Relevancy of Management Accounting System in Contemporary Organizations

MAS
Module Number

Table of Contents
Introduction.............................................................................................................................1
1. Description of Specific management accounting tools identified from the case specified in given
Journal.....................................................................................................................................1
2. Relevance of Management accounting system to “contemporary organisations” as evidence from
the case of Company-A studied in provided Journal (Journal 1 hereafter)......................................2
Comparison of the findings of Journal 1 with another selected journal (Journal 2 hereafter) and
identification of similarities or differences..............................................................................3
3. Whether MAS is relevant or not in today’s uncertain and competitive business environment......4
4. Outcomes or lessons learned from each of the two articles’ research findings which are useful for
the Australian Management Accountants....................................................................................5
Conclusion.............................................................................................................................7
References.............................................................................................................................8

Introduction
With the ramified changes, every organization needs to adapt its business process to
strengthen the overall outcomes. This report has revealed the key aspects of the implication of the
MAS accounting system in the business process and its relevancy in context with the complexities
and adaption. There are two articles have been selected to assess the relevancy of the MAS in the
business process. In addition to this, analysis of the two article has been assessed and similarities
and differences of these articles in context with the MAS has been assessed. After that, organization
uses the management accounting system to manage the several tasks which cover the productivity
and quality improvement, financial planning, cost reduction, stakeholder management and others
has been assessed. In the end, lessons and outcomes learned from the articles have been assessed.
1. Description of Specific management accounting tools identified from the case specified in
given Journal
1. Balanced Scorecard: It is a strategic approach of management accounting system instead of a
simple system of accounting. This management technique provides aid to the organizations to focus
on their determined goals and strategies. In every organization, the duties and responsibilities are
assigned to the departments according to the order of their priorities, services, product and projects.
A combination of team efforts is made by all these departments to achieve the goals of organization.
Apart from that this technique also helps to find out and monitor the current performance of the
organization. The continuous monitoring of performance level of organization helps to improve the
strategies and policies (Lai,. and Cheng, 2016).
2. Just-in-time Inventory Technique: The cost reduction of operations is a major task to perform for
the management of an organization. The accounting technique called just-in-time inventory helps
the management to set an effective cost of operations. In this technique, a very small amount of
inventory is kept by the company in its warehouse. The company marked an appropriate level of
inventory to be stored as per the current sales trends in the market. The business entity purchases
the inventory on the receipt of any order from its customers. This technique reduces the requirement
of big warehouses and stores for the company to hold the larger amount of inventory. The most
significant thing in this technique is the selection of perfect supplier who can deliver the inventory
on short notice and can provide the adequate quality of goods on right time (Maas, Schaltegger, and
Crutzen, 2016).
3. Activity Based Costing: The activity based costing is an example of developed costing techniques.
Before the introduction of this technique, the overhead cost has been allotted irregularly on different
levels of production. This activity focuses on the more allotment of the overheads in the major

activity areas and lesser to the departments where irregular activities are performed. While
executing this approach, it is required to identify the cost drivers and to assign them proportionally
to several kinds of overhead costs. Hence, this technique helps to identify the areas of activities and
assigns the cost or overheads according to the actual consumption by each department of activities.
For example, electricity consumption by every department will be considered as the overall power
overhead cost and it will be assigned to the different department as per their made consumption
(Kaplan, and Atkinson, 2015).
2. Relevance of Management accounting system to “contemporary organisations” as evidence
from the case of Company-A studied in provided Journal (Journal 1 hereafter)
In the current economic era, an enhanced use of the management accounting system can be seen.
Almost every company has its own developed system of management accounting which helps the
organization to get the one click based information regarding several functional departments,
product range, business performance level and geographical locations and many other data from
different time frame. This system enables the management to maintain a high amount of
information in easy manner. Also due to the zero amount of human error, the data gathered by this
system is more reliable for the management instead of the data collected by human (Osunsanwo,
and Dada, 2019).
However, the relevancy of the details discussed above of the management accounting system is
different for each organization and its management. In this case study, the management of Company
A has accepted the SAP R/3 for their MAS. The functionality of this company is not so large and
complex as offered in the SAP R/3 and the management of the company has also been split at
several stages of authority. At every different level of authority, the management requires different
information. Hence the relevancy of the management accounting system has to be specifically
described for each group of management (Steiss, 2019).
Company-A has operational management with a group of quite simple authorities and operational
duties. This management requires very basic information to make some short term decisions. While
deciding for the production capabilities of the company, they can demands for the past trends
related to the production growth of the company and the data of produced quantity. The decisions
regarding the production are totally based on the in-house information of production and the
management is satisfied with the provided data by SAP R/3. The SAP R/3 is a system which is
mainly works on the internal information hence it is most suitable system as per the demands of the
management of Company-A (Watts, Yapa. and Dellaportas, 2014).