Management Accounting Information Systems
· Provide information, both
financial and nonfinancial, to managers and employees inside an organization
· Is tailored to the specific
needs of each decision maker and is rarely distributed outside the organization
In contrast with: Financial accounting reports
· communicate standard format
economic information
· provide information to
individuals and organizations external to the organization (shareholders,
creditors, regulators, and governmental tax authorities
Three broad classes of
organization decision making:
-
Planning
(ex ante)
-
Organizing
-
Controlling
(ex post)
I. Planning (focus on what
will I do?):
· product planning
· production
· strategy development
II. Organizing (focus on how I
will carry out my plan?):
· focus
on how to develop the organization´s
systems and supportive infrastructure that will develop, produce and
deliver goods and services
· the
information required often focus on
assessing the potential of alternative systems to achieve the organization´s
objectives (prospective product quality, service levels provided to the
customers)
III. Controlling (focus on how
am I doing and how does my performance compare to plan?):
· measuring and evaluating the
performance of organization systems and entities
· identify how each unit
contribute to the organization´s objectives
Basic Features - Financial and
Management accounting
Financial Accounting Management
accounting
Audience External:
stockholders, creditors Internal:
workers, executives
Tax
authorities
Purpose Report
on past performance to Inform
internal decisions made
external
parties; by employees
and managers;
provide
a contracting basis for feedback and
control on operating
owners
and lenders performance
Timeliness Delayed;
historical Current; future
oriented
Restrictions Regulated;
rules driven by gene- No regulations; systems
and in-
rally
accepted accounting prin- formation
determined by manage-
ciples
and governmental authori- ment to meet
strategic and operatio-
ties mal needs
Type of in- Financial
measurements only Financial plus
operational and phy-
formation sical
measurments on processes, tech-
nologies, suppliers,
customers, and
competitors
Nature of Objective,
auditable, reliable, More
subjective and judgmental; va-
information consistent,
precise lid, relevant,
accurate
Scope Highly
aggregate; report on Disaggregate;
inform local decisions
entirely
organization and
action
Management accounting – brief
history
· Cost accounting systems for
pricing decisions
· First used by Railway
companies by end of 1800 cent.
· Large complex costing systems
for different products, services and customers
· Emergence of large integrated
companies (DuPont, General Motors and others) in beginning of 1900 changed
focus from cost accounting to management accounting for coordinating activities
and allocating resources
· The emergence of the visible
hand (Chandler
· By 1920 (stock market
failures) focus on development of new and better financial statements to meet
the new regulatory external reporting requirements
· In the 1970s under intense
pressure fro Japanese automobile companies interest turned to developing more
comprehensive management accounting systems that reported on strategic dimensions
such as quality and service
Emergent
and more important aspects and concerns in management accounting:
· The growth of service sector
industries
· Government and not-for-profit
organizations
· Behavioral implications of
management accounting information
· Ethics and management
accounting
Ethics
and management accounting
· laws of society define certain
decisions as illegal (for instance for safety or environmental protection
reasons)
· social standards (though not
illegal) rule out certain types of behaviour as unacceptable – boundary systems
and belief systems (subcontracting, etc.)
· corporate values (prescriptive
and descriptive)
· accounting bodies have codes
of conduct
· personal ethics systems
through family, culture and religion
