Advanced Management Accounting: Role, Changes, and Strategy

This report delves into the evolving role of management accounting, exploring how technological advancements, changes in management structure, and increased competition are reshaping the responsibilities of management accountants. It examines the application of strategic management accounting techniques and their impact on organizational performance, highlighting the importance of adapting to change and implementing innovative solutions. The report discusses the significance of financial control, budgeting operations, and strategic planning in achieving organizational goals, supported by the use of both internal and external data sources. It also addresses key challenges such as short-termism and sub-optimization, and emphasizes the importance of strategic management accounting in guiding decision-making, improving efficiency, and enhancing overall performance. The report also provides insights into how the role of management accountant is likely to change and the likelihood that wider adoption of strategic management accounting and application of associated techniques is likely to lead to improved organisational performance.

Advanced Management
Accounting

Table of Contents
INTRODUCTION........................................................................................................................2
How the role of management accountant is likely to change.................................................2
The likelihood that wider adoption of strategic management accounting and application of
associated techniques is likely to lead to improved organisational performance...................4
Extent to which career in management accounting role is suitable........................................7
CONCLUSION............................................................................................................................8
REFERENCES ............................................................................................................................9

INTRODUCTION
Advanced management accounting offers various tools and techniques of accounting
which can be used by the users to get better understanding of situations which are faced by
them during the course of business(Baldvinsdottir,Mitchell and Nørreklit, 2010). According to
the (CIMA), Management Accounting is "the process of identification, measurement,
accumulation, analysis, preparation, interpretation and communication of information used by
management to plan, evaluate and control within an entity and to assure appropriate use of and
accountability for its resources(Jemal and Mohsen, 2017). In this report it has been stated that
what are the roles and responsibilities of management accountant and how they likely to
change as per various organisational situations. Various concepts of strategic management
accounting and application of various techniques has been mentioned therein. Strategic
management is helpful in making decisions regarding future goals and present situations in a
way which is necessary to attain various goals and objectives which have been desired by
organisation. Concepts mentioned in this report has been supported through statements of
various authors.
How the role of management accountant is likely to change
Management accounting change is referred as the change in expectations of a
management accountant. There are some drivers which changes the expectation of
management accountant. These changes and change in role of accountant have affected both
the professional field and academic accounting literature in past few years(Burritt,Schaltegger
and Zvezdov,2011). There may be some issues which can impact over the working
environment related with this field. As now a days as stated by some authors technology has
become a major factor which changes the roles and responsibilities of various employees.
Management accountant also need to implement certain technological factors in
performance of his duties so that they can deal with their responsibilities in an efficient and
professional way. Accountant require to make his working skills flexible so that in case where
situation changes and earlier methods to solve those problems are not efficient enough then in
such case they can change their method to deal with the adverse and challenging situation.
Innovations are made in form of flexible organisational technologies. The need for change is
ever present and thus Burns & Scapens Highlight three main forces for change:

 Technology: There has been a great change in last 2 decades as Management
accounting used to be one of the few selected areas of accounting from which data can
be accessed easily but now through use of technology it is easier to access data from
other areas too. By the help of technology management accounting has broadened its
role and has become a supporter, advisor, controller and innovator.
 Management Structure: With more usage of empowerment in the businesses has
empowered management teams to have wider range of information which has increases
the role of management accounting.
 Competition: In the competitive environment threat as well as opportunity exist which
drives the change through the development and defence. It involves understanding
financial and non-financial issues over short and long term both(Sulaiman, Ramli and
Mitchell, 2016).
Management accounting deals in management of organisational funds which are used
in various projects(Cinquini and Tenucci, 2010). So its become the responsibility of a
management accountant to find the best alternative regarding finance which has less cost and
less obligations so that organisation can smoothly run their operations in a way which can
assist it to achieve predetermined targets and objectives.
As stated by the author, factors like technology, techniques and flexibility of concepts
are some factors which changes the role of cost accountant in an organisation.
The role of management accountant helps in performing the task in a better way so that they
can ensure the financial security of company as well as helps in handling all the financial
matters(DRURY, 2013). Along with this it assist in managing overall strategy so that they can
attain the success. There are so many key challenges which are faced by the business and
management accountant have to adapt the change for improving position of business.
Innovation is a advance form of operational system and flexible technology for doing
operations and make new form of business enterprise. The staff members of business entity
have to do proper developments so that they can attain success. Along with this it assist in
improving the value of developing greater versatility for the future. Fluid organisation assumes
in a different forms as they are a informal group and helps in achieving goals and objectives.
In organisation changes is necessary to gain the new experiences. They have to follow
appropriate strategy, structure, process as well as products. In doing the changes in

management accounting, they have to do responsibility accounting, budgeting, costing as well
as performance measurement. The manager of business entity have to do the changes in
strategies which they are following in attaining success(Ferreira,Moulang and Hendro, 2010).
Likewise, traditional costing system allocate the overhead to products which are proportional
to direct labour content. Firms have to change competitive strategy towards product
differentiation as it helps in increasing profit from using the activity based costing. For doing
the changes in management accounting they have to allocate proper resources which helps in
doing changes and attain goals and objectives.
The application of new MA techniques and information systems calls for additional
skill requirement from management accountants. Functions of management accounting
supports the decision making of company. The management accountant of the business entity
has a authority as well as responsibility so that they can do the proper operations. Along with
this they have to use appropriate information as well as data so that they can make a correct
business decision. Other important strategic task which include cost and financial control,
planning as well as managing budgeting operations and profit improvement(Granlund, 2011).
Management accountants assist a teams to solve intricate problems as well as improve existing
processes, which helps in improving skills to organise and analyse oral and quantitative
information, particularly in cross-functional team meetings. They have to do appropriate
reconciliation so that they can attain lead to the role of management accounting which has
changed in recent years so that they can enhance growth. They have to do fully-fledged
strategic planning which are responsible for planning, analysing, classifying and controlling
costs. Along with this they have to do proper coordination and attain best results by the
strategy formulation as well as have to do strategy implementation so that they can attain
targets(Kapferer, 2012). They have to use appropriate management tools and techniques so
that they can not face any problem. If facing then they can easily resolve the problems so that
they can reap leading position in the market.
The likelihood that wider adoption of strategic management accounting and application of
associated techniques is likely to lead to improved organisational performance
Strategic management accounting is all making strategies and formulation of various
plans so as to maintain the way to achieve goals which are decided by owners of entity. It deals
with the overall development so that the productivity and profitability can be increased. There

are a few strategic management techniques and methods which are helpful in improving
performance of an entity. It provides direction towards various objectives of entity and suggest
the best alternative technique or methods to deal with the situation(Kaplan and Atkinson,
2015). Managers can develop policies through which different available resources of firm can
be allocated on plans or projects. Two key issues that threaten the delivery of performance are:
 Short Termism: Refers to the actions which are taken by authorities to improve short-
term performance neglecting its long-term performance. This can also be said as
sacrificing the bigger picture for the present.
 Sub-Optimization: Refers to the actions which are taken by authorities which benefits
one part of the business to the damage of another part. For example relocating
operations to countries where there is no legal limitation in relation with welfare can
change the efficiency of dealing but can damage social duty(Torkelsson and Dauksz,
2014).
As per various authors, accountants develops various techniques to deal with the
organisational issues and problems so that they can make a way to get out of such situations.
They have developed a number of models and approaches which an entity in drafting of
strategies and policies. These decisions are not framed in way which can be classified in those
categories which have rigid plans. Managers and accountants frames such decisions so that if
any loop is there, then such gap can be filled up through feedbacks of there superiors and
subordinates. They work in accordance with these decisions and strategies so that they can
increase market value of cited firm. Further they can ascertain market trade off and trends with
help of research and analysis so that operations of entity can cop up with such market scenario.
Strategic management accounting have system methodology which defines the process
through which accountants can make proper strategies for effective management(Lukka and
Modell, 2010). The systematic approach to management problems assists management in
providing a better framework for analysing organisational problems and to getting access over
their solutions. System methodology includes certain steps which are mentioned below :
 Input : In this step information and data which are collected through various research
and surveys are analysed during performance management and solution for
organisational issues. Data and information which is collected through surveys must
be relevant and reliable which means these data must be related to financial and non

financial aspects of cited entity(Modell, 2010). Many authors have suggested that
surveys are best method to get data for betterment of organisational procedures so
that they can deliver best product which is desired by their customers. They can get
information regarding financial aspects such as which source of finance is to be
utilized for which project so that it can generate maximum cash outlay. As finance
and funding must be cost effective so that they can meet their other obligations.
Relevancy of information depends on the capacity of data in assisting the managerial
personnels in decision making process. If management accountant can use such data
for taking decisions regarding financial and non financial decisions then such
information can be considered as relevant. On the other hand a data is considered
reliable if it error free and the source from which it has been gathered is a valid
source. Proper control over research process is to be made by cost and management
accountant so that data can achieve required level of accuracy(Parker, 2012). Data
can be collected from two category of sources i.e. Internal and external sources and
these are mentioned below :
◦ Internal Sources : Internal sources to gather information are considered as more
reliable as compared with the other source i.e. external source of data collection.
As in this it is know that who have provided such information, time of
information or period for which such information belongs is also known. What
are the assumptions are there while selecting such data. This source of data
collection is cost effective as system for collecting data is already exist in
organisational structure. Internal sources of data collection are considered as less
effective as its scope is narrow.
◦ External Sources : External sources of data collection are less reliable as they are
outside the organisational structure. But they are more reliable as they have a
wider scope to collect data in comparison with internal sources. But its time
consuming as well as it is not economical.
 Process : A process should be formed through which cost accountant can improve
their productivity and accounting management. A team is formed in this steps which
assist accountant through its opinion and expertise(Shah,Malik and Malik, 2011).
Various tools has been advised with the help of such tools accountant can initiate

certain steps which provide better solutions. Further through such process a control
can be made over various function to ensure proper results.
 Output : Output is the result of various processes which are running inside an entity.
Mostly when there are several processes inside a firm then output of one process is
input for second process. A formal reporting system is implemented in this step
through which narrative view can made over the whole system and to take decision
over distribution strategy.
Performance management :
It is a method through which management team of cited entity can attain its objectives
and they can fulfil their responsibilities(Vaivio and Sirén, 2010). Further they can fulfil the
desires of stakeholders. This process includes certain elements like :
 operational decision and decision related with strategic process.
 It also focuses on ability of management and their performance.
 It also deals in controlling the system.
 Control can be related with acquiring feedback so as to conduct changes which are
required.
 Control can also relates with feed forward which means comparison of planned
performance along with forecast. Which is organised so that operations can be
corrected out before it fails.
Extent to which career in management accounting role is suitable
Management accounting provides a wide scope to personnels. As a person can learn
various techniques and methods to deal with financial problems as well as he can learn about
how to deal with non financial issues(Van Helden and Northcott, 2010). Better mathematical
knowledge and good computer operating skills are required to handle job of management
accountant. Other than this a sound knowledge of cost accounting and regular accounting is
necessary so as to maintain the financial data of any entity. Management accounting is the
combination of both cost accounting and financial accounting so its scope is wide and as a
career point of view, it has a good growth in terms of numbers and in terms knowledge both.
Going through this role, in this domain a candidate can have vast knowledge of both cost and
finances of the company. Management accountant advice to the senior level managerial
personnels in financial and other business related operations. A management accountant

performs a series of task to ensure financial position of cited entity in a good condition. As
high responsibilities provides high level of technical knowledge. There are lots of
opportunities a person can get as a cost accountant or management accountant. They are
considered as the key elements of the organisational structure which decides the way through
which organisation can proceed towards their objectives and goals(Ward, 2012). While
working in an entity as a cost and management accountant a person can learn about :
 Practical approach to cost accounting and its techniques.
 Financial planning.
 Managerial skills
These types of technical knowledge can provide better skills to deal with various
issues. So that they can handle various organisational issues and problem which can impart the
growth of entity. A management accountant can perform many task in any firm such as :
 Budgeting
 Taxation and its effect over financial structure of entity
 Management of assets
 Strategic planning
A cost accountant or management accountant can work as a staff accountant, internal
auditor and accountant for affairs related with taxation. There are a lot of opportunities for a
person who is working in department of management accounting.
CONCLUSION
In the above mentioned report as per the various statements given by authors and
analysis of various concepts propounded by them it can be ascertained that how role of a
management accountant in a firm can changes. Further how important is his role in any
organisation can be ascertained through this report. A person who seeking for opportunities
and self development should opt for career as a cost and management accountant. This report
also showcases the adaptation of strategic management accounting and its techniques in
various entities.

REFERENCES
Books and Journals
Baldvinsdottir, G., Mitchell, F. and Nørreklit, H., 2010. Issues in the relationship between
theory and practice in management accounting. Management Accounting Research.
21(2). pp.79-82.
Burritt, R. L., Schaltegger, S. and Zvezdov, D., 2011. Carbon management accounting:
explaining practice in leading German companies. Australian Accounting Review. 21(1).
pp.80-98.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?. Journal of Accounting & organizational change. 6(2). pp.228-259.
DRURY, C. M., 2013. Management and cost accounting. Springer.
Ferreira, A., Moulang, C. and Hendro, B., 2010. Environmental management accounting and
innovation: an exploratory analysis. Accounting, Auditing & Accountability Journal.
23(7). pp.920-948.
Granlund, M., 2011. Extending AIS research to management accounting and control issues: A
research note. International Journal of Accounting Information Systems. 12(1). pp.3-19.
Jemal, A.D.A. and Mohsen, A.M.A., 2017. The effect of disclosing intellectual capital on the
quality of accounting information. Journal of Humanity Sciences, 21(1), pp.447-431.
Kapferer, J. N., 2012. The new strategic brand management: Advanced insights and strategic
thinking. Kogan page publishers.
Kaplan, R. S. and Atkinson, A. A., 2015. Advanced management accounting. PHI Learning.
Lukka, K. and Modell, S., 2010. Validation in interpretive management accounting research.
Accounting, Organizations and Society. 35(4). pp.462-477.
Modell, S., 2010. Bridging the paradigm divide in management accounting research: The role
of mixed methods approaches. Management Accounting Research. 21(2). pp.124-129.
Parker, L. D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp.54-70.

Shah, H., Malik, A. and Malik, M. S., 2011. Strategic Management Accounting-A Messiah For
Management Accounting?. Australian Journal of Business and Management Research.
1(4). p.1.
Sulaiman, S., Ramli, A. and Mitchell, F., 2016. What factors drive change in management
accounting in Malaysian organisations?. Malaysian Accounting Review, 7(1).
Torkelsson, O. and Dauksz, M., 2014. DFMA: A Methodology Study and Method
Development.
Vaivio, J. and Sirén, A., 2010. Insights into method triangulation and “paradigms” in
interpretive management accounting research. Management Accounting Research. 21(2).
pp.130-141.
Van Helden, G. J. and Northcott, D., 2010. Examining the practical relevance of public sector
management accounting research. Financial Accountability & Management. 26(2).
pp.213-240.
Ward, K., 2012. Strategic management accounting. Routledge.'
Online
Role of the Management Accountant. 2017. [online]. Available
Through :<http://www.allbusinessschools.com/accounting/common-questions/role-of-
the-management-accountant/>. [Accessed on 10th March 2017.]