In a two-part essay: a. Discuss the tools and techniques in management accounting that can be used to support an organisation’s sustainability objectives. b. Go to:...

Management Accounting 1
Management Accounting:
Introduction:
Globalization and technological changes generates complexity in the business
environment as well as the accounting systems of the organization. With the changing conditions
the organizations needs to have a strong focus on the management accounting principles and
practices. Managerial accounting information is essential in gaining competitive advantages, is
an indispensable instrument for the decision making and that is why, in order to survive, the
companies across the globe focuses on adopting new tools and techniques so as to align their
activities as per the need and requirement of the customers and the market.
Tools and techniques:
Theories of management accounting attribute skills sets to that management function of
accounting that state that they is no set way of performing activities especially decision making
abilities based on accounting information. It has also been agreed that organizational and
leadership style that is effective in some situations may not be successful in others (Fiedler,
1964). So it can be presumed that the an optimal theory that recognizes the skill in not only
technical aspects of accounting but also the human aspect of dealing with contingent factors
internal and external to the organization could form the basis of the contingency theory. It also
has to be accepted that there are many constraints in performing the changing needs of the
accounting personnel and so it has to evolve in its entirety as reacting to organizational
framework and allowing for changes to stimulate to better performance and use by management
for
inging in responsible decision making.
Management Accounting 2
Management accounting can be defined as that perspective of management that uses
accounting information to create budgets, plans and discharge control and advisory functions
elating to financial policies.
With the development of technology and the global nature of competition, there is the
need to monitor trends and interact closely with customers and suppliers to identify and initiate
change in a timely manner, increasing the need for environmental analysis (Hamel, 2000). This
environment also resulted in increased development of tools and techniques such as ABC
(Activity-Based Costing) and BSC (Balanced Score Card) in management accounting and TQM
(Total Quality Management), TOC (Theory of Constraints), JIT (Just-in-Time) and others in
operations management in addition to phenomenal growth in information technology.
Budgets:
There is increased skepticism about the ability of traditional budgetary approach to meet
the goals of planning and control in the new environment (e.g., Hope and Fraser, 2003). With
espect to planning, strategy has grown more complex, involving the integration of stakeholder-
ased concerns that may not be immediately reflected in financial profits or outcomes. Non-
financial measures such as customer satisfaction and innovativeness have been found to predict
future financial success. The increased need for functional interaction and integration of
processes is often not evident in the traditional planning approach.
Budgets are one of the key tools that is used by the organizations to make decision on
different perspectives. Budget is one of the most important aspect of planning. It can be termed
as a detailed plan which is expressed in quantitative terms and focuses on estimating the
acquisition and utilization of different resources during a particular period of time. Budgeting
can be said as the process which focuses on developing different budgets. It can be said to be an
Management Accounting 3
aid to the management which helps in evaluating the performance of the organization. It helps in
evaluation and controlling different financial aspects of the organization. Budgeting also helps in
making different decisions in respect to capital projects and other financial aspects.
Budgets are made as per the discretion of the management. It is not a compulsory
statement that needs to be made by the organization.
Budgeting helps in analyzing the performance of the organization and individual
departments. There is a strong inte
elationship among the processes of policy setting through a
strategic plan, budgeting the resources needed to deliver services that helps in accomplishing the
goals of the plan, monitoring operations and reporting on performance, and assessing
performance as it...