Management accounting research has thrived producing substantive findings relevant to industry, but its’ application in practice is questionable. The requirements for management accountants have changed over the years in terms of the roles, skills and knowledge base required. Thus, arguably, industries should look at greater continued participation into higher education. Management accounting research has gone beyond the traditional costing for large industries. Traditional management accounting roles have been reformed and/or faded away.
Burns et al argued that the new reformed roles of management accountants necessitate new education and training. Considering the changes/emergence and popularity of new occupational management accounting roles including business analysts, strategic management accountants and management controllers, less prominence should be placed on traditional learning methods but more on ‘case studies, practical projects and group research assignments’ (Scapens 1999). If such changes are to be implemented, large challenges lie ahead including cost constraints.
Burns et al (2004) looked at management accounting research exploring the changes in terms of the expansion of topics, methods and problems making comparisons with the changes in management accounting practices. Burns et al (2004) also examined the skills and knowledge requirements by management accountants and how these aspects may also require a reform in education and management accounting curriculum. Burns and Yazdifar (2001) asked UK qualified management accountants to highlight the ten most perceived management accounting important tasks, tools and techniques of 1995-00 and 2000-05.
They founded that both sets of results, management accountants placed emphasis on traditional management accounting roles such as performance evaluation, budget planning and management, management accounts interpretation and presentation, cost and financial control. It was founded that management accountants perceived budgets as the most important task also highly ranking variance analysis in the late nineteenth century. Nevertheless, numerous new areas such as ABC, balanced scorecard were attributed as low significance.
They also founded the expected importance of future tasks considerably changed with more emphasis being placed on newer tasks particularly in strategic planning and implementation, valued-added identification and implementation, new information system implementation, operational information interpretation. It was also founded that despite budgets and variance analysis being highly rated in the 21st century, more importance was placed on ABC, balanced scorecards. Thus, future years have more emphasis on ‘strategy-aligned analysis’ and less emphasis on ‘cost control and cutting’.
Identifying the requirements of management accounting practitioners can enable researchers to place more emphasis on such requirements during investigations in order to maintain its currency with practitioners. Burns et al (2001) questioned the reasons for changes in management accounting modelling the tasks as well as roles of management accountants. Consequently, they asked UK qualified management accountants to highlight what they considered to be vitally important contributions to change in management accounting.
They founded that information technological advances including accountancy software advances and organisational restructuring as well as the new styles of modern management to be a vital contribution in driving change in the tasks and roles of management accountants. However, Scapens et al (2003) founded that customer orientated initiatives and globalisation were the two fundamental drivers for change. Johnson and Kaplan (1987) argued the existence of a ‘relevance gap’ between management accounting research and practice.
They based their argument on fact that companies had one information system and external financial reporting statutory requirements would take preference over the information required by internal management accountants. Burns et al founded modern technological advances including database capabilities enabled the storage of vast amounts of information which can be analysed in various ways meeting the needs of a number of users. Thus, managers can easily access variances and performances.
Modern technology has contributed to the change of management accounting roles. Fundamental advances in management operations and productions such as just-in-time have challenged previous methods such as Ford’s mass production. Manufacturing automation has resulted in increased the relation of fixed costs to variable (Bromwich and Bhimani, 1994). New forms of competitiveness such as customer service, differentiation and innovation of products, quality. Hence, more importance is placed on the monitoring of crucial non-financial variables.
Scapens et al (1996) argued that managers not necessarily management accountants have the necessary technology, access of data and in numerous cases the necessary skills to be their own ‘pseudo’ accountants. Burns et al (2001) founded that globalisation, customer focus and new forms of competitiveness have affected the roles of management accountants. There has been increased global competition, market volatility and shorter product life cycles contributing to the reform of management accounting roles.
There has also been an increased focus on overheads as they now contribute to a substantial proportion of business costs. Consequently, there is increased focus on investigating the value added by overhead processes. Nevertheless, the analysis of overheads is a weak section of traditional management accounting. Considering the emphasis placed on traditional methods, it is questionable whether modern management accounting research is gaining recognition by practitioners despite such research anticipating changes in modern day.
Burns et al (2001) argued to the contrary of Johnson and Kaplan stating that a relevance gap does not exist. They argued that management accounting research has highlighted issues concerning management accounting change. Practice frequently searches for a quick fix to problems failing to address fundamental issues. Practitioners and professional sponsors fail to appreciate modern important investigations and management accounting research often seeking solutions to problems using traditional methods.
Arguably, the problem does not lie in management accounting research which has accommodated changes but the way in which it is taught and generally accepted. It’s a shame that new management accounting solutions are not thoroughly researched independently in the way new medicines are. Researchers have acknowledged the requirements of incorporating social science theories, other social and economic elements into accounting in order to expand practice effectively. This was seen with the development of a ‘reward and control systems deriving from micro-economics, in particular agency theory, and social psychology’ (Merchant, 1998).
However, professional textbooks do not mention such investigations and the way in which research communicated is questionable to the sustainability of the subject. It is argued that professional bodies place more emphasis on the examination and training of traditional management accounting methods. Thus, practitioners are denied access to vital knowledge relevant to their tasks. Arguably, if practitioners do not possess adequate grasp of knowledge based on modern research and theory, they are more likely to accept new methods with questionable validity only to find limitations following implementation.
Burns et al founded a growth in international management accounting researchers in the last 30 years despite it being dominated by the West. Thus, management accounting research is now dealing with new issues such as culture and ethnicity (Harrison and McKinnon, 1999), diverse political system regulation and governance (Puxty et al 1987), dispersion of accounting knowledge internationally (Jones and Dugdale, 2002). Arguably, management accounting research is now broader and more flexible accommodating cultural variations. Management accounting research is now anticipating challenges encountered by practitioners.
This includes areas such as ‘contingent system design, motivations and rewards, environmental scanning and strategy, and non financial aspects of control’ (Burns et al 2004, pg. 16). However, it is questionable the level of emphasis placed on new methods anticipating changes in the real world and still the majority of contributions come from traditional methods which have been thoroughly tried and tested. Thus, considering the changes occurring in management accounting research and practice, practitioners need to adopt a cumulative continuous learning approach to update ones knowledge.
Langfield-Smith (1997) founded that traditional methods in management accounting have become more automated as supposed to disappearing supporting the findings of Burns et al. They stated that increased and changed forms of competition, combined with technological advances, have resulted in flexibility and flatter organisations reforming the roles of management accountants. Despite Burns et al concluding that researchers are accommodating the changing roles and requirements of practitioners, their research findings can be criticised by the findings of Lawal (2002).
Lawal (2002) founded that academics and practitioners have different opinions of the important topics ought to be taught. Lawal (2002) founded that academics highly valued budgets, organisational behaviours and IT in comparison to practitioners. Lawal (2002) also founded that academics placed less importance on skills required by practitioners such as time-management, negotiation and team-working. She also founded little innovative and participative teaching methods for example videos, field studies and outside business speakers.
Thus, Lawal (2002) argued a reform in teaching methods to incorporate case studies, real-life projects, group work and presentations and increased involvement by practitioners in teaching, in-depth research projects. This would arguably help management accounting research maintain its’ currency with practitioners. New managements accounting researches, proposals and methods are criticised by practitioners often highlighting various inadequacies and limitations. Thus, many new proposals are discarded questioning whether management accounting research is maintaining its currency with practitioners.
When evaluating new systems, practitioners often fail to refer to academic research findings on the potential obstacles and/or effectiveness. It is questionable as to whether management accounting research has been successful considering its little practical impact. This is vastly to do with the training and education which has excluded modern researches. Arguably, there have been poor mechanisms and incentives for turning research findings into suitable techniques and policies as well as incorporating such findings into teaching programmes as the roles and skills of management accountant’s change.
Observations have found that professional accounting courses including many bodies emphasise on facts and methods abandoning fundamental theory and new research. Consequently, practitioners are sceptical of research having unrealistic expectations attempting to find quick and easy explanations/solutions to difficult problems. Practitioners do not obtain sufficient research skills from professional training. Burns et al (2004) founded that academics and practicing management accountants have different career paths obstructing shared interaction as well as understanding.
Academics progression is based on research accomplishments as supposed to professional involvements. Thus, academics place less emphasis on practitioner focussed research considering the little benefit to them. The issues relating to management accounting research maintaining its currency with practitioners lie in the communication. A method needs to be adopted whereby the two are closely interrelated. The research by Burns et al (2004) has helped provide an insight into the changing roles and skills required of management accountants as well as the changes that have occurred in management accounting research.
Such research by Burns et al is vital in understanding the reasons for changes in practitioner roles as well as requirements in order for management accounting research to maintain its currency with the practitioners. Arguably, research has kept up with times to accommodate changing requirements of management accountants. However, its application in practice is questionable and whether management accounting research is actually maintaining it’s currency with practitioners. Thus, methods should be adopted whereby research is accompanied with supporting evidence involving tried and tested methods.
Suitable mechanisms and incentives for turning research findings into suitable techniques and policies should be developed and incorporated into teaching programmes. Management accountants are part of professional bodies that can incorporate new developments to the area in teaching. Professional bodies often release publications and this method should be used to communicate new management accounting research theories and findings that can be successful in practice. New management accounting research and theories are available on the internet but it is questionable whether such findings are actually used.
Thus, practitioners should be encouraged to read upon new publications of management accounting research. Considering research is constantly developing with roles of management accountants changing, there should be increased publications by professional bodies for members in order for research to maintain its currency with practitioners. Management accounting research is crucial to the healthy development of management accounting and maintaining its’ currency with practitioners.
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