES ON MANAGEMENT ACCOUNTING SYSTEM DEVELOPMENT2
( i ) Environment2
( ii ) Strategies and mission3
( iii ) Technology4
( iv ) Firm interdependence4
( v ) Business unit, firm, and industry variables5
( vi ) Knowledge and observables factors5
( vii ) Culture 6

4.0 Summary and Conclusions6

5.0 REFERENCE BOOKs7

1.0 INTRODUCTION
The management of a company needs to develop cost and management accounting systems which will provide adequate information about main impacts on cost characteristics and companies performance. The cost and management accounting practices of the companies can be described by the traditions and necessity to solve urgent problems of everyday management. Hence the management accounting systems (MAS) of the companies operating in the conditions of transition should provide adequate information, which would help managers take decisions at different management levels. The present study focus on the contingencies that influence companies management accounting systems with a particular emphasis on those operating in the transition economies. The paper aims to describe the stages and tendencies in the development of the management accounting issues in companies, analyzing the impacts on Management Accounting System by means of the contingency approach. 2.0 Contingency Theory on Management Accounting SYSTEM

Contingency theory in management accounting describes the situational factors and portrays that management accounting system is contingent upon such factors in reality. Situational factors or contingent factors vary organization to organization and it is impossible to describe and spell out the character of management accounting in the prevalence of each such factor. The circumstances in which the organizations move are distinctive in nature and largely effect the adoption, mechanism, and sophistication of management accounting system. The question arises as to whether or not there is an appropriate accounting-based control system which will suit all organisations in all situations. The answer to this question must be 'no', as organisations vary in size, structure and complexity. What constitutes an effective management control system therefore depends on the circumstances surrounding its use. These contingent factors are major contributors towards non-formation of universally acceptable effective management accounting system.  As situational factors are unique in nature and are unfeasible in believe and explain in isolation hence they can broadly be categorized in seven foremost areas according to the dominant characteristics of such circumstances. * The environment

* Strategies and mission
* Technology
* Firm Interdependence
* Business unit, firm and industry variables
* Knowledge and observable factors
* Culture
3.0 THE IMPACT OF CONTINGENCIES ON MANAGEMENT ACCOUNTING SYSTEM DEVELOPMENT ( i ) Environment
The differing traits of external environment surrounded by an organization effect management accounting systems to a greater extent and mold it towards prerequisite of exterior conditions. External environment can be uncertain or certain, static or dynamic, simple or complex, and turbulent or calm. I suggest that organization with a stable and certain environment rely on financial performance measures particularly budgetary conformance and other type of monetary variables. The management accounting system does not require greater sophistication in such organizations and it works on presupposed targets expected to remain valid for ensuing performance appraisals.. External factors indicate the features of external environment at the level of business and accounting. Environmental factors impact both on the internal characteristics of an organization and its...
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