Balanced Scorecard

Balanced Scorecard

Introduction

The purpose behind this paper is to understand the application of the balanced scorecard in accounting, in order to support our study 5 peer reviewed journal articles will be presented and summarized and finally I will present the conclusion based on the findings. To begin with I will start with some details on balanced scorecard.

Discussion

According to BSI (2012) Te balanced scorecard can be understood as a strategic tool that helps an organization effectively plan and manage the organization's performance by effectively aligning core activities of the business according to the organizations goals and strategies, it promotes effective communication throughout the organization and helps the organization monitor their performance against the strategic goals established.. The balance scorecard was presented by Dr. Kaplan and Norton. (BSI, 2012).

Understanding the Balance Scorecard in Accounting

The balanced scorecard is a managerial accounting measure. This system can be used in used in a variety of situations where managerial accounting is applicable. Any business is affected by a lot of factors and not just financial ones, by using a balanced scorecard it keeps a check on not just the financial data but with other performance indicators. Using a balanced scorecard helps the company achieve a better performance (Wendel, 2009)

Figure 1: Sample business Scorecard (Geense, 2005)

Importance of this study

In order for any company to stay ahead of its competitors and to have a better performance many organizations rely on balanced scorecards. It helps any organization maintain and establish a common vision, which helps direct the employees towards the right direction and focus on the overall result. In order to highlight the importance of the usage of the balanced scorecard the following 5 peer reviewed articles will be discussed.

Aligning the balanced scorecard and a firm's strategy using the analytic hierarchy process, by Searcy (2004)

This study discusses the importance of analytic processes while developing the organizations balanced scorecard, which helps in resolving multicriteria decisions the article, highlights the AHP for the initial level of the BSC which presents information gathered from 6 companies and demonstrates how effectively each company is meeting their organizational vision. For their study the author used six companies which were implementing lean enterprise tools. In order to effectively asses the performance of the 6 companies the internal operations were further divided nto three more categories and financial performance was one of the most important one. The AHP compares the objects with an established goal or any strategy. The result is based on the pair wise comparisons. The usage of AHP in balance scorecard clearly indicates in the study conducted that the most successful elements excluded the cutomers and the employees (DeWayne, 2004)

The balanced Scorecard and the accountant as a valued strategic partner by Latshaw and Yeong (2002)

Recently accountants have a vital role to play within any organization have been altered drastically and they are now often referred to as strategic partners, accountants are now important partners who are being approached to take part in the organizations decisions. A major development in the recent years has been ...