Managerial Accounting Practices in Australian Firms

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Managerial Accounting
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Abstract
The current assignment deals with various aspects of managerial accounting and
implementation of modern system of management accounting. The study has been
conducted on the basis of two selected journals relevant to the topic. After a brief
introduction, 3 examples of various types of management accounting methods have
been identified which has been followed by relevance of Management Accounting
System (MAS) to contemporary Australian organizations. A detailed comparison has
been made with another journal related to quality audit. However some specific
outcomes have been discussed in the respect of two journals like Relevance of the
system to needs of decisions and Quality standards in Audit Practices and others.
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Table of contents
Introduction...................................................................................................................... 4
Question 1: Identifying three examples of management accounting in the case scenario
......................................................................................................................................... 5
Question 2: Relevance of MAS........................................................................................6
Question 3: Relevance of MAS in a competitive business environment........................10
Question 4 Specific outcomes obtained from the two articles........................................11
4.1. Relevance of the system to needs of decisions......................................................12
4.2. Operational and tactical decision making................................................................12
4.3. Quality standards in Audit Practices........................................................................12
4.4. Audit Quality Control System..................................................................................13
Conclusion..................................................................................................................... 14
Reference list................................................................................................................. 15
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Introduction
Managerial accounting is one of the most important processes required for the business
firm to represent the information of financial technology. It can also be used to
summarize the records and analyzing the data, identifying and keeping the necessary
records of the company, which is internally used by the management. These statements
are generally used for decision-making purposes and also for planning the business
management mechanism. It also helps the business organization to manage the cash
and help the management to plan for the finance of the required operations. It also
focuses on the future planning of the company and determines the decisions, which are
to be rectified in the business organization.
Question 1: Identifying three examples of management accounting in the case
scenario
The three techniques which have been used in the managerial accounting techniques in
the business firm are as follows
1) TQM: TQM stands for the total quality management which is required for the
structural approach for the overall management of the organization. It focuses to
improve the quality of the output organizations which include the services and the goods
through better improvement from the practices internally which are being helped by the
organizations (Honggowati et al. 2017, p.23). TQM has been used by the organization
from the late 20th century for the widespread of the company. It has been used by the
manufacturing company mentioned in the case scenario for internally and externally
benchmarking. For example, this technique has been used for ensuring timely deliveries
to the customers and also receiving the raw materials from the suppliers.
2)BSC: BSC stands for the balanced scorecard which is used for the strategic
management and planning tool used extensively for the business management of the
organization for a global basis(Otley, 2016, p.45). BSC enables the whole system of
business management to focus on the entities, streamlining the activity of the business.
It also increases the standard of communication and improves certain strategies of
business operations. In this case, company BSC has been used for fundamentally
simplifying the manufacturing process (Bobryshev et al. 2015, p.511). However, the
process was considered impractical to some extent compared to TQM and JIT still it
had modified some specific alterations that had arisen due to uncertain accounting
environment.
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3)JIT: JIT stands for just in time a system for the management of the inventory, which is
used to keep the stock in storage and to manage the stock where it is being required for
the business organization. It is also being involved in receiving the goods, which are
being sent by the suppliers. It can also be used for giving the products back to them
when the goods are being needed by them. It also can be seen as beneficial for the
manufacturing firm because long-run benefits like savings of the cost, lowering down
cost production rate, and satisfying customers have been achieved by this firm. The
time and the expenses which are required for the firm have also been incorporated
effectively in the manufacturing company with the sheer assistance of JIT.
Question 2: Relevance of MAS
i) Evidence of case company
The duties of the management accounting system (MAS) are to take the decisions of
the organization on the right basis so that it can be quite effective for the organization in
terms of the business environment (Malmi, 2016, p.31). Therefore, the management of
the accounting works becomes related to the accounting arts and the management at
the same time. There are several benefits observed in the case study organization that
has taken place due to effective usage of MAS and the evidence is;
Proper planning: A good of planning has been observed in the current year that could
further be very helpful for scheduling the activities of the firm in the upcoming year of
the business (Hopper and Bui, 2016, p.12). All the planning segments for the short term
and the long term year are to be very helpful to the business organization to carry
forward the ventures. The proper planning of budget and the proper resource allocation
has also been achieved with the help of MAS in the stated manufacturing firm.
Controlling managerial outputs: Controls are very important for the firm to carry
forward the business in the current scheme as they have been planned. With the help of
MAS, the manufacturing firm has predetermined and compared the establishment of the
certifications to their several liability centers. Management accounting's controlling
segment thus can prove to be very effective in large scale organizations (Adler, 2018,
p.41). Moreover, rights for delegation have also become quite significant in the
manufacturing entity as it completely depends upon the methods of convection.
Ensuring profit maximization: According to the above case study, the main purpose
of the business enterprise has been observed to earn a huge amount of profit after the
ending of the respective financial year (Pavlatos and Kostakis, 2018, p.455). The
decisions, which have been taken on the part of the budget in the organizations, are
checked according to the new prospects of the company. To allow or to achieve the
desired goals and the results which have been set up by the organization MAS has
been quite fruitful (Cescon et al. 2019, p.605). It has helped to reduce the associated
errors in the project tasks and thus the entity has been observed as earning huge
amounts of profit margins.
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Ensuring the safety of trading cycles and seasonal cycles:
The management accounting budget of the system keeps changing its irregularities with
the conduct of the operations of the business organizations. Business cycles are
important for the demands of consumers (Chenhall and Moers, 2015, p.4). The level of
underemployment and unemployment means that the customers have a very low
amount of the budget to spend on the services and goods, which will evaluate the
reduction of the demand of the consumers.
As per the case study, the decision making required is operational. This is the
quantitative approach to solve the desired problems of the organization with the help of
the mathematical number and its techniques. It is very helpful for the uncertain condition
of business decisions and when there is a conflict between the two important objectives
of the business firm (Morden, T., 2016, p.21).
ii) Comparing the findings of both articles
Management of business helps with the activities which are being provided to the
customers for the administration of finance and the supervision of the pertaining
activities. Business management has nowadays taken a huge step ahead for the
organizational goals of the business firm. The business processes are being set by the
managers to ascertain the desired results for the growth of the business. The business
opportunities of the firm will be creating a huge network for business management.
Knowing practically will be a plus point for the firm to settle the disputes of the
customers. In many of the times, conflicts take place between the customers and the
business management executive. MAS can also prove that teamwork is another one of
the main points of the business organization. According to the first case study it has
been seen that if there is no proper coordination achieved It is one of the most important
aspects of the accounting of the management firm. Mainly it evaluates the units and
concludes the related financial performances. Mostly the departments of reducing the
least amount of employee’s number. Many of the related branches of the business
enterprise are being to be highly profitable for increasing the total amount of profitability
of the business.
While preparing the budget report it can't remain as to the expected point it merely
changes of position from becoming more or less from the above-estimated budget.
The productions of the products are used to be the most important segment of the
business enterprise. They are the accounting or the managers who use the top depict
the cost and the product selection of the business environment (Bromile et al. 2015,
p.265). They evaluate the real cost of the particular product and comment that weather
it is suitable for the business organization or not. Thus it has been the most deployed
part of the business enterprises to break the business in one general decision.
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The employees must have to pay attention to their customers. They use to give the
charge to a particular person of the business enterprise (Tappura et al. 2015, p.151).
The feature of the corresponding buyer should be identified by the gender or the age,
the location where he used to live, the particular income level of the consumer, the
background of the academic culture and the values of the personal.
There are several kinds of technological trends, economic downturns and other macro-
environmental concerns observed in the business environment nowadays. It has given
birth to numerous uncertainties in the competitive business framework. Managing the
accounting system nowadays is making a lot of improvements in terms of the business
environment of the market. The major segments of the business enterprises that have
been benefited by MAS are;
Relevance towards the analysis of the cost: The important part of the accounting of
the management is to review the analysis of the cost for future activities. It has to be the
best tactic to improve profit and increasing the shareholders of the firm.
Scenario: The importance of tactical and strategic decision making has been performed
here in the second case study. The tactical decision-making activities show the
business decisions of a firm, which share to take place in the middle term of the
business enterprise in between the one year or six months. The tactical decisions are to
be made within certain limitations of the supply of strategic and the over searching of
the decisions of the supply chain (Sedevich, 2018, p.1302). Hence, the tactical
decisions are being planned for executing and accomplishing the level of strategic
decisions of the firm. Tactical decisions to be ascertained for the pricing of the
competitive market share or the service of the customer to the related price these are
posed as the major advantages of the firm that can be very useful for the audit firm to
carry forward its business ventures (Chen et al. 2015, p.19). It can also help the audit
firm to schedule and distributing the management of the fleet, the logistics form of the
contracts and the transportation of the middle term for the outsourcing to the third party
of the business enterprise Material for the requirement of the proper planning and the
productions.
Decision making of the strategy is the process for the growth of the long term and the
process for the longer validity period of the time. It is required for the auditing company
for the pictures of the biggest aim to clarify the company and the sources of the
available resources to be made for the company's benefit. Strategic decision making
can be helpful for the organization for planning the shorter term plan for the biggest
mission to be achieved (Henri et al. 2016, p.269). The internal part of the audit has been
developing the format for the longer part of the period. The goals and the decision
regarding the company which has been set by the managers have consulted and the
collateral form of the operation guide for the management. The internal audit report and
the planning, programming of the assignment have been internal reviews of the audit
system around the team members of the business firm then it would be very difficult for
the team to perform the specific task. MAS have been effective for the manufacturing
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firm in terms of proceeding with its global trends, international events, stakeholder
concerns, and other macro and micro-economic trends.
According to the second case study, it has been found that this business showcases
some different findings in terms of MAS as compared to the first case scenario. The
importance of tactical and strategic decision making has been performed here in the
second case study. The tactical decision-making activities show the business decisions
of a firm, which share to take place in the middle term of the business enterprise in
between the one year or six months. The tactical decisions are to be made within
certain limitations of the supply of strategic and the over searching of the decisions of
the supply chain (Sedevich, 2018, p.1302). Hence, the tactical decisions are being
planned for executing and accomplishing the level of strategic decisions of the firm.
Tactical decisions to be ascertained for the pricing of the competitive market share or
the service of the customer to the related price these are posed as the major
advantages of the firm that can be very useful for the audit firm to carry forward its
business ventures (Chen et al. 2015, p.19). It can also help the audit firm to schedule
and distributing the management of the fleet, the logistics form of the contracts and the
transportation of the middle term for the outsourcing to the third party of the business
enterprise Material for the requirement of the proper planning and the productions.
Decision making of the strategy is the process for the growth of the long term and the
process for the longer validity period of the time. It is required for the auditing company
for the pictures of the biggest aim to clarify the company and the sources of the
available resources to be made for the company's benefit. Strategic decision making
can be helpful for the organization for planning the shorter term plan for the biggest
mission to be achieved (Henri et al. 2016, p.269). The internal part of the audit has been
developing the format for the longer part of the period. The goals and the decision
regarding the company which has been set by the managers have consulted and the
collateral form of the operation guide for the management. The internal audit report and
the planning, programming of the assignment have been internal reviews of the audit
system.
Question 3: Relevance of MAS in a competitive business environment
There are several kinds of technological trends, economic downturns and other macro-
environmental concerns observed in the business environment nowadays. It has given
birth to numerous uncertainties in the competitive business framework. Managing the
accounting system nowadays is making a lot of improvements in terms of the business
environment of the market. The major segments of the business enterprises that have
been benefited by MAS are;
Relevance towards the analysis of the cost: The important part of the accounting of the
management is to review the analysis of the cost for future activities. It has to be the
best tactic to improve profit and increasing the shareholders of the firm.
The targeting of the audience:
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The employees must have to pay attention to their customers. They use to give the
charge to a particular person of the business enterprise (Tappura et al. 2015, p.151).
The feature of the corresponding buyer should be identified by the gender or the age,
the location where he used to live, the particular income level of the consumer, the
background of the academic culture and the values of the personal.
Buy or to make the evaluations of the goods:
The productions of the products are used to be the most important segment of the
business enterprise. They are the accounting or the managers who use the top depict
the cost and the product selection of the business environment (Bromile et al. 2015,
p.265). They evaluate the real cost of the particular product and comment that weather
it is suitable for the business organization or not. Thus it has been the most deployed
part of the business enterprises to break the business in one general decision.
Budgets to be defined:
While preparing the budget report it can't remain as to the expected point it merely
changes of position from becoming more or less from the above-estimated budget.
Controlling:
It is one of the most important aspects of the accounting of the management firm.
Mainly it evaluates the units and concludes the related financial performances. Mostly
the departments of reducing the least amount of employee’s number. Many of the
related branches of the business enterprise are being to be highly profitable for
increasing the total amount of profitability of the business.
Question 4: Specific outcomes obtained from the two articles
A number of techniques that are included in the Contemporary management accounting
are: ABC (Activity Based Costing), Balance Scorecard (BSC), VCA (Value Chain
Analysis). From the viewpoint of Otley, (2016, p.51), the relevance of the information
related to management accounting is being questioned increasingly by the managers of
business unit.
The identification as well as analysis of the ways by which the MAS has been utilized an
implemented in the multi-national firms of Australia. This provides a through practical
perspective on the processes by which the industry would perceive the essential
relevance of the management accounting.
As stated by Uyar and Kuzey, (2016, p.172), technologies have enormous significance
and significance on the MAS in firms of Australia. IT plays a major role in as number of
aspects like provision of wide range of information in the management accounting. In
addition to that, it can also be regarded as prime facilitator in the processes of
management accounting which occupies an important area of investigation.
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Usenko et al. (2018, p.63), have said that, a number of contemporary tools are used for
managing accounting related operations in the Australian firms. These techniques and
tools have been found to be efficient in assisting the organizations in order to achieve
practices of effective cost management accounting procedures for evenly distribution of
necessary resources to activities. Additionally it has been found that, the 51% of the
firms in Australia have implemented these techniques and tools, 27% of the
organizations have become able to sustain the implementations for a time span, greater
than 4.5 years.
On a collective note, the contemporary techniques of management accounting, like
ABC, TQM and BSC are widely used by several sectors in Australia ( Shea et al. 2018,
p.59). However the acceptance level stays considerably lower than the expected level.
Several research based evidences prove that successful and effective implementation
of the ABC technique do not depend upon the technical aspects alone, the behavioural,
contextual and organizational factors are also incorporated in this aspect (Quattrone,
2016). Effective implementation of these tools is monitored by these factors.
In addition to that it has also been found that, the contingent factors (technology,
competition, organizational strategy) and the institutional factors like (consultants and
regulations) are found to usher influence on the Australian firms. The major purpose
behind these influential matters is to apply the new processes of management
accounting, for example ABC (Malina, 2017).
However, it can be said that a system of quality management would ensure appropriate
workflow, better delivery of service (Lu et al. 2016, p.76). The competence of the audit
team sin Australian companies is highly crucial in judging their quality of the audit works
The findings obtained from the, study of Watts et al. (2014, p.129), is presented below:
4.1. Relevance of the system to needs of decisions
In order to describe the utilization of the information in the context of management
accounting, it can be revealed that, each and every level of the management of a
company can utilize the system in an efficacious way in separate degrees to perform
the managerial tasks. It can be commented that the lower level managers uses MAS
and a large portion of its functionality to make relevant operational decisions.
Middle management actually relies upon the information in wide range of formats and
also on some additional information for making the tactical decisions. Whereas the team
of senior management uses MAS sparingly and depend or rely upon considerable
amounts of the external data or information in order to formulate several strategic
decisions. This variable utilization of the MAS presents a high degree of relevance;
however a significant part of it is actually focused at level of making tactical decisions
and also at the operational level.
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4.2. Operational and tactical decision making
At the operational level, the Australian firms set KPIs (Key Performance Indicators), for
each of the production facilities. These KPIs are fundamentally generated by historical
precedent and are found to be based on external and internal benchmarking. It relies on
the specific plan, capabilities as well as mechanisms of supply chain. Managers at
operational level, have very little control over a number of variances. Since the
decisions at operational level are based upon the accounting information from the MAS,
their relevance is considered to be absolute.
On the other hand it has been found that the, managers who are involved in the process
of making tactical decisions, assist in generating KPI for the firms. Tall these decisions
are partly strategic and partly operational and emphasizes on a timeframe of 6 to 12
months. Within this framework, the tactical managers use accounting information as
primary source to make effective decisions.
The findings obtained from the, study of Al Ghani, (2019, p.7), is presented below:
4.3. Quality standards in Audit Practices
Quality management would ensure appropriate workflow, better delivery of service. The
competence of the audit team sin Australian companies is highly crucial in judging their
quality of the audit works. The works of the auditors have to be highly regulated always.
The public audit companies work using a number of auditing procedures, whereas the
private practitioners also have to adhere to the relevant quality standards of Australia.
4.4. Audit Quality Control System
In order to achieve total quality audit, the Australian companies have to control the
measures that are aimed at the improvement of the effective outcomes in the audit
processes. At the time of conducting the audit works, systems of quality control forms
one of the most essential parts in the Auditing process. Evaluating, the practices of
auditing and measuring the authenticity are basically aimed towards reduction of errors.
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Figure 2: Relevant findings
(Source: Al Ghani, 2019, p.7)
Conclsion
A Various options of management accounting are available to the Australian firms,
inappropriate selection of which may cause fatal effect on the operational positioning
and strategic functioning. Utilization of comprehensive MAS is highly beneficial for the
organizations in Australia.
Installation of MAS and their utilization degree can be is basically left up-to the
individual companies in Australia. In order to conclude the study above, it can be stated
that, audit managers are entirely responsible for promotion of the processes of total
quality audit. Moreover this process also improves the financial performances of the
Australian companies.
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QualitystandardsinAuditPracticesAuditQualityControlSystem