Management accounting and decision making Essay Example for Free

circumspection explanation and decision devising EssayAccording to Burger (2008) chronicle is the language of business. A plenteousness of people think its just numbers, but its re aloney a lot more than that. There ar a lot of argonas outside of numbers that need to be looked at, processes and procedures, what the stones throw of the company is. write up will take you in just about any direction in a company. Wade Becker, CPA, Beard, Miller Co. The job description of many professions is changing nowadays. The skills to perform a true job require more skills to perform a particular job. If an example of Information Technology is to be taken then it is realized that once they were left to do IT related jobs or make computers relieve oneself however, in like a shots world IT professionals are now moving into higher level centering positions which require them to perform many other labors which may not be directly related to the their profession.Therefore, a stereot ypical role of an paperant was once considered a number person but todays era demands history professional to own and determination interactive and communication skills to help with the decision making process across all areas of a business. In a managerial report world all professionals must communicate their ideas to other companies using ways which are tactful and effective. Siegel (2000) states that Management accountants should be prominent communicators. Durry C (1992) believes that guidance accounting is concerned with providing information to managers that is people inside an government activity who direct and get wind the operations. In the 19th Century pecuniary accounting was considered to be the need of a society which afterward evolved to Management accounting. Management accounting became a prerequisite for more detailed information for stock control, harvesting existing and decisions affecting the future. Accounting is facing numerous challenges, as Elking ton (1998) states business people must increasingly recognise that the challenge now is to help to deliver simultaneously economic prosperity, environmental quality and fond equity.All this is making business managers to re-examine the practices that are currently led. Cokins G and Hicks D believe that managerial accounting is part of an organisations way information schema. To follow any business or an organisation guide managers engage in activities which involve an effective cost model as it idler be a great asset to an organisation. A business or projects to be a winner or bereavement three things need to be considered, forexample, cost, schedule and performance. A project should be continued within the agency supplyd otherwise stakeholders struggle to finance the project and its abandoned. A success of a manager is when appropriate tools are employed and sound safe decisions are make and follow on with applying substantial level of expertise to have effective cost mana gement.The world today is surrounded by increasingly advanced engineering science such as computer assisted manufacturing and flexible manufacturing systems. According to Cokins and Hicks presidential terms to compete effectively need to check the cost of each product or element of their value chain from product design and procure of material therefore internal cost is rattling important as mentioned in Cokins and Hicks article because it becomes exact for competitive action and increasing shareholders wealth in the current globally competitive economy. Management accounting systems are the bene ciphers of the precarious internal cost information. There has been few criticisms conk outing 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 the current strategic management paradigm.Cokins and Hicks believe that syste ms designs elements should capture the fundamental technology, promote a business based on effective cost model, quality and lead time. Precise 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 organizational complications of the current world however traditional Management accounting systems do not replicate current organizational era as all costing procedures were designed nearly late nineteenth century. In traditional era product line diversity was not very common and cost of materials and direct labour were the main 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 disk overhead component. The overhead costs are altering product cost because of the old management accounting system techniques. Management accounting needs a unique set of s kills and behaviour.According to Cokins and Hicks Accounting Management cloth gives business a planned approach to address all factors that will manage accounts interface and todays reality. make and Kaplan believe there are six critical factors which play 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 assist 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 balance help as control. The fourth one is compensations structures as they can inhibit change or accelerate adoption. The fifth account management success factors are processes and methodologies as they should align with the customer, drive growth and opportunity plan and the pull round factor channels and alliances must be managed effectively through 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 police squad need to plan using methodology a number of factors to create a ranking based on the business goal for the standstill and ability to deliver. Once these methodologies are selected they can play a vital role in team structure and it will help to deal with issues such as ownership or shareholders Cokins and Hicks discuss the passing amidst cost accounting and managerial accounting and the forcefulness of their article is that managerial accounting is fasten 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 describe economic transactions of a business. United Kingdom accounting has improved a lot as mentioned in the journal being studied for this particular assignment. Managers have immense pressure to improve fiscal management practices to improve service to the community and it is not only done on national level. managerial accountants have to keep accountant standards fair globally and that is mainly done through Accounting Standards Committee. What gets metrical gets managed, What needs managed gets measured (Peter Drucker) famous quotes has cause many criticisms but if the practices and make growment mentioned in Cokins and Hicks journal are to be analyzed, one can conclude this quote has some truth. Managers of a businessoften use this quote indicates that active management of businesses should be given importance inst ead of accountability to gain in demand(p) goals. It will lead to survive in todays world of information age argument therefore businesses should ensure they are using management systems resulting from their strengths.Any business main task is to develop an active measurement 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) measurement is a difficult 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 harmonise to the strategies and objectives developed. There has been an immense amount of research on management accountants and the research 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 validity of measures, varies, depending on people, culture and past experiences of the organization. The management accountant was developed after 1980s and it was seen a sumptuous era in management accounting research as it saw forward-looking 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 course of study of strategic management accounting are activity based costing and balance identity card. 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 regular basis and it gave a bear view of what should be measured in order to balance a particular business financial perspectives. The balance score card consists of four functions know n as learning and growth perspective. It means how to strain 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 effective impression to shareholders. Another perspective is based on customers as they can determine sales and to discover 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 jump as. (Kaplan and Norton1996) Balance scorecard is one of the necessities for any organization and it is used by the management to accomplish mental imagery and strategies of an organization and it has few other benefits too such as, making sure managers are managing every hotshot 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 ABC 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 public in recent years but faces a lot of criticisms too due to the fact that sometimes businesses face difficulties in implementing this technique.ABC is enhanced further by Activity-based management as they believe in planning and measurement and class them as key factors in a competitive business environment. To conclude, If an organization has acc ounts managers or not a success can only be achieved if a successful compose is valued. It can be done through an industry as it will help determine to what limit an account manager is an industry expert and the second is through customers as it is vital for an accountant to check 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 techniques as nothing in life comes with a indorsement however, new ideas can be used on the basis of guess work and the new cont ributions could be a way forward.