The Case of a Newly Implemented Modern Management Accounting System in a Multinational Manufacturing...

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The Case of a Newly Implemented Modern Management Accounting System in a Multinational Manufacturing Company
Australasian Accounting, Business and Finance
Journal
Volume 8 | Issue 2 Article 9
The Case of a Newly Implemented Modern
Management Accounting System in a
Multinational Manufacturing Company
Daniel Watts
McGrathNicol, Australia
P.W. Senarath Yapa
RMIT University
Steven Dellaportas
RMIT University, XXXXXXXXXX
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Recommended Citation
Watts, Daniel; Yapa, P.W. Senarath; and Dellaportas, Steven, The Case of a Newly Implemented
Modern Management Accounting System in a Multinational Manufacturing Company, Australasian
Accounting, Business and Finance Journal, 8(2), 2014, XXXXXXXXXXdoi: XXXXXXXXXX/aabfj.v8i2.9
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The Case of a Newly Implemented Modern Management Accounting
System in a Multinational Manufacturing Company
Abstract
Contemporary management accounting techniques (such as TQM, BSC, JIT) are widely lauded by academia
ut the proposed relevance to business has not necessarily the view held by industry (e.g. Burns & Vaivio,
2001; Chenhall & Langfield-Smith, 1998; Innes et al., 2000. The purpose of this article is to investigate the
acquisition by a modern multi-national firm of a major IT-based management accounting program to assess
the relevance and usefulness of its functionality by identifying the type(s) of systems that are utilised and the
ationale for upgrading or modifying its system(s).
This study relies on a single case based on two in-depth semi structured interviews with accounting and
finance professionals in a multi-national manufacturing company that recently implemented a modern
management accounting system.
The findings indicate that despite demonstrating some relevance of the management accounting information,
the manufacturer deactivated components of the system that were deemed i
elevant at particular levels of the
organisation.
This paper provides evidence about the non-reliance on management accounting information in a
multinational company operating in Australia. The findings in the study imply that relevance is linked to
implementation, planning and training will help managers to better prepare themselves in setting up
contemporary management accounting systems.
Keywords
Change, IFRS, institutional, Portugal, principles, rules
This article is available in Australasian Accounting, Business and Finance Journal: http:
o.uow.edu.au/aabfj/vol8/iss2/9
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121

Technical Note
The Case of a Newly Implemented Modern
Management Accounting System in a
Multinational Manufacturing Company

Daniel Watts1, P.W. Senarath Yapa2 & Steven Dellaportas3

Abstract
Purpose Contemporary management accounting techniques (such as TQM, BSC, JIT) are
widely lauded by academia but the proposed relevance to business has not necessarily the view
held by industry (e.g. Burns & Vaivio, 2001; Chenhall & Langfield-Smith, 1998; Innes et al.,
2000. The purpose of this article is to investigate the acquisition by a modern multi-national firm
of a major IT-based management accounting program to assess the relevance and usefulness of
its functionality by identifying the type(s) of systems that are utilised and the rationale for
upgrading or modifying its system(s).
Design/methodology/approach – This study relies on a single case based on two in-depth semi
structured interviews with accounting and finance professionals in a multi-national
manufacturing company that recently implemented a modern management accounting system.
Findings – The findings indicate that despite demonstrating some relevance of the management
accounting information, the manufacturer deactivated components of the system that were
deemed i
elevant at particular levels of the organisation.
Originality/value – This paper provides evidence about the non-reliance on management
accounting information in a multinational company operating in Australia. The findings in the
study imply that relevance is linked to implementation, planning and training will help managers
to better prepare themselves in setting up contemporary management accounting systems.

Keywords: Change, IFRS, institutional, Portugal, principles, rules

JEL Code(s): M40

1 McGrathNicol, Australia
2 RMIT University
3 RMIT University, XXXXXXXXXX
AABFJ | Volume 8, no. 2, 2014

122

Introduction
Contemporary management accounting techniques such as Activity Based Costing (ABC), the
Balanced Scorecard (BSC), Just in Time (JIT), Value Chain Analysis (VCA), Total Quality
Management (TQM) are practices that have gained widespread attention in accounting,
particularly since the latter decades of the 20th century (Argyris & Kaplan, 1994; Bromwich,
1999/2000; Bromwich & Bhimani, 1994; Horngren, 1995; Kaplan, 1994; Kaplan & Norton,
1992; Otley, 1983; Scapens et al., XXXXXXXXXXWhere management accounting information has not
kept pace with uncertain environments, the relevance of management accounting has been
increasingly questioned by business unit managers (Murphy et al., 1995; Kaplan, XXXXXXXXXXThe
determination of academic research to maintain the relevance of management accounting is a
noble pursuit but it is undermined by the choices made in industry and the lack of a pure
definition for its achievement and worth (Bromwich & Bhimani, XXXXXXXXXXWith a myriad of
conventional management accounting systems and the ability to modify or specify alterations,
the type and provision of contemporary management accounting systems is an important
decision for many firms. The selection of an inappropriate system may result in a detrimental
effect on the strategic or operational functioning and positioning of the firm (Burns & Vaivio,
2001; Coad, 1999; Langfield-Smith et al., 2000; Mintzberg, 1990; Mintzberg et al., 1998;
MacDonald & Richardson, XXXXXXXXXXWhilst the benefits of contemporary management accounting
techniques are evident, successful implementation remains an important and unresolved issue
that constrains the benefits derived from new management accounting technologies. This occurs
in part because of the contention that management accounting has not developed its own persona
and remains merely a tool, rather than an essential component of the decision making process
(Loft, 1995; Granlund & Lukka, XXXXXXXXXXIndustry challenges of the ilk of globalised competition
and fluctuating macro-economic conditions may be the saviour of management accounting as
industry seeks to find any advantage, no matter how insignificant (Langfield-Smith et al., 2000).
Until the worth of management accounting can be categorically demonstrated, its value may not
live up to its potential.
The onset of globalised competition and ready access to high technology has forced
companies to change the way they operate (Langfield-Smith et al., XXXXXXXXXXIncreasing IT
investment is touted as the advantage that provides the leverage for achieving a stronger more
flexible production process to deal with persistent change and improve organisational
performance (Chenhall, 2003; Grandeet al., XXXXXXXXXXDechow et al., XXXXXXXXXXclaim that IT automates
many control functions with use friendly systems capable of adaption to low level or line
management. With the rapid development of high-end technology, efficient and instantaneous
communication, and increased competition, many firms have been forced to seek comparative
advantage to remain viable (Langfield-Smith et al., XXXXXXXXXXManagement accounting systems and
the resulting information used to assist management in its decision making process is argued to
provide a comparative advantage in a dynamic and competitive environment (Chenhall &
Langfield-Smith, XXXXXXXXXXDesigning and maintaining effective cost management systems has
ecome a fundamental task for corporations and their management accountants. IT now plays an
important role in areas that are typically the domain of management accounting. A central and
emerging theme arising from this discussion is the focus on how organisations utilise innovative
technology-based management accounting systems across the value chain to support corporate
strategy. The aim of this study is to investigate the acquisition and implementation of a major IT-
ased management accounting program with management accounting functionality by a modern
multi-national firm and to assess its relevance by seeking to identify the type(s) of systems that
Watts, Senarath Yapa & Dellaportas | Newly Implemented Modern Management Accounting System

123

are utilised at different organisational levels and the rationale behind upgrading or improving its
system(s).
The identification and analysis of how well a management accounting system has been
implemented and subsequently utilised in a multi-national firm provides a practical perspective
on how industry perceives the relevance of management accounting. The installation of
management accounting systems and the degree to which they are utilised is left up to individual
firms (Bromwich & Bhimani, XXXXXXXXXXThis study, based on a single case with semi-structured
interviews, provides deep and personal insight on the issues facing an organisation in
implementing a contemporary management accounting system, at a time where delays may mean
loss in market share or an ill-needed drop in profitability. Dechow et al., XXXXXXXXXXcontend that the
ole of information technology as a provider of information and facilitator for management
accounting is an important area for further investigation. This study examines the relevance of a
ecently implemented technology-based management accounting system. Data is sought on the
elevance of management accounting information by management in their strategic and
operational decision making processes as well as the systems utilised (or discarded) and
modified by the company. Identification of the type, level of detail and format that this
information takes, in addition to external information will assist in forming the conclusions to
this study.
The remainder of this paper is organised as follows: a review of relevant literature is
presented in the next section. This literature review outlines the arguments that call for
management accounting change and the impediments to effective implementation. This section
also highlights the research objectives of this study. Section three outlines the methodology
adopted in this study that is based on a single case with interviews as the primary method of data
collection. This section is followed by a discussion and analysis of the findings in section four
and a conclusion in section five.
Management Accounting Change
The prominence of modern management accounting emerged in the latter part of the 20th century
with the promise of radical changes in management accounting techniques (Burns &

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Sarabjeet · Accepted Answer

HI5017
HI5017
HI5017	September 20	2019	
	
Table of Contents
Introduction	3
Part 1	3
Three specific examples of the different types of management accounting methods	3
Analysis of Financial Statements	3
Financial Planning	4
Part 2	4
Evidence from the case company	4
Comparison of two different life examples	6
Conclusion relevance of MAS	7
Specific outcomes and lessons learned	8
Conclusion	11
References	12
Abstract
The management accounting system consists of the company's internal systems, which are used to assess and measure its accounting business. Typically, companies use accounting methods for example TQM, JIT, as well as ABC to check and monitor all financial transactions, like fees, revenues and sales, all payable accounts, moreover their funds (Kont and Jantson, 2011). In addition, MAS provides companies with the opportunity to generate a variety of organizational statistics that give information to interested parties and management to support in the decision-making process in the organization. Currently both the companies Company-A as well as Apple Inc. have an integrated MAS to anticipate their accounting related operations and these companies use systems based on computers and automated systems which utilized cloud-based and service-specific systems. The report; hence, highlights the results of the two articles that address the application of the MAS within manufacturing firms, which considers three main accounting management methods: TQM, ABC, as well as JIT .  
Introduction 
It is believed that the terms information systems have an increasing influence on enterprises, occupying the model field and conducting management analysis. Financial information simply contains the news from diverse fields moreover information found in some other system. Almost all the cases, this information comes from an economic database. Also resources are comparatively scarce as well as limited, so management will face decision-making problems in some cases. Good accounting data or information should be obtained to provide appropriate and accurate decisions that maximize the organization's profitability and make the best use of scarce resources. Accounting is often seen as a language utilized by all businesses. Simply put, it is simply tool which is used by commercial companies to record, easily report, and evaluates economic events and transactions that typically affect their operations (Karpova, Serikova and Tyschenko, 2019). The accountant is responsible for processing each and every financial performance papers in terms of wages, costs, capital expenditures, and each and every other obligation of owner's equity as well as sales revenue. Provides information about the relationship between the company and internal as well as external users including investors, managers, moreover others from accounting one most important characteristics of saturating an organization is the management decision-making, which indicates failure and progress in attaining the objectives as well as goals that have been set (Laureani and Antony, 2016).  
Part 1
Three specific examples of the different types of MA methods
TQM
Total quality management is an accounting method whose primary purpose is to simply set in quality awareness in all operations of an agreed organization. TQM is a management philosophy that requires a change in organizational culture. This is a management philosophy whose main purpose is to maximize the use of opportunities as well as resources in a given stable environment (Hoozze and Hansen, 2014). The TQM requires all of the organization's efforts in the establishing an enduring accounting environment and organizations can use this to continuously improve their capabilities to ensure high quality accounting is provided to an organization pointed out that management leadership support and statistical control processes ensure employee engagement and loyalty. Again, focus on planning and product design processes, quality control, and customer and supplier engagement. Therefore, the main areas of focus are organizational factors for example cultural change, change leadership, employee training as well as quality costs. According to (Hall and O'Dwyer, 2017), firms must focus on accounting rather than on products. It also emphasizes utilize of the statistical methods for continuous preparation of employees and the commitment of senior management to continuously improve quality. As a result, TQM affects creation of the systems within an organization that assists to learn, collaborate, and facilitate the execution and implementation of various management practices to make sure improved performance. This not only improves the performance of products, processes as well as services, but also motivates employees in the firm. Laureani & Antony pointed out that the execution and implementation of TQM in the organization improves performance, strategic planning, and participation by participating in the management of leadership activities (Laureani and Antony, 2016). 
2.2 J.I.T
Accelerated production and inventory refers to a wide range of systems used to direct production processes in a multi-stage manufacturing environment (CONG, 2019). This is the idea of ​​eliminating waste altogether. It simply means "what, when and how much is needed" to eliminate waste, inconsistency and unreasonable requirements, which increases productivity. By adopting the JIT system, the value of the company can be greatly increased, especially in terms of saving inventory transportation costs and reducing storage and processing costs. In addition, excessive inventory-related declines, outdated and stolen opportunities and opportunity costs will be reduced. In addition, JIT's bridge method can directly and more effectively meet customer needs, thereby directly increasing market share. The JIT system can be executed by anyone in the organization, specifically within the production line. For example, when more work of this type is required in the work unit phase, demand for new raw materials is released. This triggered the purchase activity. When these inputs are more needed in the subassembly phase, it indicates that there is a demand for production in the work unit phase. This led to manufacturing activities in the work unit phase. In addition, when the customer needs to order the finished product, a production demand signal is generated from the final assembly stage (Nwogugu, 2015). Therefore, it is important to note that final participation from procurement department to construction department and sales and marketing departments is a testament to the JIT system covering all aspects of the production process (Prakash and Chin, 2014).
2.3 Activity Based Costing
Currently, the business environment is changing due to the development of technology. The company's management accounting system must find the right accounting tool for optimal cost control. The Activity Based Costing (ABC) program has been known as the most popular management accounting tool over the last two decades and is also known as management accounting revaluation in terms of technological development (Huizey & Hansen, 2018). This is because it can provide more accurate and traceable cost information,

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