StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Understanding Management Accounting - Assignment Example

Cite this document
Summary
The paper 'Understanding Management Accounting ' is a good example of a Finance and Accounting Assignment. Strategic management accounting (SMA) that has for a long time been recommended as a potential area of development capable of enhancing the future contribution in the field of management accounting…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.5% of users find it useful

Extract of sample "Understanding Management Accounting"

Issues in Management Accounting Name Institutional Affiliation 1) Definition of Strategic Management Accounting Strategic management accounting (SMA) has for a long time been recommended as a potential area of development capable of enhancing the future contribution in the field of management accounting. In most companies, managing accounting has failed in keeping up with developments concerning competitive and corporate strategies. The strategic thrusts are thus needed to address these issues. Strategic management accounting has been defined by various authors and organisations. Innes (1998) defines strategic management accounting as the provision of information in supporting the organisational strategic decisions. Strategic decisions in most cases are long term and it has a significant effect on the organisation. This definition suggests that the provision of information supporting the major long-term decisions of an organisation falls within SMA. Chartered Institute of Management Accountants (2005) defined SMA as a form of management accounting that emphasises information relating to organisational external factors, internally generated information and non-financial information. 2 (A) Definition of Sense Making Sense-making is a topic that has been discussed extensively in various organisational fields such as strategic management, organisational disasters, strategic change and accounting. Sense making is a crucial leadership capability needed to deal with current environment that is both dynamic and complex (Ancona, 2012). Karl Weick is responsible for the introduction of the term sense making as an alternative approach to understanding the organising process (Helms Mills, Thurlow, & Mills, 2010). However, sense-making has been explicated and refined and it is a stand-alone theoretical framework used in an analysis. Weick, Sutcliffe, and Obstfeld (2005) defined sense making as the process used by individuals and groups in their pursuit of attempting to offer an explanation for unexpected, confusing and novel events. Weick (1995:04) assert that sense making simply means “the making of sense”. He further contends that organisations are capable of making good decisions but still falters because sense making is deficient. Helms Mills, Thurlow and Mills (2010: 183) contend that sense making is basically “about understanding how different meanings are assigned to the same event”. 2 (B) Context of Sense Making in SMA Sense-making has become an important topic in the organisational study, and specifically, strategic management accounting. Organisations need to make sense of the situations in order to protect their strategic position (Drury, 2007). Moreover, it is also useful in determining strategies for improving future competitiveness. In this case, managers need information indicating by how much and by whom and why a competitor or competitors are gaining or are being defeated. This information is crucial as it provides advance warning to the organisation of the need for a change. Sense-making in every aspect of the organisational functions is important as research has showed that small separate failures are capable of contributing to major disasters (Helms Mills, Thurlow, & Mills, 2010). For example, poor pricing policy can lead to loss of customers to the competitors and organisation can gain strategic advantage by carrying out good pricing policy. Here, strategic management accounting assists in getting the major competitors cost structure and relating it to their prices. Sense-making begins when groups or individuals start confronting surprising and confusing issues, events or actions (Weick, 1995). Sense making is an alternative approach that is different from conventional ways of looking and organising the process. It is deeply embedded in strategic management accounting. In fact, managerial sense-making activities have an important role as it links knowledge management processes and their organisational strategic decision-making (Hasan & Gould, 2001). In context of SMA, organisational sense making have been found as having capability to order sense-making activities in the accounting system. The sense-making process involves completely ignoring some elements by focusing on certain elements that supports an accounting event interpretation. Sense making is retrospective. The past experiences including rules and regulations dictate the cues to be extracted in making sense of an accounting situation (Helms Mills, Thurlow, & Mills, 2010). Strategic management accountants are making interpretive readings in an organisation in understanding a given situation. This operates as a base for report writing. On the other hand, managers and other organisational members read the accounting reports in trying to make sense of situations in the organisation. Management accountants, through structuring and harmonising; compromising and balancing and bridging and contextualising strategies, they undertake ‘sense making’ activities in a conscious and unconscious manner (Tillmann & Goddard, 2008). Readers are using strategic accounting texts in giving meaning to an organisation. Moreover, they also used them in giving meaning to themselves. 3) Core Phenomenon and Rationale of using it in the Study In the study carried out by Tillman and Goddard (2008), the core phenomenon that underlies strategic management accounting is sense making. Core phenomenon refers to the main event or issue being researched upon in the study. Core phenomenon has been used in the study so as to increase the understandings of the study participants in strategic situations. Moreover, it enhances organisational transparency (Tillman & Goddard, 2008). It is important in making a situation more transparent hence facilitating understanding of linkages and cause and effect relationships. It, therefore, ensures that an organisation can understand the entirety of the situation. It is essential in building theory (Einsenhardt, 1989). It also allows for validation, extension, and knowledge refinery in a given field, in this case, strategic management accounting. Core phenomenon in this study is useful as it anchors a given situation into its spatial and time- related contexts. 4) Description of Paradigm Model of Sense-making in a Strategic Context In SMA, sense-making occurs in a manner that is both constant and ad hoc (Tillman & Goddard, 2008). Constant sense-making activities are the management accounting practices that are routine in nature and include cost analysis and reporting. Sense-making paradigm model in a strategic context entails various interactions inside and outside organisational environment that results in the overall skills profile of the management accountants. The model involves contextual conditions that group answers to questions such as why, how come, where and when some things occur through activities of sense-making in a strategic situation. The interactional strategies between the internal and external environment are individual or group strategic responses to the problems, issues and events arising from these interactions. Sense-making paradigm model that is constructed includes interactional strategies for sense making. They are structuring and harmonisation, bridging and contextualisation and to compromise and bridge. Interactional strategies in the organisation contribute to sense making by explaining the ‘how’ of organisational sense-making activities. Structuring and harmonising is one of the strategies. Structuring and harmonising contributes in a direct and indirect manner regarding sense-making efforts as it allows information to be more understandable and coherent (Tillman & Goddard, 2008). This is important in a strategic context as it reduces inherent complexity. Structuring and harmonising strategies are also used by the management accountants when they are dealing with incomparable information that cannot be easily analysed. Information has to be organised in a way that is systematic for it to be comparable. It contributes in a direct manner to the organisational sense-making activities by offering assistance in the search for both understanding and transparency (Tillman & Goddard, 2008). They are useful in communicating sense. Bridging and contextualising is the second sense-making strategies in the paradigm model. Strategies for bridging and contextualising include information bridging across time and information contextualization across space (Tillman & Goddard, 2008). In the study, bridging and contextualising were perceived to be very important in a strategic context. In case the future-related information does not exist, these strategies might be helpful in gaining an understanding. For example, it could help in understanding what a future acquisition carried out by a company means to the company itself. In the model, it appears that there are no activities of sense-making in absence of activities involving bridging and contextualisation. For this reason, they provide a tool for sense-making in context that is strategic in nature (Tillman & Goddard, 2008). Contextualising is of prime importance for management accountants in their pursuit to capture ‘entirety’ of situations. In the paradigm model, compromising and balancing are strategies that are auxiliaryto the activities of sense-making. Compromising is coming up with compromises that are unavoidable in a way that is best as possible (Tillman & Goddard, 2008). Compromising is used strategically in case there are issues relating to time and monetary resources availability. Balancing is observed in circumstances where there is a selection of information and it stresses the importance of being focused on aspects of the problem that are most relevant. Compromising and balancing involve a great deal of judgement. In particular, it is true a context that is strategic. The reason is that lack of information that is relevant and reliable as well as complexity characterise it (Tillman & Goddard, 2008). References Ancona, D. (2012). Sensemaking: Framing and Acting in the Unknown. In S.A Snook., N. Nohria & R. Khurana (eds.), The Handbook for Teaching Leadership: Knowing, Doing, and Being (3-19). Thousand Oaks: Sage Publications. Chartered Institute of Management Accountants. (2005). CIMA official terminology. London: CIMA. Drury, C. (2007). Management and cost accounting (3ed..). London: Thomson Learning. Eisenhardt, K (1989), Building Theories from Case Study Research, The Academy of Management Review, 14(4), 532-550. Hasan, H., & Gould, E. (2001). Support for the sense-making activity of managers. Decision Support Systems, 31(1), 71-86. Helms Mills, J., Thurlow, A., & Mills, A. J. (2010). Making sense of sensemaking: the critical sensemaking approach. Qualitative Research in Organizations and Management: An International Journal, 5(2), 182-195. Innes J. (1998) Strategic Management Accounting, In Innes J (Ed.). Handbook of management Accounting (3rd ed.). Gee: London. Maitlis, S., Vogus, T. J., & Lawrence, T. B. (2013). Sensemaking and emotion in organisations. Organizational Psychology Review, 3(3), 222-247. Tillmann, K., & Goddard, A. (2008). Strategic management accounting and sense-making in a multinational company. Management Accounting Research, 19(1), 80-102 Weick, K. E. (1995). Sensemaking in organiza­tions. Thousand Oaks, CA: Sage. Weick, K. E., Sutcliffe, K. M., & Obstfeld, D. (2005). Organizing and the process of sen­semaking and organizing. Organization Science, 16(4), 409–421. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Understanding Management Accounting Assignment Example | Topics and Well Written Essays - 1250 words, n.d.)
Understanding Management Accounting Assignment Example | Topics and Well Written Essays - 1250 words. https://studentshare.org/finance-accounting/2071724-issues-in-management-accounting
(Understanding Management Accounting Assignment Example | Topics and Well Written Essays - 1250 Words)
Understanding Management Accounting Assignment Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/2071724-issues-in-management-accounting.
“Understanding Management Accounting Assignment Example | Topics and Well Written Essays - 1250 Words”. https://studentshare.org/finance-accounting/2071724-issues-in-management-accounting.
  • Cited: 0 times

CHECK THESE SAMPLES OF Understanding Management Accounting

Management Accounting Innovation

management accounting innovations are strategic management accountings that join the strategies to the value chain and link activities across the organization which relate to cost objectives.... These innovations are very important in an organization management accounting innovations are strategic management accountings that join the strategies to the value chain and link activities across the organization which relate to cost objectives.... This calls for an innovative strategy which is supplied by the management accounting to the managers who in the end make decision which affect the performances of the organization from the information given by the management accountants....
10 Pages (2500 words) Assignment

Benefits for Management Accountants in Understanding the Explanations of Decision-Making Processes

The aim of these management accounting include; safeguarding companies asserts, formulation of strategies, supporting of financial reports preparation, assists in making decision and planning and constructing business activities.... t is quite observable that in management accounting, most decision making is simply defined as choosing a specific quality action from various alternative.... Strategic decisions are defined as those decisions which are broadly based and can be termed to be qualitatively since they widely reflect organizational goals and objectives; they are further based on subjective thinking of management accounting concerning stipulated objectives and goals....
11 Pages (2750 words) Article

Management Accounting Innovations

… The paper "management accounting Innovations" is an outstanding example of a management assignment.... management accounting innovation is increasingly becoming more popular among organizations.... The paper "management accounting Innovations" is an outstanding example of a management assignment.... management accounting innovation is increasingly becoming more popular among organizations.... To keep pace with this dynamism, management accountants have been forced to spend less time in their accounting functions and devote more time gathering information that will transform management accounting....
5 Pages (1250 words) Assignment

Management Accounting - Barclays Bank

… The paper 'management accounting - Barclays Bank" is a good example of a management case study.... The paper 'management accounting - Barclays Bank" is a good example of a management case study.... management accounting refers to providing organization managers with accounting data, in order for them to make informed choices, business decisions, thus, helping them accomplish their administrative and management duties.... Management accountants carry out the function of management accounting....
6 Pages (1500 words) Case Study

Managing Change in National Health Service Hospital in England

… The paper "Managing Change in National Health Service Hospital in England " is a good example of a management case study.... The paper "Managing Change in National Health Service Hospital in England " is a good example of a management case study.... Change management is an important aspect of change that helps to guide the employees and the organization into accepting the implemented changes.... The paper thus discusses the concepts of change management in relation to the National Health Service hospital in England which has problems in terms of implementing and managing change....
11 Pages (2750 words) Case Study

Cash Budget for Omega Solution Limited and Evaluating R-n-D Projects

… The paper “Cash Budget for Omega Solution Limited and Evaluating R-n-D Projects” is an informative example of the assignment on finance & accounting.... The paper “Cash Budget for Omega Solution Limited and Evaluating R-n-D Projects” is an informative example of the assignment on finance & accounting....
9 Pages (2250 words) Assignment

Management Accounting Innovation in Modern Organisations

… The paper "management accounting Innovation in Modern Organisations" is an outstanding example of finance and accounting coursework.... nbsp;Modern organisations are largely being driven by management accounting innovation; they can achieve a competitive advantage, maintain continued performance and thus manage to prosper through constant gradual innovations.... The paper "management accounting Innovation in Modern Organisations" is an outstanding example of finance and accounting coursework....
7 Pages (1750 words) Coursework

Social Implications of the Planning Function of Management Accounting

… The paper “Social Implications of the Planning Function of management accounting” is an exciting variant of the literature review on finance & accounting.... Planning is a very aspect of management accounting.... The paper “Social Implications of the Planning Function of management accounting” is an exciting variant of the literature review on finance & accounting.... Planning is a very aspect of management accounting....
10 Pages (2500 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us