ACC203 Management Accounting Major Assignment: Balance Scorecard

This report provides a comprehensive overview of management accounting principles and the balanced scorecard. It identifies internal and external factors influencing management accounting practices, including environmental unpredictability, market competition, organizational size and structure, and the qualification of accounting staff. The report also evaluates the usefulness of the balanced scorecard, highlighting its role in strategy implementation, strategic mapping, leading indicator monitoring, and linking measures to strategic goals. The analysis includes a discussion on the importance of integrating strategic measurement and project management. Desklib provides students access to solved assignments and past papers for further learning.

ACC203 Management Accounting
Major Assignment

TABLE OF CONTENTS
Part A.........................................................................................................................................3
Factors affecting Management Accounting Principles..........................................................3
Evaluating the usefulness of Balance Scorecard....................................................................4
Part B..........................................................................................................................................5
Critical success factors and Key performance indicators of Qantas......................................5
Strategic map for long term objectives of Qantas..................................................................5
Balance score card..................................................................................................................5
References..................................................................................................................................6

PART A
Factors affecting Management Accounting Principles
Management Accounting is among the descending generations of Accounting. It is not the
outcome of a sudden event, but instead a result of many effects. Management accounting is
the practice of preparing managerial accounts and reports which give precise and timely,
statistical and financial data to help in decision making. Management accounting practices
are employed by organizational executives at different levels. At the same time, it provides
managers with the independence of choice as there are no restrictions, besides the cost of data
collected as compared to benefits of better decision making (Tappura, Sievänen, Heikkilä,
Jussila & Nenonen, 2015). There are many factors which may influence management
accounting practices. These factors are both external and internal to an organization.
External Factors
A company cannot just develop to show the objectives as well as the motivations or
the requirements of its members. It should conform to the restrictions imposed by its relations
with the environment. Hence, the uncertainty of the environment has presumed implications
for the management accounting system. The external factors include the following:
1. Environmental Unpredictability – It is one of the first contingent aspects examined for
their impact on the design of management accounting practices (MAP). When apparent
environmental unpredictability is low, management can take comparatively precise forecasts
in the market. Companies which perceive a greater extent of environmental unpredictability
follow more sophisticated MAPs than companies which perceive less uncertainty (Gitman,
Juchau and Flanagan, 2015).
2. Market Competition – The rise in the intensity of competition in the marketplace is related
to high managerial usage of management accounting information. Today’s companies require
management accounting practices which can give timely, precise and pertinent data on an
extensive range of issues such as quality, product cost, consumer service, profitability and
consumer satisfaction. The MAP must be developed or modified to concentrate on a firm’s
value-added operations comparative to its rivals. Managers require to acquire experience and
knowledge pertaining to new costing systems for competing in an aggressively competitive
market (Lavia López and Hiebl, 2014).
Internal Factors
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The internal aspects affecting management accounting practices of a company pertain
to its size, structure and it’s pursued the strategy.
1. Organizational Size – A company’s size is defined as a number of workers in the
workplace. Nonetheless, this size can also be measured through paid-up capital of the
company. The size of an organization has a considerable effect on the MAP because bigger
companies have more resources to enable MAPs. Bigger companies also need more
comprehensive MAPs relative to SMEs. Size signifies the core factor of structural
contingency, which justifies and explains the usage of management control tools (Fullerton,
Kennedy and Widener, 2014).
2. Organizational Structure – The structure of an organization also demands changes in
management accounting practices. Mergers, acquisitions, centralization, decentralization,
organizational restructuring, downsizing, hierarchy, outsourcing etc. have implications for
MAP and ultimately alter the role of management accountants.
3. Qualification and Experience of Accounting Staff – Level of qualification refers to the
knowledge acquired by accountants to perform accounting tasks in a company. Level of
qualification has a direct impact on nature and sophistication level of the MAP used in a
company (Indoria, 2014). Accounting staff which is highly qualified and trained can work on
the more sophisticated MAP relative to accounting staff which has a low level of
qualification and skills.
Evaluating the usefulness of Balance Scorecard
The Balanced Scorecard (BSC) started as a concept that a singular dependence on the
financial indicators like profit and loss is too restricted a focus to gauge business
performance. The BSC reports on performance measures besides the financials to
demonstrate the efficiency of the business in management customers, processes and staff. The
BSC is alleged to be employed by 70% organizations throughout the world. The key to its
popularity and longevity resides in its ability to acclimatize and offer solutions to transitions
in the wider economy (Hoque, 2014). The below-mentioned points serve as a strong
justification for the usefulness of Balance Scorecard and why it is as significant – if not more
– than it was 20 years ago.
1. It is crucial to have a weak strategy implemented well then it is to have a great
strategy to implement poorly. Just having a Balance Scorecard will not help
companies implement the strategy. However, if the company gets a leadership buy-in
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and support while the integration process takes place and continue to develop the
system, it will help it make the explicit strategic decisions it needs in a more effectual
manner (Cooper, Ezzamel and Qu, 2017).
2. When the Balance Scorecard was first developed, it did not have much to do with
strategic mapping. But, over the years, it has turned into a unique and integral
component of the framework. A strategic map is a visual portrayal of a company’s
strategy which tells a story. This technique enables the company to see consistently,
and hence concentrate on the most crucial objectives and goals (Hansen and
Schaltegger, 2016).
3. Leading indicators, i.e. the non-economic measures on the scorecard assist the
organization to envision and forecast future performance. In simple terms, monitoring
leading indicators can help the firm react to a range of issues before they turn into
problems. For instance, the management may see sales in a specific region falling,
indicating the entry of a new rival. Monitoring BSC measures enable the management
to handle this strategic threat before it has a huge effect on the company’s profit
(Valmohammadi and Ahmadi, 2015).
4. Common sense tells that if something is not measured, it cannot be measured.
However, the act of choosing just about any KPI does not guarantee a better strategy.
In fact, measures can stimulate a bad strategy just as fast as they can stimulate a great
one. So, to remedy this, select measures which connect to one of the overall goals –
one which has a direct link with the strategy.
5. Many organizations have segregated strategic measurement and project management.
Honestly, this is a mistake. The Balance Scorecard corrects this by clearly connecting
measures to the strategic goals and linking projects or initiatives to the strategy
(Hoque, 2014). By such linking, management can obtain visibility into the steps the
company is espousing to improve its measures.
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REFERENCES
Cooper, D.J., Ezzamel, M. & Qu, S.Q., (2017). Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research, 34(2),
pp.991-1025.
Fullerton, R.R., Kennedy, F.A. & Widener, S.K., (2014). Lean manufacturing and firm
performance: The incremental contribution of lean management accounting
practices. Journal of Operations Management, 32(7-8), pp.414-428.
Gitman, L.J., Juchau, R. & Flanagan, J., (2015). Principles of managerial finance. Pearson
Higher Education AU.
Hansen, E.G. & Schaltegger, S., (2016).The sustainability balanced scorecard: A systematic
review of architectures. Journal of Business Ethics, 133(2), pp.193-221.
Hoque, Z., (2014). 20 years of studies on the balanced scorecard: trends, accomplishments,
gaps and opportunities for future research. The British accounting review, 46(1),
pp.33-59.
Indoria, D., (2014). Management Accounting Practices. Sage.
Lavia López, O. &Hiebl, M.R., (2014). Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of
Management Accounting Research, 27(1), pp.81-119.
Tappura, S., Sievänen, M., Heikkilä, J., Jussila, A. & Nenonen, N., (2015). A management
accounting perspective on safety. Safety science, 71, pp.151-159.
Valmohammadi, C. & Ahmadi, M., (2015). The impact of knowledge management practices
on organizational performance: A balanced scorecard approach. Journal of Enterprise
Information Management, 28(1), pp.131-159.
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