Management accounting has become a popular topic as the economic globalization

developing at a high speed and the world is lack of management accountant, As The
Ministry of Finance of the People's Republic of China (2013) pointed out that there
are 20 million accountants in China and 95% of them are financial accountants while
in the USA there are 5 million accountants and 80% of them are management
accountants. So in conservative estimate, China still needs at least 3 million
management accountants in the economic globalization which means that China has
excess financial accountants and is badly in need of management accountants.
Management accounting is a burgeoning certification and its aims are value creation
and enterprise maintenance, Based on this, management accounting is an effective
tool for the integration of enterprises strategy, business and finance. Cost control,
management and ethical issues are the main parts of management accounting. Many
would argue that management accounting is the final destination of accounting as in
addition to the financial knowledge, it also contains a complete system of enterprise
management, and the well performed enterprise management is the key factor in the
economy globalization especially in the developing countries (CIMA 2012).This
essay will discuss how management accounting can improve an enterprises
competitiveness in the economic globalization. First it explores the difference
between financial accounting and management accounting. Second the essay will
analyze the management accounting in three issues and shows how these issues can
improve the enterprises competitiveness. Finally it will summarize to which extent
management accounting can benefit to the enterprises competitiveness.

History
Management accountings arose in the 19th century in the railway and spinning
industry to measure and manage companys internal business. At that time, in order to
measure the efficiency of the internal production process without considering
information on market transactions, the mill, arsenal and other companies begin focus
on the internal management information. In 1855, New England Leaman (Lyman)
mill based on the double-entry bookkeeping and create the first set of cost accounting
system which contains detailed information to show the cost of the. In the mid-19th
century with the emergence of rapidly growing railway industry promoted the
development of cost accounting since the railway company is the biggest organization
and has a complicated operation structure at that time across a wide geographical area
so it needs cost management to help deal with companys cost control part to pursue a
more effective cost management system.

Contrast between financial accounting and management accounting

There are both internal and external perspectives in a company so there are
financial accounting and management. Financial management is the external
accounting as it prepares the information mainly for external use which consist of the
statement of financial position, income statement and cash flow that can generally
introduce the situation of the company and help external users make decisions,
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income tax collection and other purposes. However, in addition to the issues
mentioned above, management accounting can help internal decision makers make
professional choices by supplying internal reporting to them which can help analyze
and make better decisions and formulate a comprehensive strategy and plan for the
whole company. Anita (2000:54) pointed out that the worlds business environment
becomes more complex than before in the 21st century because of the economic
globalization, so the rules of competitiveness also change. The management
accounting will play a significant role in this situation as management accounting
involves control, management and ethics issues which can improve a companys
Flexibility and adaptability to make its management structure more efficient. So there
will be a large demand for management accounting in the worlds business
environment. Compared with the traditional financial accounting, management
accounting focuses more on combining the future strategy with the current situation
which may require management accountants a comprehensive knowledge that
combine several skills together, such as information system, human resource,
operation control and marketing. In a company there may be the IT manager, line
manager, HR manager who are the experts of their own area and more professional
than the management accountant. However a management accountant can integrate
such areas information together and give an overall analysis to the problem that the
company may confront (Hill2003; 36).

Improve in three parts

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Management accounting can be divided into operation control, management system

and ethical issues and these are related to almost every area of a large companys
structure. The process of a comprehensive management structure can be divided into
strategy planning, execute and feedback stage which are totally covered by
management accounting.
Operation control
Strategy is the process through which a company can decide the whole structure of it
and settle down the objective for a long time period, while planning trend to be a
shorter term orientated and they combine together to formulate the strategy planning
(Coates et al 1996;37). During the strategy planning stage, top managers will analyze
and conclude the data to control the cost and improve the efficiency of the program.
Coates (1996) also pointed out that during the strategy making the attention should be
focused on the reality and be creative which means that the board should attempt to
bring together a wide range of information based on the companys situation and
operation in order to make the best appropriate strategy the company needs to fulfill
its objective over the duration of the development.
Management system
After the strategy is confirmed, the company needs to execute the strategy in an
effective way. As management accounting has a complete management control
structure which can support quality control, performance evaluation and risk
avoidance through the advanced information system. These are all closely related with
the control system. Throughout the world, how to increase profits and reduce costs is
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the main function of the application of management accounting as management

accountings strength is the cost management and control, which is more advance than
financial accounting. Management accounting control cost, of course, is not only to
lower the cost or just the content of cost management. It concerns the modern quality
management such as TQM (total quality management), TPM (total productivity
maintenance), six sigma management technology and modern manufacturing
technology such as JIT, lean production. Management is used for calculation of
quality cost, quality management; it is the internal accounting which combines
management and accounting together to manage the company. Management
accounting provide the enterprise managers with strategic and tactical information for
the daily operation decisions and performance management. (CIMA 2009).
Ethical issue
The

last

issue

the

essay

will

discuss

is

CSR

that

is

short

for

Corporate-Social-Responsibility, which refers to that while the enterprise create

profits for their shareholders and response to their shareholders, they should also
focus on the interests of workers, consumers and responsibilities of environment,
communities, its core is to protect workers' legal rights and interests from a wide
range of non-discrimination, child labor is forbidden and forced labor, in
addition ,health and safety working environment should also be concentrated.(CIMA
1991). Lindgreen (2010) noted that CSR plays a significant role in the management
accounting system as with the economic globalization develops, companies confront a
more competitive environment and social attitude toward the company show a vital
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position as customers loyalty is the main support for a company. Management

accounting is the institute that connects CSR with the operation of the company and it
has a deep research on the influence of CSR to the enterprise development in
economic globalization.

Summarize
With the steady development of the worlds economy, the most challenging issues
confronted by corporate managers are not "how to succeed" but "how to keep
sustainable success, The world has entered an era of meager profit, manufacturing
industry is facing increasingly fierce market competition and it has serious waste of
resources, high input and low output is another problem in the manufacture industry.
So the quality and cost advantages are the final destination to achieve. Management
accounting can help other managers solve this problem in their day to day running of
the business through its more holistic knowledge scale and management control
system. However there is insufficient management accountants around the world.
Junyong (2012) pointed out that over the next decade, the personnel structure of the
accounting profession will be change a lot. Low-level financial and accounting
accountants and other staff will be replaced by high-end management accounting
accountants, so there expected to have two-thirds of the general financial accountants
will be forced to face unemployment or career change. " As economic globalization
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develops, an increasingly pressure for the business market of public bodies,

government and commercial organizations continue disturbing the international
business environment while management accounting can adopt to the fickle situation
and improve the companys capacity by reducing cost and minimizing the risk of
economic globalization. Management accounting will show a more significant role in
the future business market.

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Reference

Adam Lindgreen and Valrie Swaenl, 2000. International Journal of Management

Reviews

ANITA ALLOTT, 2000.

Management Accounting (British). 78.7 (July 2000): p54.

CIMA., (2005). CIMA MAY 2005 Q&A Performance Evaluation. 1st ed. Burlington:
Elsevier.

CIMA, 2012.Enterprise operation (E 1) London: BPP Learning Media Ltd.

Coates, J., Rickwood, C. and Stacey, R. (1996). Management accounting for strategic
and operational control. 1st ed. Boston: Butterworth-Heinemann.

Scapens, R., Burns, J., Baldvinsdottir, G. and Ezzamel, M. (2003). The Future
Direction of UK Management Accounting Practice. 1st ed. Oxford: Elsevier.

Ministry of Finance of the People's Republic of China, 2013.Cost accounting systems

of enterprise
Available
http://jx.mof.gov.cn/lanmudaohang/dcyj/201312/t20131227_1030064.html
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at:

[Accessed 5 August 2014].

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