Introduction To Management Accounting: Its Purpose And Basic Concepts Essay

Question:

1. Identify and analyse the achievements of the Burns and Scapens framework for studying management accounting change and also describe some of its limitations and extensions?
2. What are some of the processes that are shaping management accounting practices?
3. What challenges to management accounting practices are likely to be encountered in the future?

Answer:

1. Achievements of Burns and Scapens Framework

The framework is concerned with understanding the laws and rules that helps in structuring the actions that are undertaken by the members in organization. The frameworks tells that the incorporating any fresh system of management accounting in a company without considering the prevailing organizations can have the potency to deliver resistance. Further, the prevailing establishment can have the latent of forming the character and also shaping the context related with the change process within a given system (Salvato and Moores, 2010). Therefore, Burns and Scapens framework has been able to gain achievement by focusing on the stability and the change that occurs in the management accounting. Moreover, the framework provides better understanding that stability and change are both the parts of external and internal players so that stability can be maintained in the organizational system (Modell, 2005).

Limitations and Extensions of Framework

Connection between internal and external institutions: Due to exertion of pressure from government on the organization can make the organization to become commercialize, corporatize and lastly privatize. Therefore, due to commercialization, the company may be bounded to hire fresh staffs in order to pack the vacant accounting policies. However, the fresh workers may be regarded as needless-meddlers in the organizational system (Hartmann et al. 2013).

Trust: There can be lack of trust in adopting and implementing management accounting system. If an organization acquires a company and tries to revolutionize it completely thus it can lead to lack of trust.

Power: The power can be used by an individual in order to make decisions and can impact the change process and can lead to damage in the institutionalize practices. Therefore, power drives the success for applying the accounting practice for making decisions.

Agency: The high persuade of the agency can affect the anticipation of the public and change process. The involvement of third parties that is agents can tie up the applicability of the management accounting practice (Malmi and Brown, 2008).

The diversity can be adopted in the management accounting’s extended form so that limitation can be controlled. Moreover, independent and individual aspects can be addressed.

2. Shaping Management Accounting Practices

The evolution and revolution are effectively involved in changing the practices of management accounting. For instance, if a company is acquired by other company and each company has a different policy in operating the activities. Therefore, with the passage of time the buying company can integrated the bought company within its organizational structure and system. Thus, it can ensure success and it can be known that revolutionary management accounting can be possible (DeFond, 2010).

3. Challenges to management accounting practices

According to Balachandran et al. (2014) due to increase in diversity it can be tough to maintain stability in the management accounting. The diversity can allow organizations to have many functions at one time and can provide power to the organizations or any other individuals that may not be relevant with the arising situation. For instance, a company can create an environment for accounting diversity in two different nations and different approaches can be implemented in these nations. Therefore, it can be tough to resolve such situation with the same accounting practice.

Reference List

Balachandran, K., Marra, A. and Rangan, S. (2014). Research Challenges in Accounting and Finance in a Globalized Economy: Fair value measurements, Valuation models, and Management practices. Journal of Accounting, Auditing & Finance, 29(1), pp.88-89.

DeFond, M. (2010). Earnings quality research: Advances, challenges and future research. Journal of Accounting and Economics, 50(2-3), pp.402-409.

Hartmann, F., Perego, P. and Young, A. (2013). Carbon Accounting: Challenges for Research in Management Control and Performance Measurement. Abacus, 49(4), pp.539-563.

Malmi, T. and Brown, D. (2008). Management control systems as a package- Opportunities, challenges and research directions. Management Accounting Research, 19(4), pp.287-300.

Modell, S. (2005). Performance Management in the Public Sector: Past Experiences, Current Practices and Future Challenges. Australian Accounting Review, 15(37), pp.56-66.

Salvato, C. and Moores, K. (2010). Research on Accounting in Family Firms: Past Accomplishments and Future Challenges. Family Business Review, 23(3), pp.193-215.

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