Sunday, August 18, 2019
Management Accounting Essay -- Business Budgeting Accountancy Accounta
Management Accounting Introduction Management control is to ensure that the organization achieves its objectives. Once the objectives have been agreed, action plans should be drawn up so that the progress can be directed towards the ends specified in the objectives. Such objectives are used to make comparison with alternatives in decision making & are also the critical elements in evaluating the success or failure of the action plans. One of the most widely used management control systems is the budgetary control & the term Ã¢â¬Å"BudgetÃ¢â¬ itself is one of the objectives that is expressed quantitatively in financial value . Undoubtedly budget is drawn up for control purposes & guiding the organization towards its objectives. The budgeting process is done quite arbitrary by estimating the expenses in the next year or adding a few percentages from last yearsÃ¢â¬â¢ budget. Any contingency & extraordinary dollar spent would be acquired from the miscellaneous item; as long as it is still a positive figure. The main control function of the budget follows the same old rule: no budget, no expenses. The scope of this paper is to explore better control & management in the organizationÃ¢â¬â¢s financial resources deployed in training & development, especially in avoiding the ineffective use of resources, increasing accountability, streamlining & improving existing procedures, & managing & measuring performance in a systematic & data-oriented approach. Control & Performance Measurement System Referring to Broadbent & Cullen , management control is the process by which management ensures that the organization carries out its strategies, i.e. resources are obtained & used efficiently & effectively in the accomplishment of the company objectives. As pointed out by Brooks , the role of management accounting is to concern the performance of the organization & the way in which its activities are planned & controlled by its management. Further supported by Bromwich , the major functions of management accounting used by management are to plan, evaluate, & control within an organization & to assure use of & accountability for its resources. Although most literatures reviewed (Jeans & Morrow , Murphy & Braund , Clark & Baxter ) stated that the major use of management accounting control is on manufacturing process, the concept of performance measurem... ...ctivity-Based CostingÃ¢â¬ , Management Accounting, November 1989. 6. Murphy J.C. & Braund S.L., Ã¢â¬Å"Management Accounting & New Manufacturing TechnologyÃ¢â¬ , Management Accounting, February 1990. 7. Clark A. & Baxter A., Ã¢â¬Å"ABC + ABM = Action, LetÃ¢â¬â¢s Get Down to BusinessÃ¢â¬ , Management Accounting, June 1992. 8. Kennedy A., Ã¢â¬Å"Activity-Based Management & Short-Term Relevant Cost: Clash or Complement?Ã¢â¬ , Management Accounting, June 1995. 9. Robert G., Ã¢â¬Å"Fixed Costs & Sunk Costs in Decision-MakingÃ¢â¬ Management Accounting, January 1992. 10. Broadbent M. & Cullen J., Managing Financial Resources, Second Edition, Butterworth-Heinemann, 1999, p.121. 11. Mills R. & Cave M., Ã¢â¬Å"Overhead Cost Allocation in Service OrganizationsÃ¢â¬ , Management Accounting, June 1990. 12. Claret J., Ã¢â¬Å"Budgeting with FlexibilityÃ¢â¬ , Certified Accountant, November 1988, p.36. 13. Jones R.B., Ã¢â¬Å"Budgeting & Cost Management: A Route to Continuous ImprovementÃ¢â¬ , Management Accounting, February 1992, p.36. 14. Newing R., Ã¢â¬Å"Out with the Old, In with the NewÃ¢â¬ , Accountancy, July, 1994, p.49. 15. Hopwood A.G., Ã¢â¬Å"Accounting & Organization ChangeÃ¢â¬ , Journal of Accounting & Public Policy, Vol. 8, No. 3, Fall 1989.