ISSUES IN MANAGEMENT ACCOUNTING 5
Issuesin Management Accounting
Issuesin Management Accounting
Question1. Chief Financial Officers
Theability and the willingness of Chief Financial Officers (CFOs) in anorganization determines the extent of the use of managementaccounting innovation. This is because CFOs of an organization play amajor role in the selection, adoption and the success of themanagement accounting innovations. This is because of the role theyhold in the organization and their understanding of the businessenvironment the an organization operates on. They determine themanagement accounting innovation by controlling the strategy makingdecisions.
Inaddition, CFOs determine the management innovation by exploring theneeds of the organization against the current organizationalenvironment. They are able to establish this information due to theirexpertise in finance and their positions in the management.Therefore, they are able to evaluate the organization`s needs andpropose new strategies.
Question2. Management Accounting and Strategy
Theauthors argue that management accounting plays a major role in theprocess of strategy. This is because it is the main basis throughwhich a strategy can be validated in terms of the expected returns.According toHopper (2007), strategiesare adopted by the management as a way of increasing returns orcreating efficiency in an organization. Therefore, managementaccounting provided the necessary, costing information as well ascost procedures for the achievement of the identified strategy.
Inaddition, the management accounting provides the resources that willbe used in the implementation process of every structure. Thisprovides the management with the information that will help in theimplementation process. The findings of the research found out thatmost strategies are made successful through the use of appropriatecost accounting. According to the research, the management of anorganization should place more emphasis on the costing factors of astrategy before implementing it.
Question3. British Postal System
Thereforms of the British postal system were introduced under theRawlands Hill Reforms that were meant to revolutionize the postalcorporation. The management accounting reform involved theintroduction of uniform rate of one penny for ne ounce for thepostage of letters. This led to the introduction of standard ratepostage stamps. The standardization of the costs led to betterpredictability of the costs expected by the firm and also therevenues expected. The main role of cost and management accounting isthe establishment of frameworks for the evaluation and prediction ofcosts and revenues.
Theimplementation of the management accounting reforms was effective inthe standardization of the costs and revenue anticipations. This wasbecause the use of a standard rate became a new way for thecorporation to establish a cost estimation that was enabled by theuse of stamps. The effectiveness of the new reforms proposed underthe Rawlands Hill reforms made the corporation’s costing functionfinancially effective.
Question4. Accounting and Management Accounting
Theimplication of the difference between accounting and managementaccounting is their use in the management function of anorganization. Because of the difference, these two accountingfunctions are applied in an organization to compliment each other. Onthe management, financial accounting focuses on providing informationand reports for decision making based on the historical data of theorganization (Hopper,2007).However, managerial accounting provides information on financialprojections and implication of the organization’s futureengagements. This anticipates future financial information that willbe used for the organizations. This information on the costimplications of the organizations becomes the financial intelligenceof the organization for the management to make informed decisions.
Hopper,T. (2007). Issuesin Management Accounting.Upper Saddle River, New Jersey: