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TO WHAT EXTENT HAS THE ROLE OF MANAGEMENT ACCOUNTING CHANGED ?

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Introduction

The Changing Nature of Management Accounting and the Emergence of "HYBRID" Accountants In the last few years, Johnson and Kaplan who are accountancy experts have debated over the extent management accounting is changing. They argued that management accounting it had not changed since the early twenties century as well as it had lost its importance for the purpose of informing manager's decisions. Furthermore, the environment in which management accounting is exercised has changed with progress in information technology, more competitive markets, different organisational structures and new management operations. Since the publication of Johnson and Kaplan various new accounting techniques have been developed, such as strategic management accounting and activity based costing. Where these new modern accounting techniques have not been widely used as it is shown in many surveys. This study emphasize on functions and expectations of these "hybrid" accountants who increasingly become part of the management team within a business process, and project implications for the professional accounting bodies and its members. This project was based at Manchester University (UK) and consisted of a questionnaire survey, a field study of 12 companies and 8 long term case studies. The project highlighted on two objects. Firstly, discovering whether management accounting has been too slow to change notwithstanding the fast changing organisational and technological environment recently. ...read more.

Middle

What has been seen during the study was there were people called "pseudo-accountants" who have accounting knowledge. Therefore, the number of people who have accounting knowledge in each department has increased. This decentring of accounting knowledge is the consequence of "pseudo-accountants" who educate other people in the organisation. The writers note that in several companies the management accountant would be notionally a member of the centralized accounting function but out in the field. These accountants were esteemed as important because of there links to the centralized accounting function which means that these accountants' knowledge of interactions with other parts of the business. Essentially, management accountants could look outwards from a specific area of activity to the business more generally. From the companies which the writers have visited a further issue that appeared, the role of the budgets has changed. The budgets are being seen as foreword. Management accountants can forecast the next financial period from the current budget. This is especially important because whereas accountants usually associate with budgets, managers identify from forecasts. Forecasts usually need significant inputs from signals department and functions, as they are the only people who have the essential detailed knowledge. Additional finding from the project is the change from what may be designated a "financial accounting mentality" to "commercial orientation". ...read more.

Conclusion

Under this new structure there is a process leader who is for all these activities, together with the associated back up functions which are an integral component part of the process. The writers have seen various examples in their case studies. At one extreme there were accountants, who were superior at producing and analysing the figures, but they could not associate them to the commerce, and consequently they were not kept in possession. In particular, management accountants need to associate the accounting and financial info to the wider info flowing within the organisation, including strategic info, and to identify the limitations and the potential of management accounting. the writers started with issue which has been claimed by Kaplan and Jonson that management accounting had lost relevance, which the tool that the managers use to make decision. The writers indicated the emergence of hybrid accountants which have developed the organisations. They are to team member in department and educate the others financial issues. One more issue the study has found that organisations provide continuing education activities which preparing their future and current members for changing role of management accounting. Reference Burns, John and Scapens, Robert. (2000). The Changing Nature of Management Accounting and the Emergence of "HYBRID" Accountants. Available: http://press.ifac.org/article/2000/11/the-changing-nature-of-management-accounting-and-the-emergence-of-hybrid-accountants. Last accessed 05 AUG 2010. (1283) words ?? ?? ?? ?? 1 ...read more.

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