Exploring the Concept of Loose Coupling in Strategic Management Accounting

Management
Accounting

INTRODUCTION
Management accounting is used to inspect, record and report any financial information
for decision making. They do not follow any accounting standards of any country as they
themselves design management accounting according to the company and its operations or
management. We could say that management accounting is the process of investigation,
explanation and presentation of accounting information gathered with the help of financial
accounting and cost accounting. The information which is gathered is used for making
organisational decisions. All the report will be dealing with the management accounting of Imda
Tech (UK) limited who is producing special charger for mobile telephone and other carry
gadgets for a retail outlet in the UK (Asosheh, Nalchigar and Jamporazmey, 2010). The
department managers of the company in the last senior management meeting complained about
the lack of financial information to improve decision making. So as per the instructions of line
manager a report has been produced as a part learning which will include functions and
importance of management accounting, different types of management accounting system, cost
of the charges for mobile telephone, income statements, budgeting and its aspects,
implementation of balance score card and etc. This report will contain all the information related
to management accounting of the Imda Tech Limited which will help them in making proper and
effective decisions.
TASK 1
(a) Functions of Management Accounting.
Management accounting is related to the information that is needed by the management
of the company so we can say that it is technique or process which aims at providing managers
the information related to the accounting (Tseng, 2010). We know that in today's world the duty
of management accounting is not only restricted to report the score of the company but to use the
score or numbers in influencing the decisions of the company. These can be used to extracted
any new strategy or plan related to the management of the organisation. People who are assigned
with the task of preparation of information related to accounting should posses knowledge and
certain skills because through their report all the decisions, policies and plans will be made. A
manager takes decision on the basis of the accounting information which is provided to him, it is
basically the background of the company which defines what where the company stands or what

is the performance of the firm in past financial years (Chen, Hsu, and Tzeng, 2011). Accounting
information will assist Imda Tech (UK) limited to control the working and take significant
decisions which would benefit company for a long run. It is seen that people take management
accounting same as the the financial accounting but they are different from each other. A table is
made below to differentiate between the financial accounting and management accounting.
Financial Accounting Management Accounting
Financial accounting is related to financial
information like balance sheet, income
statement, cash flow, income statement and
financial statements. These information is
provided outside the business to the financial
expert, shareholders and etc.
Management accounting deals with providing
information which is useful in maintaining the
efficiency of the management of the company.
We could say that in this the information is
provided to the internal body of the
organisation.
In this the information of all the company is
included or we could say that all the
departments of the company are analysed for
this report.
In this case only analyse or inspection of the
specific department or area is done, there may
be a particular product management accounting
is restricted by the company.
Time period is set for the financing accounting
report or a time period is considered for this.
For example, Imda Tech (UK) wants to prepare
its financial reports so they will take past
financial year and consider the growth and
development of the company (Giovannoni,
Maraghini, and Riccaboni, 2011).
Management accounting does not include or
specific any time period as they prepare reports
according to the demand and requirement of the
organisation.
It is a mandatory or compulsory for most of the
companies to extract or maintain financial
accounting.
It could be optional and but in modern era
companies also take note of it.
For the preparation of the financial accounting
information reports they accept general
accounting principles in the UK and other
policies.
Companies while making managing accounting
report develops and follows rules according top
the needs of the company (Macintosh and
Quattrone, 2010).

It is the high-level summary of the business of
the company.
It emphasis on the certain required details of the
organisation.
Whatever the information extracted from management accounting process plays a significant
role in the decision-making process of a company (Van der Stede, 2011). This will provide them
the information in relation to the performance of the Imda Tech (UK) Limited which would be a
great help for them in recognizing the performance of the specific departments. This information
can be evaluated and can be compared with the expected results. What all plans and strategies
has gone wrong which has resulted in downfall of the performance and by this the cost of the
product can be managed.
(b) Different types of management accounting systems.
There are different management accounting systems which can be used by the Imda Tech
(UK) limited to inspect or record information related to its products and service. Following are
some management according systems: -
Cost Accounting System: - Production related activities can be traced through use of
inventory perpetual system (Scapens and Bromwich, 2010). This is one of the important system
used by the organisations and five parts of the system which are an input measurement basis, an
inventory valuation method in which valuation of inventory is done, third includes accumulation
of all the cost methods, fourth one is assumption of cost flow, and in the last one capability at
certain levels of recording inventory cost flows.
Inventory Management System: - Through this numbers of the products which is to be
sold can be managed because it helps in controlling the storage, orders and what are their use in
production of the items. Any decision concerned with the quantity and storage can be taken
through inventory management system.
Job costing system: - This is a process of accumulating information related to the costs
attached with a product. The information which is extracted through this are required in order to
give cost information to a buyer or customer and this can be also a useful method for
determining the accuracy of the company's estimating system. Imda Tech limited can earn profits
by quoting the price of the charges they are producing. Job costing system gives information of
the cost related to material, labours and other.