Balanced Scorecard and Management Accounting Practice

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ACC203 Management Accounting

BSC
Balanced scorecard’s
A prime perspective of the implementation of process of balanced scorecard approach is the
adoption of proper performance measures. Furthermore, the relevance of engaging middle-
management in the measurement selection is also clearly associated with the usefulness of
balanced scorecard approach. Nevertheless, departments are already aware of their key
measures of performance and prime success factors and hence, they are in a best position to
frame their own scorecard measures (Rompho, 2011). Balanced scorecard’s strategic
management and planning system has been used for industry and business, government, and
non-profit corporations throughout the world. It is very useful for business affairs like
strategy and vision of corporation to enhance external and internal communication to
supervise the performance of organizations against all objectives. The approach has been
designed in a way that can assist managers and executives to attain a balanced view of the
organizational performance (Peirson et. al, 2015). In the previous days, this approach was
only utilized for measurement of simple performance measures. However, in contrast to this,
the new system transforms a company’s strategic plan from efficient document into marching
orders for the companies daily. The measures of balanced scorecard provide the managers a
rapid but comprehensive aspect of the company’s performance and encompass both results
and procedure measures. For instance, in relation to flying an airplane, the pilot requires
descriptive information about the air speed, fuel, bearing, altitude, and other signs that can
summarize the present and expected environment (Brown, 2013). This is because dependence
on one single instrument can be risky and similarly, the complications of managing a
company require that the managers are properly able to view performance in various parts
simultaneously. This valuable information can be offered only through the adoption or
implementation of a balanced scorecard measure.
In relation to accumulation of information for attaining the usefulness of a balanced scorecard
approach, it is notable that there are four relevant perspectives. Firstly, there is a customer’s
perspective wherein the managers are bound to know if their company can address the
requirements of customers. Furthermore, they must ascertain the solution to the query how do
customers view them. Secondly, there is an internal business perspective wherein managers
must focus on the critical internal affairs of business that allows them to cater the needs of
customers (Hopper & Biu, 2016). Thirdly, there comes a learning and innovation perspective
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BSC
wherein a company’s ability to improve, innovate, and learn interconnects directly to its
value as a company. Lastly, there is a financial perspective wherein in the private sector, the
measures of balanced scorecard approach have primarily concentrated on the market share
and profits. Furthermore, for the public sector, financial measures can accommodate the
outcome-oriented measures needed by the GPRA (government performance and results act).
The psychology behind these four perspectives plays a key role in representing a balanced
view of a company and by establishing measures under each of these previously mentioned
headings and all the relevant areas of business can also be taken into consideration (Venanci,
2012). Besides, it is crucial to note that the balanced scorecard approach itself is primarily a
framework and it does not reflect what the measures must be. Nevertheless, it is a significant
matter for the people within the company to decide upon the same. Moreover, much of the
success of the balanced scorecard measure relies on how the measures are agreed and the way
they are adopted and how they are acted upon (Rompho, 2011). In relation to these four
perspectives, it is crucial to note that any company is not bound to adopt or abide by the same
(Hopper & Biu, 2016). Instead, they can freely frame or develop their own viewpoints to look
at relying on what is beneficial to the success of the organization. This sheds light on the
usefulness of such an approach because in other words, the approach assists in addressing all
these four perspectives, thereby facilitating in the attainment of maximum efficacies.
Moreover, due to these perspectives, the companies have now been deviating from the
traditional scorecard approach and framing ones that are better for their overall environment
and by relying on the ultimate objectives (Petty et. al, 2012). This has facilitated in the
allowance of assessment to come into light. In other words, the approach of balanced
scorecard has significantly evolved to offer a framework that can not only offer measurement
of performance but can also assist all the planners in recognizing what must be measured and
done on a whole. Furthermore, what must be viewed as a benchmark, the final outcomes of a
scorecard are now assessed by interpreting the information and thereafter, exploring the
options available for improvement. Moreover, evaluation or assessment is not only utilized
after the production of balanced scorecard approach is undertaken and instead, it also plays a
benevolent role in the original development of the scorecard.
Management accounting practice
In relation to management accounting practice, it is notable that the same approach has a
potential influence on the performance of companies. Besides, this approach does not have
any variations from one market or business to another and therefore, the kind of business or
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