Management accounting and decision making Essay

According to Burger (2008) invoice is the manner of speaking of occupancy. A lot of people think its just numbers, just its really a lot more than than that. there be a lot of beas outside of numbers that direct to be looked at, processes and procedures, what the note of the comp any is. employment relationship forget take you in just nearly any direction in a company. Wade Becker, CPA, Beard, Miller Co. The ruminate description of many professions is changing nowadays. The skills to perform a certain(a) hypothecate require more skills to perform a particular job. If an example of training Technology is to be taken then it is realized that once they were odd to do IT colligated jobs or make computers work however, in directlys foundation IT professionals argon now moving into higher take direction positions which require them to perform many other tasks which may not be directly related to the their profession.Therefore, a stereotypical role of an restrainer was once considered a number person notwithstanding todays era demands account statement professional to own and wasting disease interactive and confabulation skills to help with the purpose making process across all atomic number 18as of a commercial enterprise. In a pick outrial write up world all professionals must(prenominal) communicate their ideas to other companies using ways which ar tactful and effective. Siegel (2000) states that focus accountants should be great communicators. Durry C (1992) guesss that management chronicle is concerned with providing schooling to managers that is people inside an governing body who direct and control the operations. In the nineteenth Century pecuniary accounting was considered to be the need of a parliamentary procedure which later evolved to Management accounting. Management accounting became a prerequisite for more detailed information for stock control, product representing and decisions affecting the future. writ e up is facing numerous challenges, as Elkington (1998) states short letter people must progressively recognise that the challenge now is to help to deliver simultaneously stinting prosperity, environmental quality and social equity.All this is making business managers to re-examine the practices that are on-goingly led. Cokins G and Hicks D believe that Managerial accounting is part of an organisations management information corpse. To follow any business or an organisation aim managers engage in activities which involve an effective represent model as it lowlife be a great plus to an organisation. A business or sound projections to be a advantage or failure three things need to be considered, forexample, cost, schedule and performance. A project should be continued within the means provided otherwise stakeholders struggle to finance the project and its aband cardinald. A success of a manager is when appropriate tools are employed and sound safe decisions are made and fol low on with applying substantial level of expertise to have effective cost management.The world today is surrounded by increasingly advanced engineering such as computer assisted manufacturing and flexible manufacturing systems. According to Cokins and Hicks organizations to compete effectively need to infrastand the cost of each product or section of their value chain from product design and purchase of material in that respectfrom upcountry cost is very important as mentioned in Cokins and Hicks word because it becomes critical for competitive action and increasing shareholders wealth in the current globally competitive economy. Management accounting systems are the benefactors of the precarious internal cost information. There has been few criticisms leading to the literature of Management accounting system and it has been labeled outdated and there has been criticisms linked to its consistency as it has been thought that it does not provide consistent information with t he current strategic management paradigm.Cokins and Hicks believe that systems designs elements should capture the fundamental engineering science, promote a business establish on effective cost model, quality and lead time. slender and appropriate cost information is critical to managements decision making procedures (Cokins and Hicks) and the literature being studied reveals Management accounting system reflects the organisational complications of the current world however traditional Management accounting systems do not replicate current organizational era as all costing procedures were designed rough late nineteenth century. In traditional era product line diversity was not very common and cost of materials and direct labour were the chief(prenominal) components of production cost but the environment today is surrounded around advanced technology and automation and that has led the prime cost to be the operating cost component. The overhead costs are altering product cost b ecause of the old management accounting system techniques. Management accounting needs a singular set of skills and behaviour.According to Cokins and Hicks Accounting Management theoretical account gives business a formulatened approach to address all factors that will manage accounts porthole and todays reality. Cooper and Kaplan believe there are six critical factors which count a crucial rolein Accounting Management framework which also backs Cokins and Hicks journal being studied for this assignment. The first one is organizational structure. It includes factors such as whom and how you manage accounts, why and how you organize around them. The plunk for account management success factor is people as they need the appropriate skills, knowledge and skills to experience and perform the role. The third factor is tools and technology as it must support the account management processes and must equilibrate help as control. The fourth one is compensations structures as they can curtail change or accelerate adoption. The fifth account management success factors are processes and methodologies as they should align with the customer, drive appendage and opportunity plan and the last factor channels and alliances must be managed effectively finished the account manager interface.it is up to an organization to structure their useful employees around their key customers and that can create a deep impact on their performance. First few deliberate decisions need to be taken in terms of placement of accounts management resources such as market and territory.Cokins and Hicks believe management team need to plan using methodology a number of factors to create a ranking based on the business goal for the affiliation and ability to deliver. Once these methodologies are selected they can shape a vital role in team structure and it will help to deal with issues such as ownership or shareholders Cokins and Hicks dissertate the difference between cost accounting and managerial accounting and the specialness of their article is that managerial accounting is tied with GAAP whereas cost accounting is utilise within a business to manage that particular business.Accounting standards of a country provide guidelines to an accountant so they can be used while reporting economic transactions of a business. fall in Kingdom accounting has improved a lot as mentioned in the journal being studied for this particular assignment. Managers have immense twinge to improve financial management practices to improve service to the community and it is not except make on national level. Managerial accountants have to conserve accountant standards fair globally and that is main(prenominal)ly done through Accounting Standards Committee. What gets measured gets managed, What needs managed gets measured (Peter Drucker) famous quotes has cause many criticisms but if the practices and development mentioned in Cokins and Hicks journal are to be analyzed, one can con clude this quote has some truth. Managers of a businessoften use this quote indicates that active management of businesses should be given importance preferably of accountability to gain desired goals. It will lead to survive in todays world of information age competition therefore businesses should ensure they are using management systems resulting from their strengths.Any business main task is to develop an active beat system as it is main part of the management process. Good management practices lead to using certain measures to plan, implement and improve certain aspects of an organization. According to Kaplan, (1994) meter is a rough task because it is not related to science so there are no facts and does not have rules between variables. Furthermore, systems which are used by management accountants will make sure that actions are taken match to the strategies and objectives essential. There has been an immense amount of search on management accountants and the search evidence has proved that businesses which are using a developed measurement system are developing and gaining profits therefore, Gates (1991) states an organizations objectives and severity of measures, varies, depending on people, culture and past experiences of the organization. The management accountant was developed after mid-eighties and it was seen a golden era in management accounting research as it saw new techniques and practices beneficial to the management accounting.One of the techniques developed in 80s was strategic management accounting and some of the processes which fall under the category of strategic management accounting are activity based costing and remainder scorecard. The balance scorecard emerged after it was realized that there is a need of an integrated system which can be used to measure both financial and non-financial performances. It helps companies to view their performances on a official basis and it gave a clear view of what should be measured in order to balance a particular business financial perspectives. The balance score card consists of four functions cognise as learning and growth perspective. It means how to achieve a certain organizations goals and how will a business will sustain its ability to change and improve. the second perspective is financial and its aim is to succeed financially and is mainly concerned with making a erect impression to shareholders. Another perspective is based on customers as they can determine sales and to achieve business goals a good impression is to be made upon customers.The last perspective is known as internal businessprocesses. It mainly deals with how to satisfy customers and shareholders and what business processes must a certain business excel as. (Kaplan and Norton1996) Balance scorecard is one of the necessities for any organization and it is used by the management to accomplish vision and strategies of an organization and it has few other benefits too such as, making sure m anagers are managing every single variable within an organization and are not working upon favoritism. If more developments are to be discussed and strength of Cokins and Hicks journal than one must not forget one of the major development in an accounting field known as Activity-based costing. Kaplan and Cooper gave this idea a new beginning as it was not very well known in previous years. According to Kaplan (1996) manufacturing costs are determined by amount of activities and the key to effective cost control is maintaining the effectiveness of the activities first rudiment recognizes better cost pools for indirect costs and then implies cost drivers to relate the expenses in the cost pools to activities of an organization. ABC has become more popular in recent years but faces a lot of criticisms too ascribable to the fact that sometimes businesses face difficulties in implementing this technique.ABC is enhanced yet by Activity-based management as they believe in planning and m easurement and class them as key factors in a competitive business environment. To conclude, If an organization has accounts managers or not a success can only be achieved if a successful profile is valued. It can be done through an industry as it will help determine to what fulfilment an account manager is an industry expert and the second is through customers as it is vital for an accountant to understand the businesses being worked upon. The profession Accountancy has seen many developments and criticisms however, since 1980s there has been many changes in management accountancy. The new changes are focusing on measurement tools within a business to manage its aims and objectives.Management techniques are discussed briefly in this essay and they emphasize on Cokins and Hicks journal that management decisions can be made better by using effective management measurement tools and it leads to improving the management of an organization. There can be problem with new measurement tec hniques as aught in life comes with a guarantee however, new ideas can be used on the basis of guess work and the new contributions could be a way forward.