Evolution of Performance Measurement Models in Management Accounting
2nd October 2010
Abstract Changes in management accounting have gone by unnoticed in the recent years. This article tries to explain by how much management accounting has altered through the years, since the 1950s to date, and the reasons that led to the changes. This work also focuses on various performance evaluation models, their applications and their effectiveness.
Introduction There was little advancement in accounting in the 1950s, as much of the effort was made towards finance and stock valuation. However, there have been material changes in the business environment over the past six decades, coupled with advancements in information technology that have warranted the transformation of management accounting. Although management control measures have altered significantly, there have been little changes in design and actions in most procedures.
Literature review Scholars and business people alike have contributed to the advancement of management accounting. Bhattacharya (2009, 11) says that except for those who work in research, many people do not realize the role in management accounting changed from cost collection and analysis to a proactive part in development and implementation of strategy. Bhattacharya gives two reasons for this; first being that there is no culture to capture the evolution of accounting and a lack of innovativeness on the part of accounting bodies. Secondly, most businesses do not fully utilize management accounting systems, implying that the average accountant would not experience the whole scope of his or her profession. The Institute of Management Accountants (IMA) of the USA captures the evolution of management accounting by giving it a new definition: “Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and
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