Management Accounting Developments Essay

3336 words - 14 pages

Mariusz Zaborowski



Coursework assignment (10%)

Submission date: by 3.00 pm Wednesday 14 January 2010
(Week 2)

In this assignment, you are asked to discuss:

‘The critique drawing on the developments and theoretical explanations for the evolution & role of management accounting’
“Relevance Lost”, Johnson & Kaplan

Prof. Ronald Kaye
January 2010

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ᵅ University of East Anglia, Faculty of Accounting and Finance, Norwich, United Kingdom


Today’s management accounting information, driven by the procedures and cycle of the organization’s financial reporting system, is too late, too aggregated, and too distorted to be relevant for manager’s planning and control decisions.” (Relevance Lost 1987, Johnson & Kaplan)

The above paragraph is the opening point for a fierce discussion among accounting academics and practitioners that a foundation of which has been laid in a series of publications by H.T. Johnson and R.S Kaplan in the 1980’s. Although its culmination falls on the first edition of “Relevance Lost: The rise and fall of management accounting” (1987), we must consider the whole period of author’s research activity beginning from a few polemical papers by Kaplan (1983, 1984, 1985, 1988) and concluding with Johnson’s Critical Commentaries, “Relevance regained: Total Quality Management and the Role of Management Accounting”. The four major lines of criticism have been drawn:
- limited technical developments within management accounting practice
- management accounting has become too closely correlated to financial reporting
- progressing separation of academic management accountants and accounting practitioners
- lack of wider view of management accounting as not only recent development and as not entirely separated from economic changes
As the criticism of management accounting has become more widespread the major development programmes have been evident.

ritical accounting development has been dominated by two approaches: accounting for strategic positioning and time management accounting. Among them we can find many different, controversial projects. The first promotes multidisciplinary cooperation, sustainability and spread of best practice, crossing borders between accounting sub-branches. The accounting for strategic positioning has been through 3 succeeding phases: promotion of new relevant techniques, emergence of generic approaches for enhancing accounting’s role in the management decision making and ongoing discussion on best performance measurement indicators. The propagator of the initial wave of changes was Robert Kaplan himself. His development in cooperation with Robin Cooper of activity-based costing (ABC, its first maiden use has been implemented by General Electric in the 1960’s) in the series of publications ranging from 1987 to 1992 revolutionised the understanding of cost drivers in the face of new emerging technologies. At the same time come into being the group of new techniques like: Foster and Horngren’s backflush accounting (1988) or Galloway and Waldon’s throughput accounting that contributed to Goldratt and Cox’s publication “The Goal: Excellence in Manufacturing” (1984)....

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