Critically assess the role of management accountants

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Due Date: 23 February 2015

Chart of Antecedent


This paper argues that the development of the function of direction comptrollers ( MAs ) from the 1990s to 2013 is both necessary and ineluctable. This is because traditionally, MAs perform independently without any cross-functional interaction with other sections. Furthermore, MAs were non involved in any strategic planning or determination devising procedure for the administration. Hence, there is a demand for the alteration in the function of MAs based on subjects such as decentralization of MAs, debut of new techniques, promotion in accounting engineering and administration civilization.

The demand for an evolvement in MAs

As stated by Simon et Al, 1954, MAs were ab initio centralised in central offices concentrating on supplying relevant informations to the relevant parties. They were non actively involved in organisation’s operations, therefore they were ever deemed as an foreigner to administration ( Golembieski, 1964 ) .

However, due to rapid development in the planetary concern environment, the traditional function of MAs had to germinate. This was because the traditional function was excessively simplified to be used in the new complex environment ( Golembieski, 1961 ) , as traditionally they are merely focus in informations entry and score-keeping. Therefore, they are deemed as an foreigner to the administration. As stated in Golembieski, 1961, if administrations continued to follow traditional function of MAs, its operation theoretical account would lose its effectivity and efficiency compared to its rivals using the new function where they play a more pro-active function in administration.

The passage from centralization to decentralization

Once, MAs are centralised because they are ever stationed in central offices, they are proficient and focused on the fiscal facets of the histories with small understanding on how it may impact the operations. Besides that, MAs were besides involved in score-keeping activities, attention- directing and problem-solving ( Simon et al, 1954 ) . They perform independently without cross-functional interaction with other sections. Furthermore, MAs were non involved in any strategic planning or decision-making procedure for the administration.

Hence to retain their competitory border in the complex environment, administrations have to slowly follow the new function of the MAs. The new function allows the MAs to go more pro-active in operations as they will be decentralised to assorted concern units ( Golembieski, 1964 ) . The decentralizations of MAs let them to understand the units’ operation better, therefore enabling MAs to take part actively in decision-making facets that will better the efficiency of the unit. It is besides good for administration as it encourages more interaction and closer propinquity between director and comptroller, which reduces misconstruing between the MAs and director ( Pierce & A ; O’Dea, 2003 ) . Therefore, MAs will go more accessible and knowing about the operations, which in bend makes the directors more willing to accept their accounting study ( Pierce & A ; O’Dea, 2003 ) . Hence, MAs are able to derive more legitimacy from directors. The decentralization of MAs is farther amplified in Granlund & A ; Lukka, 1998. It is seen as a cardinal component in bettering the function of MAs. It can be labelled as a national norm for administrations in Finland holding to follow towards decentralized staff maps. This was one of the first marks of an development of the function of MAs.

However, all signifiers of development comes with obstructions and challenges. The first was the at odds function for MAs who are decentralised and those who are located at central offices. Based on Hopper, 1980, there was a given that lower and in-between direction believed that the comptroller should execute a service-oriented function. This implied that directors at the subdivision wanted their Ma to play a service function regardless of their structural place as required by the concern environment.

For those MAs centralised in central offices, their chief function was to be a book-keeper. These book-keepers prioritize information to upper direction as they are really bureaucratic. They were merely interested in clear publicity way.

Whereas for those decentralised in assorted subdivisions, they are more service-oriented. These MAs identified the service provided to take down and middle direction as their precedence. This implies that there are less hierarchical control but it encourages more horizontal communicating and legitimacy ( Hopper, 1980 ) .

Having two positions of the same functions created confusion within administration and therefore greater uncertainnesss. Furthermore, as stated by Hopper, 1980, some traditional comptrollers are unwilling to do the alteration as they do non desire to drop down the hierarchy. Furthermore, fiscal informations could be manipulated before making central offices due to less cheque and balance involved and greater interaction between MAs and subdivision directors, leting them to work together to pull strings the histories.

Resolution of confusion through ABC

In order to work out the confusion, the legitimacy of the new function had to be built. This was in the signifier of the activity-based costing ( ABC ) system. Hence, Friedman & A ; Lyne, 1997, emphasized the importance of MAs to follow the ABC. ABC is a method that examines the relationship between cost, activities and merchandise before apportioning the resources. Hence, it is of import to hold high grade of interaction between MAs and the subdivisions.

ABC allows MAs to better understand the subdivision operations and to advance better determination devising when being compared with MAs that employed traditional techniques such as standard costing and discrepancy costing ( Kaplan & A ; Johnson, 1988 ) . This allows MAs to break apportion fiscal resources to the subdivisions.

Since execution of the ABC, MAs have more cross-functional coaction with the subdivisions which lead to better accounting informations for determination devising ( Friedman & A ; Lyne, 1997 ) . Furthermore, it improves the relationship between MAs and subdivisions, which increases the legitimacy of the new MAs’ function. Most significantly, administration can break pull off their cost.

The execution of the new ABC techniques has besides allowed the function of direction comptroller to germinate throughout the old ages from traditional bean counter to going more strategically and operationally focused. Hence, MAs now non merely necessitate to analyze its ain cost construction but besides do rivals analysis ( Bromwich, 1990 ) . Furthermore, MAs must be able to see the costing together with the demand from market ( Bromwich, 1990 ) . Most significantly, MAs must be able to mensurate their value-add against the rivals. This new accomplishments which are a requirement to the new function of an MA will let administrations to come out with effectual schemes against their rivals.

Another challenge faced in the development of the function was the new accomplishments required.In order to keep their new functions, MAs are now expected to hold both fiscal and concern direction accomplishments ( Yazdifar & A ; Tsamenyi, 2005 ) . However, there is a deficiency of persons who can suit the function and it can be more dearly-won to enroll and develop MAs ( Sathe, 1983 ) .

Promotion of engineering

As the complexness of the universe increases, one of the most of import push factors for the farther development of the functions was the promotions of engineering in the universe which led to the development and debut of the Enterprise Resource Planning System ( ERPS ) . With it, MAs are able to concentrate more on complex activities such as coming up with schemes from fiscal informations ( Granlund & A ; Malmi, 2002 ) .

The ERPS system integrates all informations and procedures of the concern map, enabling MAs to construe assorted public presentation indexs and demo the relationships between indexs rapidly ( Scapens, 2004 ) . Hence, leting MAs to help direction with scheme and runing determination in existent clip. With ERPS, the basic accounting work can be done more expeditiously. This is because it integrates assorted facet of the concern into a individual information system ( Granlund & A ; Malmi, 2002 ) . MAs can besides utilize real-time information provided by the ERPS to do determinations rapidly in the new fast moving concern environment ( Byrne & A ; Pierce, 2007 ) .

This ERPS has farther allowed MAs to germinate into a specialized adviser. However, it meant that even more accomplishments and cognition were required to prolong the new function. Some of these accomplishments are confer withing accomplishments and strong communicating and relational accomplishments ( Byrne & A ; Pierce, 2007 ) . Furthermore, MAs have to take a wider position of the concern and be able to associate cost and fiscal information to the strategic development of the concern ( Birnberg et al, 1983 ) .

Another job in the manner of development was the integrating of the system which required clip taking to holds in the development of the concern. Most significantly, the complexness of the system besides hindered other sophisticated accounting developments ( Scapens, 2004 ) . The development procedure is farther amalgamate because of the decentralization and promotion in engineering, therefore ensuing in a shared apprehension between the MAs and the concern units within the administration, leting the MAs to fit their activities with the organisation’s ongoing demands ( Burns & A ; Baldvinsdottir, 2005 ) .

The changing needs for concern to be more market ready, has besides farther boosted the demand for the development of the function of MAs to be specialised advisers with particular fiscal cognition ( Mouritsen, 1996 ) . In order to pitch up towards the new function, administrations have provided enlisting, preparation and calling planning to advance the function alteration of MAs ( Mouritsen, 1996 ) .

Having a pro-active function allows MAs to supply the direction with information from a fiscal position ( Burns & A ; Baldvinsdottir, 2005 ) . The rubric of a specialized adviser increases their legitimacy, promoting concern units to seek their advice within their administration ( Mouritsen, 1996 ) . However, the development of the function of MAs to go more pro-active in the audience function led to some pretermiting their original accounting duties.

Increase in size and complexness of administrations

With the rapid development of the planetary concern environment and the addition in size and complexness of administrations, there was a demand for the function of MA’s to foster evolve from specializer to accountants. ( Sathe, 1983 ) . The accountant supervises the accounting section and aids direction in construing and utilising managerial accounting information. A strong accountant requires good supervisory accomplishments from MAs as they have to pull off a squad of comptrollers. This is in contrast from the traditional function where MAs chiefly focus on fiscal informations and work independently.

As a strong accountant, MAs are actively involved in concern determination devising procedures and can retain a senses of objectiveness. This ensures alliance between MAs and the administration. Furthermore, MAs can urge classs of action and dispute the programs and actions of runing executives ( Chenhall & A ; Langfield-Smith, 1998 ) . Most significantly, it can make synergism and efficiency across administration as at that place will non be any duplicate work as all plants will be assigned consequently by the MAs in their new functions as accountants. ( Burns & A ; Baldvinsdottir, 2005 ) .

The development of the function was further legitimised by professional organic structures who encouraged direction comptrollers to take on more managerial duties ( Clinton & A ; White, 2012 ) . The preparations for MAs have besides evolved in both the academic and professional facet towards a more concern oriented attack ( Clinton & A ; White, 2012 ) . This has greatly influenced the cognition base of future accounting professionals.

However, one of the cardinal drawbacks to the development of a specializer into a accountant is a state of affairs where there is over cheque and balance in the administration, which can restrict the creativeness and entrepreneurship of the administration ( Sathe, 1983 ) .

The ineffectualness of the traditional organizational civilization

Traditionally, organisation’s civilization perceived MAs as a non-value added function to administration, hence they were non involved straight in any concern operations. Older coevals of MAs are besides unwilling to take the alterations as they have to upgrade their accomplishments to run into the new function ( Granlund & A ; Lukka, 1998 ) . Furthermore, many establishments are still learning the traditional method of MAs, therefore those new MAs will non be able to accommodate to the new civilization ( Jarvenpaa, 2007 ) . Most significantly, the complexness of the new function will do it hard for big administrations to to the full incorporate the new civilization within a short clip frame which may ensue in function confusion as employees do non cognize which civilization to follow on. Thus, doing it hard to legalize the function of MAs.

With development comes the demand to legalize development through organizational civilization. This is because employees in the administration will act harmonizing to its civilization ( Jarvenpaa, 2007 ) . Furthermore, accounting is besides seen as a cultural object as all organizational actions and determinations are derived from the foundation of accounting ( Jarvenpaa, 2007 ) . Hence, administrations must re-structure their traditional civilization to let the legitimising of the new MA’s function.

But due to alterations in the concern environment, MAs have to take on a more value-added function in the administration. Hence, in order for all employees to admit and accept the development of the function of MAs playing a more pro-active function, administration had to take a few enterprises to alter the organizational civilization to back up the new function. Several of the enterprises as stated by ( Jarvenpaa, 2007 ) , are function modeling by top direction through proactive engagement, development of new accounting invention that supports concern direction such as ABC and story-telling about the value-added service that MAs have provided to the administration.

Role modeling is where the direction can take the alterations by leting MAs to take up more strategic functions and leting them chances to show their thoughts in a formal scene within administration. Furthermore, administrations develop new accounting techniques that free up clip, leting MAs to take on more complex responsibilities as compared to their traditional function.

The direction have besides explained to employees through narrative stating on how the new MAs’ function has brought about value-added services to the administration. This greatly boost the image of MAs in the organisation’s new civilization as more employees now understand and accept the critical function that MAs drama in the modern map of the administration. This is because to legalize the new function, it is of import to derive support from the direction by bettering the perceptual experience of the administration accounting map, the formal authorization of MAs and their societal and proficient accomplishments.

Hence, on top of making new function individuality for MAs and legalizing their new function, the administration has went on to commit the new function of the MAs. Administrations have taken several enterprises to make so as stated by ( Goretzki et al, 2013 ) . There are administrations to carry on seminars and conferences to acquire the new thoughts and web across and guarantee that the MAs are good cognizant that they can supply value-added service in this new function.

Furthermore, administrations link their Ma with wider institutional environment which can supply counsel rules for the new functions. Most significantly, professional organic structures and administrations cooperate and instil a new civilization for the MAs. This guarantee alliance between the operational and fiscal facet of the concern, which will ensue in end congruity between MAs and the concern that allows better adaptation of the new function ( Pierce & A ; O’Dea, 2003 ) .


In decision, the decentralization of MAs, the alteration in organisational civilization and the promotion of engineering have allowed them to play an of import portion in the administration where they are operationally and strategically concentrate. Employees of the administration no longer see them as a bean counter but more of a concern adviser where they will seek advice and consulting service. Most significantly, the development has been necessary and should go on as the times change to let MAs to keep their relevancy in the economic system.


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