ACC203 Management Accounting & Balanced Scorecard - Australia

This management accounting report discusses the factors contributing to the development of management accounting practices, emphasizing the role of compliance, control mechanisms, and competitive support. It evaluates the usefulness of the Balanced Scorecard method and applies these concepts to Qantas Airlines, identifying critical success factors (CSFs), key performance indicators (KPIs), and constructing a strategy map and balanced scorecard for the company. The report concludes that management accounting practices have evolved significantly due to compliance, regulatory controls, and competitive factors, with the Balanced Scorecard proving useful in improving financial performance and operational efficiency.

Management Accounting Report 1
Management Accounting Report

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Contents
Part A..........................................................................................................................................................3
Introduction.................................................................................................................................................3
Main Discussions........................................................................................................................................3
The Role of the Compliance, Control Mechanism, and Competitive Support in influencing the
Management Accounting Practices..........................................................................................................3
Factors Contributing to the Development of Management Accounting Practices....................................5
Evaluation of the Usefulness of Balance Scorecard Method in the Management Accounting Practices..6
Part B Management Accounting Practices in Qantas Airlines.....................................................................9
Task 1 Critical Success Factors and Performance Indicators for Qantas Airlines....................................9
Task 2 Strategy Map..............................................................................................................................10
Task 3 Balance Scorecard......................................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

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Part A
Introduction
Management Accounting is an important process of preparing the accurate and timely
management reports, financial statements, and auditing reports based on the statistical figures,
financial data, and accounting information. It is also defined as a process of identifying,
preparing, measuring, analyzing, interpreting, and communicating information to assist the
management in the accomplishment of the organizational goals and business objectives. The
management accounting involves management decision-making, devising performance
management planning, performance management system, feedback in the financial reporting,
and control for the formulation and implementation of an effective strategy for determining the
future growth of the firm(Sunarni, 2013).This report is prepared to identify and analyze the
factors for contributing in the development of the management accounting system and practices.
It will also emphasize the evolution of the management accounting practices resulting from the
enforcement of the regulation compliance and internal control system in the organizations.
Main Discussions
The Role of the Compliance, Control Mechanism, and Competitive Support in influencing
the Management Accounting Practices
The compliance, control, and competitive support are such factors that are responsible for
shaping the management accounting practices in the organizations. The regulatory compliance
and control factors influence the management accounting practices, like the creation of the
standardized financial statements, investigating the expense reports and inventory cost reports,
and preparation of the financial budget and accounting policies. The compliance and control set
the industry standards and statistical control measures,enforce laws and regulations derived from

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the industry standards, internal business processes or ethical guidelines, IT governance, and
quality assurance. The compliance and control mechanism assist in examining whether the
current organizational strategies and policies and the financial performance measures are
compliance with the perspectives of the economic-financial, competencies and growth, and
customer/markers perceived by the stakeholders.The regulation mechanisms, like tax regulations,
effective compliance, and quality controls are required to add the strategic value for a firm by
meeting the strategic goals and objectives. On the other side, the non-compliance or control
failures cause for the significant loss of the business, producing the depressed stock market
valuations, distracting the senior management from their tasks, and even substantial threatening
cost (McKinsey& Company, 2015).
But, nowadays the modern businesses more focus on the competitive support than the
compliance and control for achieving the business objectives and strategic goals. The effective
control and compliance provide guidelines and regulations for performing the financial
functions, management of accounting operations, and auditing standards. Todays’ auditors,
accountants, and financial expertise place more emphasis on the competitive support for
achieving the financial, strategic, operational, and management objectives. The competitive
forces drive the firm for the changes in the accounting policies, auditing standards, financial
measures and statistics through installation of new accounting software system, knowledge
management practices, and information and communication technologies.
The modern business organizations look for the competitive support for creating the competitive
advantage instead of avoiding the trap of compliance and control. The intensity of the market
competition encourages the companies for using the standardized management accounting
practices to compete with the competitors and make better decisions (Nair &Nian, 2017). The

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competitive support enforces the business firms to make changes in the internal operational
processes, financial policies, and accounting system in adapting to the external environmental
fluctuations/ uncertainties and industry dynamics.
Factors Contributing to the Development of Management Accounting Practices
Both external (market competition and environmental uncertainties) and internal factors
(organizational structure, strategy, business size, the nature of a firm, and business line)
contribute to the development of the management accounting practices. The MA practices are
influenced by the factors, like the organizational size, corporate governance, stakeholders’
expectations, qualification level and experiences of the accounting staff, the intensity of the
competitive factors, and advanced production technologies.The corporate governance affects the
evolution of the MA practices because it sets structures, legal procedures, and policies for
enforcing the laws and regulatory environment for following the effective management
accounting practices through the internal control system, auditing standards, and accounting
information system software (CIMA, 2017).
The accounting information system is a factor, responsible for the accountability of the decisions
by increasing access to the information related to the financial, operational, customers, markets,
growth, and competitors for developing the strategic planning accordingly.The factors, like the
competitive support, stakeholders’ expectations and changing clients’ preferences and demand
patterns also encourage the SMEs or large corporations to maximize the standards of the
management accounting practices. In the sequence, these factors encourage the firms to consider
or allow the knowledge management tools (decision-support system, groupware, OLAP, Data
Analytics, IoT, Documented Management System, Information Management System, and
simulation tools) and information and communication technologies (e-commerce, EDI, extranet,

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social media, intranet, and video communication applications) for increasing access to the
financial and operational performance.
The customer-oriented activities, globalization factor, the intensity of the competition, corporate
governance structure, accounting policies and techniques, quality-oriented initiatives,
organizational restructuring, information technology, and core competitive aims drive for the
changes in the management accounting practices. The skilled, knowledgeable, and qualified
accounting staffs and expertise auditors assist the management for taking better decisions on
fund management, budget, cash flow, and preparing of the financial statements(Leite, Fernandes,
&Leite, 2015).
The organization size and nature of the business industry is also an important factor for
influencing the accountancy management practices. The firm size, like SMEs, large-scale
business enterprises or MNCs require for the development of the accounting management
practices based on the business requirements and size of the businesses as well as nature of the
businesses (service industries, manufacturing, telecommunication, tourism, hospitality, foods
service or business firms).
Evaluation of the Usefulness of Balance Scorecard Method in the Management Accounting
Practices
The balance scorecard method is a performance measurement tool based on the performance
indicators and critical success factors that plays an important role for ensuring the effectiveness
of the management accounting practices. The BSC measures the financial performance of a firm
by combining the financial control measures with the non-financial control measures. This is
significant in both short-term and long-term financial goals and objectives by linking the internal
processes and business strategy of the firm with the mission, goals, and objectives. The Balance

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scorecard methodology is aimed at effective monitoring and control of the organizational
business operations. The BSC assists to provide the financial and operational performance and
relates the strategy to the planning in base with the CSFs and PI. It provides a platform for the
integration of both non-financial and financial measures, communicating the feedback of the
strategy, bond with the strategic planning and financial budgets, and increased focus on aligning
the business processes within the organization(Sadi, Vitor, &Antonio, 2010).
The BSC analyzes the firm’s financial performance from four perspectivesincluding the
financial, customers, learning and growth, and internal processes. The financial perspective is
related to maximizing the financial performance of the organization by increasing the revenues,
profits margins, smooth cash flow,and maximum stakeholders’ returns for the firm (CIMA,
2017). The learning and growth perspective is related to ensuring the long-term survival and
growth of the firm through the organizational learning culture and training and development
programs for enhancing the workforce competencies in order to attain the desired outcomes
within the organization.
Figure: Balance Scorecard Method
(Source: CIMA, 2017)

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The customer perspective is related to enhancing the customer satisfaction by satisfying their
needs, wants, and expectations through the effective customer service delivery. The internal
business process perspective is related to enhancing the effectiveness and efficiency of the
internal business processes and operations for improving the organizational production outcomes
and performance measures by reducing the operating costs, delays, defects, and manpower
efforts. The BSC could be useful in the SMEs or MNCs for clearly defining strategy,
communicating the strategy with the team members, aligning the organizational goals and
objectives with the strategy, linking the strategic components with the annual budgets and long-
term targets, aligning the strategic initiatives and conducting the periodic performance reviews
for bring improvement in the management accounting practices (Cooper, 2017).
The BSC could be useful in identifying the critical success factors (CSFs), key performance
indicators for the efficient production outcomes, creating an effective informational system, data
capture, and measurement system, and developing effective mechanisms to report to the
managers and staffs. It is useful to improve the performance of the internal outcomes and
resulting external outcomes and making better decisions based on the collected data and useful
information. The BSC could be useful for the firms in mapping strategy accordingly for adding
value to the firm and its stakeholders.

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Part B Management Accounting Practices in Qantas Airlines
Task 1 Critical Success Factors and Performance Indicators for Qantas Airlines
Slide 1
Slide 2

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Task 2 Strategy Map
Slide 3
Slide 4

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Task 3 Balance Scorecard
Slide 5

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Conclusion
The management accounting process uses the financial data and accounting information for
preparing the financial statements and management accounting records on the regular basis and
accordingly providing appropriate feedback on the accounting system efficiency and financial
performance of the company. The management accounting practices have evolved and developed
significantly to the great extent as a result of increasing influence of the compliance, regulatory
controls, and competitive factors. There are several external and internal organizational factors
that support the mechanism and processes for the development of the management accounting
practices in the service industries or business enterprises. Additionally, the balance scorecard
method justified its usefulness for supporting the management accounting practices because it
provides the performance indicators for improving the financial performance, operational
efficiency through the improvement in the internal processes, customer service operations, and
measures to the organizational growth.

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References
CIMA (2017).Balance Scorecard Method. Retrieved From:
http://www.cimaglobal.com/Documents/ImportedDocuments/cid_image_balance-
scorecard_june06.pdf.pdf.
Cooper, D. (2017). Popularizing a Management Accounting Idea: The case of Balance
Scorecard.Retrieved
From:https://www.researchgate.net/publication/315345761_Popularizing_a_Management
_Accounting_Idea_The_Case_of_the_Balanced_Scorecard.
Leite, A.A., Fernandes, P.O., &Leite, J.M. (2015). ‘Contingent factors that influence the use of
management accounting practices in the Portuguese textile and clothing sector’, The
International Journal of ManagementScience and Information Technology, pp. 59-77
McKinsey& Company (2015).Compliance and Control 2.0. Retrieved
From:https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Risk/
Working%20papers/33_Compliance_and_Control.a.
Nair S. &Nian, S.Y. (2017).Factors affecting the Management Accounting Practices in
Malaysia.Retrieved
From:https://www.researchgate.net/publication/319874494_Factors_Affecting_Managem
ent_Accounting_Practices_in_Malaysia.
Sadi, S., Vitor, R., &Antonio, R. (2010).The Contribution of the Balance Scorecard as a
Strategic Management Tool in Management Report.Retrieved From:
http://www.scielo.org.ar/pdf/vf/v13n1/v13n1a02.pdf.

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Sunarni, C. W. (2013). ‘Management Accounting Practices and the Role of Management
Accountant: Evidence from Manufacturing Companies throughout Yogyakarta,
Indonesia’, Review Journal of Management, Vol. 18(2), pp.233- 248.