Accounting and Finance Essay

This essay examines the evolution of traditional management accounting, discussing the emergence of new techniques like activity-based costing and the balanced scorecard. It presents arguments for and against the widespread adoption of these modern tools, considering factors such as implementation costs, skill requirements, and the competitive environment. The essay highlights the changing role of management accountants, from cost controllers to strategic business partners, and acknowledges the dynamic nature of business and the ongoing need for adaptation in accounting practices. The conclusion emphasizes the increasing importance of management accountants in organizations due to the wider use of advanced management accounting tools.

ACCOUNTING AND FINANCE
Argumentative Essay

Traditional management accounting and how it has evolved
INTRODUCTION
The changes being incorporated in the recent years in the role of management accountants have
been argued strongly in the academic literature due to the development of various emerging
advanced and sophisticated management accounting (MA) systems, tools and techniques
(Guilding, Cravens and Tayles 2000; Tsamenyi, Cullen and Gonzalez 2006; Scapens and
Jazayeri2003). The emerging management accounting techniques like the balanced scorecard
(BSC), activity-based costing (ABC), strategic pricing, quality costing, strategic management
accounting (SMA), throughput costing etc. have been investigated and examined by various
researchers and academics (Atkinson, Balakrishnan, Booth, Cote, Groot, Malmi, Roberts, Uliana
and Wu 1997;Emsley 2005). The acceptance of the management accounting tools being
mentioned above and the inherent skills being demanded from the management accountants have
been argues in favor and against the motion (Yazdifar and Tsamenyi 2005; Kennedy and
Sorensen 2006).
The counter argument Earlier it was seen that the management accountants were functioning as
support staff for all the decision makers but with the emergence of various tools and techniques,
their roles is seen to have evolved from serving as internal customers directly to the strategic
planner and business partners. Now that the management accountants are equal member of the
decision making system, they have the authority and responsibility for telling the operating
executives and the various types of information which they may or may not consider relevant to
the business decisions and they also have the authority to improve the quality of decisions, if
they desire to do so.
In the main argument with the organization being highly centered on the MA tools and
techniques, their benefits are usually seen to be over emphasized. According to Yazdifar and
Tsamenyi (2005) the benefits of implementation of such tools have not always outweighed the
cost of implementation. In developing countries, the adoption rate for new MA tools is seen to be
quite low (Scapens 2000, Yazdifar and Tsamenyi 2005) suggesting that there is no drive to
widen the roles of management accountants. There are various factors that are responsible for

lower probability of adoption of the new techniques like the requirement of extensive data
extraction from various divisions, departments for customer profitability analysis, activity-based
costing etc. making it time-consuming and laborious.
The counter argument due to inherent relationship of Mas with diverse array of disciplines of
management, it might be suggested that the use of tools and techniques can help in expanding the
tasks of management accountants from bean counting, score keeping, cost controlling to a wider
strategic and multi-disciplinary roles. In the main argument the high cost of advanced tool is
another issue due to competitor focused accounting, environmental costing, quality costing and
value chain costing (Cardinaels et al 2004). Additionally, the execution of such techniques are
seen to necessitate the additional skill requirements like better quality communication, enhanced
coordination, systems knowledge etc. (Kennedy and Sorensen 2006; Emsley 2005; Yazdifar and
Tsamenyi 2005). This particular factor is seen to act like an impediment in adoption owing to the
efforts and time demanded in learning the skills.
The counter argument is that the fact that the management accountants spend more time in
classifying, identifying activities and analyzing the costs. Further they have to allot these costs to
procurement, designing, distribution and marketing of products and services. In the main
argument this particular factor is seen to act like an impediment in adoption owing to the efforts
and time demanded in learning the skills. According to Guilding, Cravens and Tayles (2000), the
MA tools do not operate as per the expectations in case the environment of the firm is not highly
competitive in nature. Various studies have depicted that the managers are perceiving to the
traditional techniques for better performance even in the developed countries.
The counter argument is that the transition phase in the practices of MAs Finland and studied
the transformation in their roles and responsibilities from being the cost controllers to one of the
most vital part of the managerial decision-making. In the main argument one of the key reason
of not adopting to the new techniques in spite of the availability of the relevant literature is the
ambiguity that concerns its particular meaning among the prospective managers. According to
Zainuddin, Z.N. and Sulaiman, S. (2016), the management accountants have been facing issues
due to customer focus, globalization and rapid changes in the technology, reduction in the
inventory cost, target costing, Just in Time inventory, supply chain management etc.

SUMMARY
One must acknowledge the fact that the business is a dynamic discipline where everything is bound to
change (McSweeny 2009). The role of management accountants has been severely affected by the
emergence and development of several advanced MA techniques. One must recognize that their
benefits are usually over-emphasized and they have a plethora drawbacks (Lord 1996), and the
organizations have been using these tools immensely (Cadez and Guilding 2008). The greater amount of
use of such tools is bound to enhance the importance of the management accountants and their role in
the firms in the near future.

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