Managerial accounting

 

Managerial accounting

Introduction

In the era where the advanced computers and various technological interventions rule, the business organizations can now be considered assisting the modernization. The impact of the globalization compelled the entire organizations to make changes according to the increasing information that are mostly focus in their environment. When the propellers mean changes, they mean that all of the important areas in the organization should develop in their own way and establish the effective techniques and processes. The increase demands of the organizations and their obligation to follow the trend of changes, there is definitely an evolution on the role of the organizational areas to meet the needs of information in the modern organizations.

Factors Affecting the Business Environment

Management accounting or managerial accounting is identified as the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of the financial information that are necessary in management planning, evaluation, and control within the organization. In the origin and evolution of the management accounting, there are four important factors that can create a big impact in the entire organization. The emergence of the permanent employees, continuous industrial revolution, the application of the scientific management because of the growing need for information, and the diversification within the working place are considered (Werner, 2004). In addition there are pressures and complexities in the working environment that cannot be avoided.

The internal and external changes has been broadly applied in the new management accounting practices and as well as the roles of the management accountants. The availability of the technology and the information changes the strength in managerial accountancy. Learning the capacity of an organization to invest in changes is the ability of the management accounting and with the presence of the factors, there is a increase awareness within the organization in establishing well-functioning activities (Cooper and Dart, 2009).

Role of Management Accounting

The role of the management accounting is to integrate with the sustainable considerations in crafting the decisions and control processes. The contribution of the managerial accounting in the organization links in the various areas in the organization, In addition, the sustainability of the information provided is essential in the operation, management, and strategic control (van Heeren, 2002). Due to the approach of the organization in various market challenges, the traditional role of the management accounting changes but remains in the core of the managerial accountant’s activities. The shift of the role and the appearance of the changes are through the development and progress in the practice. First, the adoption of new tools and techniques and second is the movement of the accountants towards delivering the managerial decision-making, instead of providing information. These changes attracted many of the organizations and influence the people to make a difference. The drivers of change can result in the greater diversity in terms of the practice in the organization (Cooper and Dart, 2009). However, the shift in the roles being played by the management accountants is expected to create effectiveness. The new management accounting techniques were not necessary intended for the performance evaluation but to focus on the financial profits that can aid in creating sound and sensible decisions (Werner, 2004).

Evolution of Accounting Techniques and Processes

The new management tools and techniques had been developed because of the support in the idea for internal decision making. The accounting techniques such as the Activity Based Costing and the Balanced Business Score Card are the two techniques being used in the managerial accounting due to the growing competitiveness in the business environment. The use of the Activity Based Costing measures in more accurate the costs of the activities, products and services, and the customers. Meanwhile, the Balanced Score Card plays an important role in evaluating the business performance through the range of indicators such as the financial, customer, the business, and the organization itself. This new and improved approach of management accounting lies in the expansion of the type of management information that the organization generate. All of the information can contribute in the processing the quality of the products and/or services that targets the customer satisfaction (van Heeren, 2002).

Conclusion

The changes appeared in the business environment is inevitable for the organization as long as the people are aware about the impact that it might bring and the capacity of the business to endure the changes. The use of the new management accounting techniques and processes should still need to be investigated and measure the effectiveness in meeting the goals of the organization, more specifically in delivering the decisions. 

References:

Cooper, P., & Dart, E., 2009. Change in the Management Accountant’s Role: Drivers and Diversity, University of Bath School of Management [Online] Available at: http://www.bath.ac.uk/management/research/pdf/2009-06.pdf [Accessed 08 April 2010].

van Heeren, A., 2002. Management Accounting for Sustainable Development: A Chain Related Case Study between Costa Rica and the Netherlands, Institute for Environmental Management [Online] Available at: http://www.p2pays.org/ref/26/25585.pdf [Accessed 08 April 2010].

Werner, J., 2004. Management Accounting: Its Environment and Future, Introduction to Management Accounting, Prentice Hall Business Publishing [Online] Available at: http://www.mc.maricopa.edu/~prestoncameron/Faculty_Documents/ch01ima.pdf [Accessed 08 April 2010]. 

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