Critical Analysis of Managerial Accounting Systems for Decision Making

This report critically assesses the function of Management Accounting Systems (MAS) and accounting information provision, drawing from a journal article to identify and analyze various management accounting techniques like Total Quality Management (TQM), Just in Time (JIT), and Balance Scorecard (BSC). It evaluates the significance of MAS in a producing organization, comparing its importance with another journal article and determining its relevance in a competitive business environment. The report also examines the practical implications of MAS for management accountants, considering real-life company examples and the application of techniques such as information technology integration and the use of Activity-Based Costing (ABC) on production performance and managerial decision-making. The analysis includes the evaluation of financial and non-financial measures, and the impact of MAS on strategic planning and operational decision-making at different management levels.

Running head: MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Answer to question 1:.................................................................................................................2
Identifying definite examples of different kinds of management accounting techniques:........2
Answer to question 2:.................................................................................................................4
Evaluating the use of management accounting system on the modern organization:................4
Recognizing the evidence from the concerned company:..........................................................4
Distinguishing the evidences from another practical life company:..........................................6
Answer to question 3:.................................................................................................................8
Determining the application of MAS in vigorous and competitive business orientation:.........8
Answer to question 4:.................................................................................................................9
Determining the four suitable outcomes for the management accountants:..............................9
Conclusion:..............................................................................................................................10
References................................................................................................................................12

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Introduction:
Considering the journal article, this report has been equipped to critically asses the
function of Management Accounting System (MAS) and the accounting information
provision for the company case. Referring to the journal article, a clear synopsis of the case
has been done to identify examples of certain specific yet different sort of management
accounting techniques and significance of such accounting system in the mentioned
producing organization (Bebbington and O’DWYER 2014). A comparison about the
importance of MAS has been performed between the information gathered from the journal
article and the article chosen from the journal of management accounting research.
Additionally, this paper determines the relevance of MAS in an ambiguous and competitive
business atmosphere. Moreover, this paper gathers information of research from the synopsis
of the two journal articles and their practicality to the management accountant.
Discussion:
Answer to question 1:
Identifying definite examples of different kinds of management accounting techniques:
The provided case discusses about the new age technique of management accounting.
Some of the techniques are Total Quality Management (TQM), Just in Time (JIT) and
Balance Scorecard (BSC). A large scale of attention has been provided to TQM and it is
widely accepted and adopted by the organization. Moreover, in the recent years this
technique has become extensively popular among the industries. However, these techniques
are broadly used by the industry with the level of acceptance relatively lower than the
expected one. It has been observed that the case company has merged and improved the
components of JIT and TQM to make them suitable for their operations. On the other hand,
application of BSC is sought to be unnecessary because of the simplicity of the

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manufacturing process (Valmohammadi and Ahmadi 2015). To be precise, the BSC model is
essentially unrealistic and unfeasible as they are applied prudently with some scorecards
(Akkermans and Van Oorschot 2018). The modern era of accounting tool like the BSC helps
the organizations to allocate resources for operations by applying the effective cost of
management accounting. BCS tends to bring a wide range of paybacks for the organization.
This fact is addressed, as the benefits of BCS is attributable from improved decision-making.
This is a result of collection of accurate cost data and elimination of misinterpretations.
The manufacturing system where the product is processed only after the ordering of
the product is referred to as Just in Time. For a successful manufacturing process, the
companies control the dynamics of Just in Time that has the average capacity of producing
with the least quantity of waste (Javadian and Talari 2013). In the market place, it is a system
of processing that is endowed with capacity and strength of competitiveness of the
organization only when the production process is efficient and the product quality is
improvised.
To meet the aims of organizations and customers demand, TQM is implemented in
the production companies that helps in integrating all the purposes of an organization. TQM
enables the employees to increase their efficiency by involving in the improvement of
product and services. This is a result of reduction in cost that is possible because of waste
management and growth in business. With the implementation of TQM, quality control
becomes an essential part of the process of production as the divergence from quality s is
analyzed by the quantitative measurement (Sallis 2014). However, for implementing TQM
there is no standard method.
Contrary to this, balance scorecard is a management system and strategic planning
that the organizations uses to increase communication, what they have completed is the

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technique of performance measurement. Various surveys concludes that larger companies
tends to implement BSC more than the smaller ones. BSC includes performance of both
financial and non-financial measures (Hoque 2014). Financial measures are classified as
profitability and sales. Whereas, product or service quality and consumer satisfaction fall
under the category of non-financial measures. Considering the implementation of
management accounting system like the BSC, JIT and TQM, operation is different from the
original intention. Moreover, in the article the case company was observed from the standard
form of MAS, which was complicated for the fulfillment of the company’s needs. It was
found that the technique of MAS is unsuitable for the company’s environment.
Answer to question 2:
Evaluating the use of management accounting system on the modern organization:
Recognizing the evidence from the concerned company:
The concerned article presents a complete report on the significance and application
of the functionality of the management accounting system by the organization of this modern
age. The failure of the management accounting information has induced the business unit
managers to question the relevance of MAS technique because of inability to maintain a pace
with uncertain environment (Fullerton Kennedy and Widener 2013). The case study
mentioned in the article presents a complete study of the management accounting
functionality that is useable in Major IT based management accounting program by various
multinational firm (Arjaliès and Mundy 2013). The development of internal accounting
practices will help in estimating the significance of contemporary management accounting.
The steps of estimating the MAS is segregated into two dimensions. The first is to analyze
the extent of suitability of the MAS to the needs of the organization. Secondly, perceived

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importance of the management accounting information to strategy planning at all the
management levels.
The functioning of the management accounting system is used by the producing
organization that is analyzed by estimating the features of the system. This is needed for the
adaptation of the concerned functionality in order to meet the need of specific users and the
usage of this information for the mangers suitable planning (Bauer et al. 2013). It is
proclaimed from the information gathered from the research that the managers at the lower
end utilizes a greater part of the functionality for strategically making decisions as they are
greatly indulged with the management system. Additionally, the middle management uses
management accounting system differently as they depend on some external information and
additional findings of different formats for generating calculative decisions. Management
belonging at the senior level frugally uses the system, as the organization is dependent upon
the external data for taking strategic decisions. A major part of the relevance is shown by
using variability in management accounting system and most of it is focused over analytical
and operational decision-making (Kaplan and Atkinson 2015). Considering the operational
decision-making, there are some deviations over which the managers have a little control. In
such a situation, relevance is known to be an absolute as the planning is made depending
upon the research findings that are specifically obtained from the management accounting
system.
In order to generate strategically decision, the evidences provided by the management
accounting system is significant along with the synopsis that is being positioned on the
exogenous information. The process of strategical planning of the case company from the
article requires the inclusion of exogenous information when handling the problems
possessed by chains of supply and customers (Soin and Collier 2013). From the evidences
collected from the research, it has been obtained that the operational and analytical managers

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have placed heavy reliant on the management accounting information. This indicates that
there is a considerable importance provided to MAS by the organization. The usage of the
management accounting system is important for the management residing at the lower level.
However, this relevancy to the lower level managers declines as they are promoted to the
corporate pyramid. Therefore, with the promotion to corporate hierarchy the senior managers
tends to reduce the proportion of the relevancy of management accounting system. Moreover,
the operational and tactical decision depends on the information offered by the management
accounting system. The managers that are believed to take tactical decisions, base their plans
on the external evidence and they do use the information obtained from the system of
management accounting. Accordingly, it is observed by the analytical managers that the
findings collected from the management accounting system is known to have a little
significance (Appelbaum et al. 2017). However, this evidences gathered results into
questioning of management accounting system.
Distinguishing the evidences from another practical life company:
Considering another article titled “Information technology integration, extent of use
of ABC, business strategy, performance” is selected from the International Journal of applied
management accounting (Maiga 2015). The concerned research work evaluates the effect of
information technology (IT) in the manufacturing site and assess the impact on the use of
ABC. This also analyzes the relation between the performance plant and integration of IT,
and the extent of ABC used. The management accounting system provides the key
component for the manufacturing infrastructure. It is presented in the article that the
management accounting system gives the major principles for assessing the operations
managers. The report has lengthened previous researches by appraising the literature on the
management accounting, marketing and information system. The main source of accurate
evidences for the management accounting system is generated by the information technology

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and the relationship between information system and management accounting system. A
severe method has been argued in the research study for evaluating the relationship between
IT integration, usage of ABC and its effects on the production performance. The paper
presents a structure in order to identify the linkage between the performances of the site ant
the length of ABC used. This is performed by assessing the relationship between the extent of
use of ABC and IT integration with the measurement of its effect on the organization’s
strategy.
For identifying the linkage between the given variables in the research study, the
researcher should be provided with a chosen sample of production plans. The analysis of the
paper shows that there is a relevancy in linkage between the integration of IT and the length
of usage of ABC. Additionally, different tactics implemented by the company site has been
impacted by such relationship. The different strategy used is product segregation and low cost
of manufacturing (Thomas and Ambrosini 2015). From further evaluation this has been
determined that there is no direct link between the extent of ABC used and the market
performance and the IT integration. The information obtained from the study has vital
managerial implications. This is due to the investment in the management accounting system
like the ABC and amalgamation with IT. This would lead the business towards higher return
and good growth that need to be connected with the business tactics. However, future study is
subject to challenges due to the proving insight that are genuine and are useful for the
practitioners. This would permit management accounting study to generate an impact on
practice.
The first study based on the management accounting program recognized the
application of functionality management accounting system in relation to the acquisition of
modern IT (Ghobakhloo and Azar 2018). On the other hand, the second study is based on
evaluating the impact of ABC usage and the IT integration on the presentation of the

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production plant. The evidences gathered from both the research articles are diverse. The
analysis of the two paper focuses around the implication of MAS in terms of combining IT
and its entire impact on the presentation. The first study has obtained that the evidences given
by the MAS is significant, however they were supposed to be irrelevant for specific levels of
organizations. However, the second paper recommends to interview variables as this would
arbitrate the effect of the management accounting method like the ABC on performance.
Moreover, it is presented that amalgamation of IT is related with the ABC usage, which is
processed into influential business planning. Thus, to conclude from the information this can
be viewed that in terms of influencing profitability and market performance, the second paper
generates relevant information by MAS. Thus, this can be said that the two articles provide
varied information.
Answer to question 3:
Determining the application of MAS in vigorous and competitive business orientation:
The assessment of the articles provides a real-life idea about how the manufacturing
industry identifies the relevance of management accounting system by utilization and use of
MAS (Lee et al. 2013). It is seen that studies with increase in competitive environment and
uncertainty, increases the significance of MAS. This is due to the prompt requirement of the
organization to rapidly adapt to the changing ambience for the maintenance of the
competitive advantage. MAS assist the organizations for the assessment, identification and
usefulness of proper tactics. This is done by monitoring and using the benchmark information
that helps in molding the performance. Studies have found that MAS provides evidences that
has a positive effect on the performance of the organization. This supports the senior
management to achieve the optimal conclusion by refereeing to other tactics. This is
implemented by using both the financial and non-financial information with the usage of

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external and internal domains. Yet the linkage between MAS and organizational performance
is mediated because of competition and uncertainty. However, this reduces the significance of
MAS (Akgün et al. 2014).
Several research papers provides theoretical opinions about the welfare generated
from the organizations in terms of their decision-making. The paper presents the significance
of MAS that is irrelevant at specific levels of organization. Thus, this is observed that the
usefulness of MAS drops down with an increase in maturity in the process of decision-
making (Nielsen Mitchell and Nørreklit 2015).
Beside this, MAS is important to a number of companies for their unique strategy
planning. Whereas, other companies prefers to rely on external sources for information for
strategic planning by managers. In this scenario, the overall significance of MAS declines
due to its importance in strategical and operational planning, yet the managers try focusing on
exogenous sources of information. Further study on the article suggests that the relation
between MAS and company performance is reduced to a certain domain. This induced in
questioning the significance of MAS. The information gathered from the evaluation of the
paper has limitations in terms of operations of the manufacturing industries. Moreover, the
implementation of MAS in private and public enterprises belonging to the manufacturing
sector has different cost structures (DRURY 2013).
Answer to question 4:
Determining the four suitable outcomes for the management accountants:
The concerned article provides the significance of MAS for the case company
mentioned in the paper. The case company generates operational and tactical formulation and
not strategic level. This is because strategic planning needs managers to depend on
exogenous as well as endogenous organizations. Thus, the significance of inward information

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generated by the MAS decreases due to the inadequate strategic managers on the information
of MAS. The first paper signifies that the training can cause development in the management
accounting skills, which can support in achieving the required company performance.
The study generates information about the multinational organization mentioned in
the article that provides irrelevant management accounting information. The consequences of
the gathered information is to show the significance of MAS information that is related to
planning, usefulness and training that provides assistance to managers for increasing
efficiency in their work for establishing the modern management accounting technique.
Therefore, the lessons and reliable findings gathered from the research paper would help to
build the fundamental task of corporation that is to assist the management in understanding,
maintaining and designing low cost procedure in a system.
The plausible results gained from the second paper have a considerate amount of
importance on the corporate and management accountants. This is because they should be
highly engaged when investing in IT and using ABC with an analytical meaning reflects an
appropriate business strategy. The results imply that findings should be used in enhancing the
confidence of specialists for developing an appropriate business planning. This would help in
facilitating the performance and integration of IT to the extent of ABC. The second research
verifies that the length to which ABC is used in the manufacturing sites is significantly
affected by IT. Hence, this creates an impact on the low cost structure and product
differentiation strategy. Moreover, the study supports the performance of the organization
indirectly by using the IT integration and ABC as they generate effect on other influential
performance variables. There is both hypothetical and practical usage of the results identified
from the article. From the viewpoint of the research, this is obtained that the management
accountant faces a wide variety of difficulties in analyzing the effect of a solo management
discovery as the concerned organization contains complex interdependencies. Hence, the

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management accountants of Australia would be asked to know more regarding the variability
in relationship in the difficult business domain (Watts Yapa and Dellaportas 2014).
Moreover, certain consequences of the strength and nature of the information gathered is
reflected and transferred to the service sector. Therefore, several limitations that are
mentioned in the study, despite of the limitations, there is a prevalence of a wide range of
implications in terms of both theory and practicality.
Conclusion:
Thus, to conclude this can be viewed that the report prepared have analyzed and listed
the results of two research articles from the journal of management accounting research. The
paper tries to describe about the execution and effect of the management accounting system
on the relative performance of the organization in the production industry. The first paper
identifies and mentions the effect of newly executed MAS technique on the manufacturing
company. On the other hand, the second paper evaluates the impact of freshly generated ideas
of MAS implementation on the production company and their effect on the implementation
of management accounting system like the ABC and IT integration. Moreover, both the
articles produces diversified information on the management accounting system as this
system produces relatively positive impact. Though their relevancy has declined due to the
mediation of certain variables, yet their effect is measurable. Moreover, the information
gathered cannot be generalized as the effect of MAS varies with the implementation on the
concerned organization.