Good Example Of Essay On Managerial Accounting

There is no doubt that every technological development or advancement comes with both negative and positive impacts. In diverse ways, Information technology transformed and shaped the business world as well as the society, as a whole. Besides business, many fields have also been influenced by modern technological advancements. These include; health, education, communication, entertainment, just to mention but a few. The implications are profound, and as the world develops; further advancements in IT will continue affecting businesses in both positive and negative dimensions. I firmly believe that commercial activities, especially businesses, are most affected by most of these advancements. Therefore, this paper evaluates and discusses the essentials of developing and implementing modern management accounting tools and technologies. Highlighted as well are the drawbacks of such technologies, especially in regards to the role of accountants in the process.
Since the introduction and implementation of new technologies and systems in the field of managerial accounting, new practices adoption is one of the significant features and aspects influencing Management Accounting, Johnson 32). Many businesses are appreciating the evolution and adoption of management accounting to meet the demands of the contemporary companies and institutions. Therefore, there is an increased likelihood that many organizations will implement new developments in the field as they emerge (Dechow, 15). According to the Chartered Global Management Accountant (CGMA), the year 2004 saw the development of The CIMA Strategic Scorecard. The tool was a result of research by CIMA prompted by major failures of accounting groups of the time such as Enron and WorldCom. Its development was to address company boards’ failures in overseeing risk and strategy effectively, as global financial crisis of 2008-09 would indicate. The scorecard thus plays a crucial role in helping firms to engage in an effective manner in the accounting process. Another innovation in the discipline of management accounting has been Enterprise Risk Management tool (ERM). ERM, as a process, is critical in a methodical approach to addressing potential risks in the achievement of strategic objectives in a firm. The assessment of significant risk and the implementation of suitable risk responses are the fundamental mental elements of ERM, (CGMA). Related to ERM is a Risk Heat Map tool that presents the findings of a risk assessment process in a visual, meaningful, and concise way. Heat Maps represent qualitative and quantitative analysis of risk occurrence probabilities and possible impacts in case of certain risks taking place. In essence, the tool helps businesses to prepare for all possible outcome scenarios of business decisions, (CGMA). Despite what proponents of development and implementation of these and other tools may say, CGMA makes a strong case for their adoption. Therefore, those in doubt of the usefulness of modern management accounting tools should rest assured of the case.
In addition to the rapid organizational and technological change, critical aspects of management accounting have been changing. Specifically, new and relatively proactive management accountants have emerged and increasingly serving in the managerial aspects of the business process (Burns 18). Although modern management accounting technologies may be a challenge, individuals working as accountants must be prepared to adapt to the new environment. While working with the current information systems (IS), accountants will be able to produce management accounting reports in a manner that is more presentable than in the past (Burns 18).
Further, Dechow illustrates that IS configuration with new tools of management accounting can enable or disable varied aspects of management control. He affirms that such effects may not be visible and may lead to situations where decision makers are not aware of the outcomes of system applications they make while undertaking system implementation. As such, many managerial accountants could prefer the traditional management tools, systems and methodologies (On Enterprise Wide Resource Planning Systems 23). In addition, technology has taken over most positions that humans used to occupy. In management accounting, some accountant roles are mainly executed by software; therefore, some controllers are rendered jobless. Besides, security breaches have come with some of the contemporary techniques, thereby leading to increased instances of frauds and bankruptcies.
On another perspective, Mohammad states that in the new millennium, organizations will need to adopt realistic approaches. He contends that managerial personnel will require both traditional and non-traditional management accounting methods to help them make right decisions. Core determinants such as the industry, size, and strategic priorities have a different impact on management practices. While the industry is important for traditional methods, size is significant for emerging practices. Strategic priorities also influence the gains from modern and from traditional practices. Nevertheless, there are implications for the need for management accounting to adopt new methodologies to address the new paradigm with the advancement of IT.

Works Cited

Burns, John E, Scapens, R. 'Conceptualising Management Accounting Change: an institutional framework', , London, Vol.10, 3-25, (2000): 1044-5005. Web. 10 March 2015
CGMA. (n.d). Essential Tools for Management Accountants: The tools and techniques to support sustainable business success. Web. 10 March 2015
Dechow, N. - Mouritsen, J. ERP manuscripts of accounting and information systems. In Andersen, V., &Vendelo, T. (Eds.), The Past and Future of Information Systems. (2004). Web. 10 March 2015
Dechow, N. - Mouritsen, J. On Enterprise Wide Resource Planning Systems – The quest for integration and management control.Accounting, Organizations and Society, 30. 7 (2005): 691-733. Web. 10 March 2015
Johnson, H.T. Management Accounting in the 21st Century.Journal of Cost Management. Fall. (1995).15-19.Web. 10 March 2015
Mohammad, Talha, John B. Raja, A. Seetharaman. A New Look At Management Accounting. The Journal of Applied Business Research. 26. 4 (2010). Web. 10 March 2015