MANAGEMENT ACCOUNTING

Management Accounting

Management Accounting Move to Technologically-Based Non-Financial Information

Introduction

Commerce and production ambient has observed significant changes through three past decades. Companies use automation to improve their product quality and face with competition. It can be expected that management accounting system focusing on control and analysis of management decisions, also can concurrently adapt with these changes and encourage and reinforce them. However, various authors claim that management accounting systems act as a constraining factor in investment in production technology and productivity. Because of excessive dependence of operational managers on short-term financial information, removing other qualitative information can push them to improve figures in accounting reports instead of real improvement of operation.

Over View

Strategic management accounting could broadly be described as a long range, future and outward looking approach which is also trying to cope with new views inside the organization as well as it might include non-financial measures. Recently, nonfinancial measures have received widespread exposure in the management accounting literature. As financial performance measures are less complete or less perfect expressions of economic consequences of managers' actions, in practice, more and more companies use non-financial measures to evaluate the performance.

Non-financial measures are the key indicator of financial measures. Management accounting systems have begun to measure and report non-financial information, such as product quality, customer satisfaction, and service response rates.Discussion and Analysis

In today's world in which a new form of economic communication can be emerged each day and individuals and institutions communicate with each other and their financial changes affect each other and activities become more complex day by day, these factors results in further recognition of accounting role as a provider of financial information using accounting standards for users. Thus, increasing need of institutions and organizations for true and timely information for being applied in managers' decision making process is a particular category.

In this regard, management information system is the main resource for providing information. As the main subset of this system, accounting information system provides users of such information like organization managers with a variety of financial information. Accounting systems in production companies are in two forms: financial accounting and management accounting. Latter focuses on management decisions control and analysis while the former focuses on short-term reports for outhouse individuals. Companies change their production ambient for encountering competition through automation. A variety of factors create an obstacle on the way to automation. On one hand, existing production facilities not developed for dealing with today needs and requirements and on the other production companies management accounting does not provide management with information necessary for moving toward a better future. There is potential for operational managers that realize their management using numbers and, employ accounting systems in an improper way, which results in an accounting fault and in specific management accounting. In this study, there is an attempt to recognize management accounting system based on three components of justification of investment in advanced production technology, costing system and performance assessment, and express its relationships and weaknesses (Gray, 2010, pp 56-89).Purpose and Place in the Accounting

Management accounting created primarily in order to quickly make decisions ...