FACTORS THAT INFLUENCED THE CHANGE IN MANAGEMENT ACCOUNTING  Nanni et al (1992) point out that traditional management accountants have tended to focus on a product-oriented rather than a part 2 1000w

FACTORS THAT INFLUENCED THE CHANGE IN MANAGEMENT ACCOUNTING  Nanni et al (1992) point out that traditional management accountants have tended to focus on a product-oriented rather than a part 2 1000w

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FACTORS THAT INFLUENCED THE CHANGE IN MANAGEMENT ACCOUNTING  part 2 1000w

Nanni et al (1992) point out that traditional management accountants have tended to focus on a product-oriented rather than a process-oriented performance. There is some evidence that accountants have had little interests in any organizational changes even they had skills to bring some changes. For example, it was accountants who insisted on the implementation an activity-based costing system (Foster and Gupta, 1989) or product life-cycle costing system.

2.2.3 ‘Accounting lag’

Johnson and Kaplan (1987) criticized management accountant for their inability to innovations and this was viewed as an “accounting lag” .Kaplan (1984) in his study about accounting lag proposed that accountants “should develop a research strategy to meet new demands for planning and control information”. He suggested that there was little innovation since 1920. Accounting lag need to be minimized to keep accounting information relevant to all changes occurring over time.

2. 3 Pressures for Changes

The literature identifies some relevant factors that impact on the role of management accountants including:

2.3.1 Advances in Manufacturing and Globalization

Companies have invested heavily in new manufacturing technology such as computer aided manufacturing (CAM), Computer Aided Design (CAD), and flexible manufacturing systems (FMS) (Buggerman and Siagmulder) The new manufacturing technologies have impacted on traditional managing accounting systems and

!”Consequently it is argued that management accounting systems have to change when manufacturing systems change”

With respect to product costing and overhead costs, tracking thousand’s of individual products can be overwhelming. Traditionally, Labour hours were used as a basis for an overhead allocation. It is perhaps less suited as products made through automation would be charged an insufficient overhead rate.

The competitive pressure on firms and the shift in many industry sectors from cost led pricing to price-led costing (Nixon, 1998) and globalization are just some of the many factors that are influencing the escalating expenditure on R&D and New Product Development that most companies must now incur.

2.3.2Competition

Pre 1980’s many countries enjoyed operating in protective environments. Oversees companies were limited to operating in the domestic market with barriers to communication, geographical distance and sometimes protected markets (Drury 2003)