Critically evaluate the social implications of decision making in management accounting with examples Essay

Evaluation of the social implications of decision making in management accounting

Lecturer

Table of Contents

3Introduction

3The organizational theory

4Social implication on environment

4Management accounting as an Interpretive Perspective

5Social implication on Individualism Approach

5Social Justice Approach

6Social implications of Contingency Theory on decision making

7The social implication on corporate accounting culture

7Critical Perspective theory

8Labor Process Perspective

8The current research in management accounting

9Conclusion

10References

Introduction

Adams (2000) state Management accounting is field that relates in management decision-making partnering with performance management systems, planning devising system and, and providence of experience in money and financial news and management to help management within the formulation, implementation strategy of a company. Management accounting in addition provides the required data to help management in selections creating and internal control (Adams, 2004).

Ittherefore serves the management in the providence of the required as well as recommendation and advice on the structure higher cognitive decision making process. The choice creating in accounting has been classified aseither tactical and strategic and short term or long term of the cognitive decision process (Mahoney & Roberts, 2007).

Social implication on management accounting will offer vital advantages to the firms at hand .through redefining the accounting successes in terms of social implications on the environmental issues (Orhan & Graham, 2011). Social accounting in addition seeks to strengthen the choice creating of business case for investments in social ventures .it additionally seeks to market behaviors of effectiveness in doing the proper factors in terms of social and environmental impacts. This is often vital within the management higher decision making process for resource extractions and most of the financial establishments that are besieged to articulate their environmental and social impacts.

The structural organizational theory

Basicorganizational structures utilized in the decision making processes to analyze and arrange financials operations differ and varies from management to management in their degree of centralization and decentralization. Centralized decision structures are units mostly and sometimes defined as tall organization due to the result of vital selections originates from the top immediate in hierarchy level and passed right down to the lower section of the hierarchy. (Rob, Dave & Carol, 2010). Conversely, organizations, withdecentralized structures of decision-making, involve a few hierarchical levels such as management and operational corporations are generally target-hunting by a philosophy that has favorabledisposed towards some kinds of worker direction and individual autonomy (Orhan & Graham, 2011).

Social implication on environmental settings

Management accounting systems are primarily a matter of internal concern and responsibility, the Potential economic, social and environmental advantages external to the enterprise resulting from widespread use of environmental management accountingtools have stirred up some governments to undertake active programs for promoting on suchtools. Environmental indicators for management the decision making processes embody both: physical indicators for material and energy consumption, financial indicators for costs and prices, final disposal, savings, and revenues associated with potential environmental impacts.

Management accounting as an Interpretive Perspective

The social implication here is bothered with the social construction and disbursement of rationality and therefore the means during which this logical ways affects the structure decision making (Brammer & Millington, 2008). Solely a number of structure and social theories including political views on the institutional theory, resourcedecency, and therefore the social scientist professions area unit checked out to look at the connections of interpretative views. Interpretive views of social control accounting have begun to ascertain social control accounting practices and knowledge as socially created phenomena with the total implications of the facility and social construction instead of a technically rational perform driven by serving the interior operations of organizations.Social control in management accounting asinvolved within the social aspects of reality instead of being passively reflective of the facts as delineated in the contingency theory (Rob, Dave & Carol, 2010).

This social perspective isa ceremonial means for symbolically demonstrating an organizationalstructure commitment to a rational course of action. Develops legitimized classes and social control accounting in the cognitive processes is employed to set a legitimizing and principle organizations through the development of rationality and potency images by Mahoney & Roberts, 2007.Socially created development with the total implication of the facilities and politics of social constructions.

Social implication on Individualism Approach

Individualism approach contends that acts are ethical once they promote the individuals best long term interests (Brammer & Millington, 2008).The individual self navigation is predominate and external forces that limit self-sufficiency ought to be severely restricted therefore social controls in management accounting should think about on the individual approach on their cognitive decision making processes (Rob, Dave & Carol, 2010).

Individuals calculate the best long-run advantage to themselves and therefore organization asa livemeasure of a decision’s success. This action is meant to provide a bigger magnitude relation of fine rather unhealthy for the individual compared with different alternatives that is the right to perform the corporates tasks. In this social theory, with everyone following their self direction the greater smart option is eventually served as a result of people learning how to accommodate one other in their own long-term interest. This is often believed to lead to honesty and integrity as result of its works best within the long term planning of decision (Rob et al., 2010).

Therefore, individualism ends up in behavior towards others that matches the standards of behavior that people will wish towards themselves.one worth of understanding this approach is to acknowledge the short run variations if planned .people maypropose for short term interest supported by individualism and ending up missing the purpose of the planning process thus individualism is easily misinterpreted to support immediate self gain ,however its unpopular in today’s extremely organized and group oriented team of management accounting (State &Popescu, 2008).

Social Justice Approach

Social justice approach accents that ethical higher cognitive process should be supported standards of equity, nonpartisanship and fairness.3 styles of social justice units of concern in the decision making process in management accounting .is procedural justice, distributive justice and antagonistic justice (Orhan & Graham, 2011). Distributive justice needs completely different treatment of individuals not to be supported their discretionary options.

Individuals whoare similar in respects relevant to a decision ought to be treated equally within the management of accounting corporations in their managing of pay cognitive processes male and females should not receive completely different salaries if they are performing the same constant work (Cummings & Patel, 2009). People however who disagree during a substantive way ,like responsibilities or the working skills will be treated differently in proportion to the variations in skills and responsibilities among them. This however should exhibit a transparent relationship to the structure missions and goals .Procedural justiceinvolves that rules be administered equally and fairly. They must be clearly declared and systematically enforced (Mahoney & Roberts, 2007). While antagonistic justice system states that the individual ought to be paid for the value of their misfortunes by the responsible person’s .more so people should not be controlled for matters over which they can’t manage or control.As a result of this it assumes that justice is applied through laws and rules.

Managers are expected to outline attributes on that completely different treatment of staff as acceptable to their working conditions however this approach will justify as moral behavior efforts to rectify past wrongs done and act truthfully according to the principles, additionally they must put into effect job relevance variations as the basis for various levels of promotion and pay opportunities. (State & Popescu, 2008).

Social implications of Contingency Theory on decision making

The social implication here is the control processes and structures of organizations in the context of social control on managerial accounting. Contingency theory is «a theoretical perspective of structural behavior however contingent factors like technology and therefore the task setting affected by the planning and functioning organizational is supported by its historical roots based on the fifties and sixties, the theory represent a fusion of structure theory and the social point of view of management accounting.). Through this s like control and decision making process. It’s the acute concern for problems with coordination and management that has provided vital contributions to social control understanding of issues relating to budgeting and strategic style of knowledge and management system .historically this theory mirrored and promoted the assumptions that decision making ought to be logical and rational thus the social control accounting data employed by managers served as the quantitative nomenclature of social control. But the currentaccounting researchers have tried to widen the contingency arguments to embrace the relationships between firms’ strategies and methods and the style oftheir decision, control and management systems.

While the present and traditional theory of contingency has had an overall broad influence on management accounting, it’s been criticized for representing a deterministically historical read of organizations that provides restricted insight on the mediating processes of organizations higher cognitive process in management accounting

The social implication on corporate accounting culture

The corporate social responsibility may be an idea whereby firms integrate social and environmental issues into their business dailyoperations and their social interactions with their stakeholder on a voluntary basis. This is a method by which the managers at Intervals Company deem and discuss relationships with stakeholders further as their roles in relevance to the common advantages in conjunction with their activity characters with relevancy of the fulfillment and accomplishments of those roles and relationship (State &Popescu, 2008).

The social responsibility on the corporate management accounting influences considerably the line of work profession, exploiting on the crucial competencies for instance the Environmental Management Accounting (EMA) is the management of environmental and economic performance through management accounting systems and practices that specialize in each physical data on the flow of energy, water, wastes and materials further as financial data on connected prices, savings and earnings (Mahoney & Roberts, 2007). The management accounting system monitor and form reality within the company culture ,the social implication on accounting and company culture is to regulate the choice creating of financials in social organizations like hospitals (Cummings & Patel, 2009).

The social implication here is that the higher cognitive process in policies for addressing property problems that’s the social and environmental problems .evaluating the company social responsibilities impact and to create certain their call complies with the environmental and social laws.

Critical Perspective theory

The critical perspective is mainly concerns itself with the role that management accounting plays in relevance to the higher cognitive processes in decision making of problems relating to conflicts, power and domination as in the capital and labor organizations (Adams, 2004).. The implication here is how the management account will relate to this social theory as they partake in their roles in the planning and decision making in a company setting to curb the crisis in case of conflict in work placesThe critical perspective provides an even more direct view of power and politics through the structure and social theories (Mahoney & Roberts, 2007).

Labor Process Perspective

Labor process theorist argue against management accounting as a neutral tool in serving the overall interests, of efficiencycontributing to the management and domination of labor, and stresses on its role in legitimizing partisan interests, and in reinforcing the dominant mode of production. This theory is per the opposite of the structure social views like the contingency and informative it adds the sense that it embeds management accounting during the wider contextual preferences than the additional ancient approaches .This labor method theory emanates from these approaches by specializing on the structural antagonism between categories inherent in capitalistic governance in their higher cognitive processes (Hopwood, 2009).

The pure cause of management accounting is to demonstrates the ambiguous position of mangers in accounting corporations , to contributes to the management control and domination of labor, reinforces capitalist production, they have to focus this social aspects in managing their cognitive processes in their decision making plan (State &Popescu, 2008).

The current research in management accounting

A number of the latest difficult objects of mensuration and management have developed more recently as well as their intellectual networks of organizations capital (Magness, 2006). Their roles and styles of budgeting systems can be dynamic, whereas abundant of this implementation and innovations concentrates on new cost of accounting or performance systems of measuring new challenging objects ,additionally amendments of roles of management accountants I corporations have also been incorporated in the new and arising researches on management accounting in recent times(Cummings & Patel, 2009).

According to Orhan & Graham (2011).The rate of amendment within the appliance of and analysis on the management accounting seems to be increasing, several organizations try to vary their ancient and implementing innovative and management accounting in their practices in their decision making plan supported by new management accounting strategies that are practiced, business concept, structural processes and knowledge systems (Cummings & Patel, 2009).

Current developments made public on top of offer several new opportunities for innovative analysis in management accounting, and a made integration of existing accounting data and therefore the presently rising apply to the diverse problems (Cramer, 2003).

According to Brammer& Millington (2008). The current analysis aims at specializing in the role of science and different theoretical views in researching innovative practices, comparative analyses of assorted theoretical approaches, new theories for researching innovative apply, ways in which of up the connation, validity, and dependableness of theoretic enquiry, role of analysis style in management accounting studies, analysis methodology problems in analyzing innovative practices and innovative ways in which of conducting management accounting research (Hopwood, 2009).

Conclusion

The social implication of management accounting affects its decision making and other cognitive processes in a wide variety of means as mentioned numerous social theories and opinions direct how the social control accountants in the managerial accounting create their daily selection as part of their work (Cramer, 2003). Social implications on management accounting will offer vital advantages to the firm decision making processes how these managerial accountant play their role in making and planning for the company strategic goals and objectives. The social accounting implications will strengthen and solidifies the choice creating of the business case for investments in the wider social avenues, by mostly redefining how the company relates to the various social aspects of the society, which is its success in the environment and cultural status (Rob, Dave & Carol, 2010)

These social theories used by the research community are borrowed from related fields of accounting and social. Though they are capable of explaining variety of problems with interests they are rarely intrinsically or in conjunction with management accounting practices useful in explaining what styles the circumstances these theories aim to present a steering application. However rarely they address the potential shortcomings and inherent consequences. Thus the social aspect plays an important role in decision making of management accounting .its responsible for the implication of sustainability that is social and environmental sustainability in an organization.

References

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