Question 1: Social, political and cultural implications of management accounting Essay Example
Management Accounting in Case AUA
Overview of the report
This report will cover on the specific management issues facing Australian University of Accounting (AUA) and that are related to concept of Management Accounting. Given the case information, there three specific management issues facing AUA and are related to planning, controlling and decision making. The issues identified in the case include: forecasting on the market demands and resources required, cost management and budgeting process.
Forecasting on the marketing demands and resources required
Management Accounting according to Zorn & Taylor (2004), is important in making major decisions in an institution because of its ability to make certain pieces of information available. This includes what the institution wants to do and the anticipated resource implication. However, in the case of AUA, there is a problem in linking what the goals and objectives the institution wants to achieve and the required number of staff (Otley & Fakiolas, 2000). This has made it difficult for the institution to plan on the required number of staff and their roles in the organization structure. This is what has resulted to a situation where there is some discomfort among the academic staff for feeling that they are overworked as opposed to their colleagues, the support staff. The effect of this to the institution is low quality service to the customers and who in this case the students both from local are and international. This is a problem that could easily be addressed by recognizing the role of management accounting in providing vital information for planning (Shields & Shields, 1998).
Cost management and control
In any given organizational setting, Management Accounting is charged with the responsibility of ensuring that any information required by the management to make certain strategic decisions is available (Roslender & Hart, 2003). This is important in ensuring that benefits accrue to a certain decision outweigh the costs and for long-term good. As indicated in the case, there is the fear that most students and more especially the foreigners, are not enrolling with the institution. This is because the fee is very expensive for most of them. This could have been caused by the fact that management has failed to adhere to applying the accounting information in their investment decisions in order to increase efficiency in the operations (Cadez, 2006). This problem could be solved by investing in new technology that could help the costs of operations.
Budget making and control
From the case, it is also emerging that AUA is facing some various problems in the aspects of budget preparing and control. This is because much of the budgeting is done centrally. This in most cases does not cover on the important areas related to expenditure (Holloway, 2004a). For instance, the senior management of the institution operates a central budget system. This will always deny important functions of the institutions the opportunity to be represented in the budgeting process (Macintosh, 1998). Further, this could also impact on the expansion plan of the institution and other important functions. In order to help solve this problem, the senior management needs to give powers to the functions to jump-start the budgeting process. This will ensure proper control and usage of the available resources.
This report has highlighted on the important issues that pertains to management in AUA and that in one way or the other are related to management accounting. The issues includes Forecasting on the marketing demands and resources required, Cost management and control and Budget making and control. Generally, there is need to allow management accounting to play its rightful role in making of strategic decisions since it provides very valuable information.
Cadez, S. (2006). A Cross-Industry Comparison of Strategic Management Accounting Practices: An Exploratory Study. Economic and Business Review, 8(3), 279-298.
Holloway, D. A. (2004a). Strategic planning and Habermasian informed discourse: reality or rhetoric. Critical Perspectives on Accounting, 15(4-5), 469-483.
Macintosh, N. B. (1998). Management accounting in Europe: a view from Canada. Management Accounting Research, 9, 495-500.
Otley, D. T., & Fakiolas, A. (2000). Reliance on accounting performance measures: dead end or new beginning? Accounting, Organizations and Society, 25, 497-510.
Roslender, R. & Hart, S.J. (2003). In search of strategic management accounting: theoretical and field study perspectives. Management Accounting Research, 14, 255-279.
Shields, J. F., & Shields, M. D. (1998). Antecedents of Participative Budgeting. Accounting, Organizations and Society, 23(1), 49-76.
Zorn, T. E. & Taylor (2004). Knowledge management and/as organizational communication. In D. Tourish & O. Hargie (Eds.), Key Issues in Organizational Communication (pp. 96-112 ). London: Routledge.
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