Balanced Scorecard: A Tool for Performance Measurement in Management Accounting

Balanced Scorecard

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
CONCLUSION..........................................................................................................................5
REFERENCES...........................................................................................................................6

INTRODUCTION
Management accounting is the field of accounting which involves planning,
controlling, sourcing, analysing, communicating and making relevant financial and non-
financial decisions in order to generate value for the business. This essay is based on the topic
balanced scorecard and provides a useful insight into the topic and the significance of it to the
business.
MAIN BODY
In respect to the management accounting, the idea behind Balanced Scorecard (BSC)
is to focus on the performance of the business concerns through the way of measuring and
implementing the current strategy. It is helpful in not only evaluating the performance of the
organization but also the evaluates and analyses the performance of the employees based on
certain quantitative metrics which is built on the financial information along with some
qualitative factors in various significant areas (Cooper, Ezzamel and Qu, 2017). The BSC is
aimed at avoiding concentration on the shorter-term financial measures and expand to long
term as well. It basically enables the management to concentrate and understand the key areas
of the business which is needed to be accounted for.
The BSC comprises of the 4 components which are being measured and analysed for
determining the overall performance of the business. This technique was created by Kaplan
and Norton for the purpose of uniting the monetary control measures along with the non-
monetary control measures. It is used by the business organizations for successfully
implementing its mission and objectives pertaining to its business strategy and the main aim
and objectives of the BSC is to effectively monitor and control the business (Kasasbeh,
2018). Most importantly, the BSC is the administration framework which empowers the
business substance to distinguish and explain its vision and system. It results into offering
ideal criticism in regard to both inward business measures and the outer results for improving
persistently essential execution and results. But it does not take into account the strategic
issue arising from the transformational change.
The balance scorecard involves 4 interconnected components each containing
measures for a specific point of view. These areas are chosen due to the reason that the
success of the organization is highly dependent on how it performs financially which directly
associated to the organization’s internal operations and the way in which the customers
perceive and interact with the concern and the way towards which the company is heading.