Strategic management accounting
Strategic management accounting
The importance of management accounting cannot be gainsaid in any particular company. It has everything to do with provision of accounting information for the management needs. In this particular function, the accountants would need to have a clear understanding of the manager’s information needs in the making of certain decisions and make that information available by accessing that company’s accounting system.
In the company’s accounting section, there must be an “Accounting Information for Management” section. In most cases, companies’ accounts departments have a number of sections dealing in specific issues such as accounting information for management, cost accounting, indirect taxes, corporate taxes, financial statements as well as financial accounting.
In addition, the section dealing with Accounting Information Management may incorporate quite a number of persons with varied information specialties such as marketing management, strategic management as well as production management etc.
So what is strategic management accounting?
Strategic management accounting is used to refer to the provision as well as analysis of the management accounting information of a business and that of its competitors. The information is used in developing as well as monitoring the business strategy. It is more preferable that the focus be on accessing the system of financial accounting as well as that of the cost accounting and the necessary analysis for provision of information essential in coming up with a strategy for monitoring business. It may be important that there be a separate system of management accounting that which gathers data that would not be collected in cost accounting or financial accounting system. Currently however, sufficient information or work is handled at the accounting information for decision making level.
It is argued that the accounting professional’s orientation to the development of strategic management accounting must be modified. In management accounting, rather than use orientation to accounting document information orientation should be followed. Information orientation incorporates a number of steps. To begin with, the problem would be diagnosed followed by the development of a number of alternative solutions, decision making methodology or choosing the most appropriate alternative. Accounting information and data may be necessary or is important in the development of solutions as well as the selection of the most appropriate solution. With the necessary information, the accountant would need to generate the necessary accounting information. In this endeavor, the accountant may develop or build systems of accounting data.
Accountants may be able to assess or have an idea on the cost information and accounting information of the competitor using the statements that are specially compiled or publicly available. The information that is available to the public may include financial statements as well we other statements that are filed by the regulatory agencies while the statements that are specially compiled may incorporate consolidated information that is shared by information reports in the industrial level and benchmarking information. In using the sources, the strategic management accounting department can provide the accounting information of the competitor business to strategic management operation.
There are various forms of accounting information that strategic management is mostly interested in. these include relative levels as well as trends in the real prices and costs, market share, volume, cash flow as well as the percentage of the business’ total resources that have been focused in a particular product group. Every one of the issues would require comparison with the competitor’s. For accounting items of strategic importance, time series data is necessary. In this case, particular set information needs may be identified for propping strategic management while accounting information department must prop the strategic manager’s impromptu information needs.
I definitely agree with the need for comparison of the various variables in a particular enterprise with those of their competitors. This information would be essential in evaluating the success of the competitors as well as knowing what to change in order to increase an enterprise’s output. In addition, the information would also be essential in identifying the strengths of the particular enterprise thereby knowing where it has an edge against the competitors and therefore which areas it should lay emphasis on.
One thing that I particularly like about the strategic management accounting is the emphasis on the divisibility of duties in the particular organization. The accounting department of an organization would be having many sections dealing with particular information needs of the company. In addition, each of the sections would have individuals specializing on particular tasks. Specialization has always been very important in an organization in as far as dealing with information needs exhaustively is concerned. On the same note, dividing the information needs of the strategic managers and drawing comparison for each with the competitor’s data would allow for exhaustion of all issues so that the solutions can be specialized to the particular units.
Conclusion
The importance of having sufficient management accounting information cannot be gainsaid as far as strategic management accounting information is concerned. This information would have to relate to every section of the enterprise and be used in making particular decisions for the progress of the same. This allows for customization of the strategies to the individual departments.
References
HYPERLINK “http://knol.google.com/k/strategic-management-accounting#” http://knol.google.com/k/strategic-management-accounting#
Strategic Management Accounting,
Management Accounting Article Series
