STRATEGIC MANAGEMENT ACCOUNTING

The meaning of the term strategic management accounting as a sub concept of management
accounting revealed unanimously that participants did not subscribes to a view that such a
separate concept existed. A term that was not used within the lexicon of accountants in practice
according by Lang field-Smith (2008) and Nixon et al. (2011). The discussion returned to the
notion of business partnering in that management accounting is about supporting the managers
and that placing a definition on the specific activities or techniques are counterproductive as it
highlighted the activities of accounting when the focus should be on supporting the business.

Strategic management accounting as the provision of information to support the strategic

decisions in the organizations. Strategic decisions usually involve the longer term, have a
significant effect on the organization and although they may have an internal element and also
have an external element.

THE ROLE OF MANAGEMENT ACCOUNTING

Management accounting refers to a function of tracking internal cost for any business process
that helps an organization, firm or an individual in making decisions related to production,
operation and investment in market. Companies need management accounting to know the
efficiency of their budget, the cost of their operation and then allocate funds accordingly in
production, sales and investment. The role of a management accountant is thus, very crucial for a
firm’s well-being. An accountant role and responsibilities are so huge that even a single
miscalculation or underestimation of any business plan by a management accountant can put a
company’s future in danger.

The role of management accountant include collecting, recording and reporting financial data
from several units of an organization, observe and analyze their budget and suggest their funding
and allocation. This includes estimation of cost of raw material, labor, manufacturing, sales and
advertising, social media networking, lobbying and company’s internal operation cost. A
management accountant need to coordinate with all concerned departments to make an overall
analysis of company’s functioning capital and availability of funds and then the accountants has
to report all the information to senior management and board of directors.

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Management accounting’s main role is budgeting. For a small company budgets are guide to all
expenditures. Small businessman decides a budget every year to fix their expenses on each
process that is operation and production cost and investment. Thus here a management
accountant has to review historical data to prepare an accurate prediction of a year’s future
expenses. Budget ensures coordination between the entrepreneur and his employees in
implementing all the plans for the year ahead.

Time is very important for making all plans for a company’s management. A management
accountant’s functions are time bound since they has to make predictions, budget’s and report
within a stipulated period so that they can be implemented at the time of need. A timely
forecasting is needed with taking consideration of market uncertainties. The budget need to be
according to the available working capital and exposure to market risks thus a certain amount of
accuracy is very necessary. Before reporting the owners, a management accountant has to ensure
accuracy of all information gathered to help in correct decision making.

Business technology software plays an important role now days in preparation of financial
record, their analysis and forecasting. They help in dissemination of budget and its interpretation.
This software provides tools that take required track record and automatically create financial
predictions. Thus time and effort to calculate this lengthy information get reduced saving
management accountant from lots of burden.

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STRATEGIC MANAGEMENT ACCOUNTING CHANGES THE STRATEGIC ROLES
OF MANAGEMENT ACCOUNTANTS

The management accounting practices in use today are largely driven by the informational
demands of decision makers within organizations. It follows that changes in management
accounting can be influenced by shifts in these information demands. Change is an all-pervading
feature of most organizations nowadays, an expected and normal part of the day-to-day
organizational fabric.

There have been changes over the last 30 years in the way the management accountant’s role is
characterized. The main focus of management accountants has always been improving
organization’s performance and profitability. Management accountant has been invariably
relegated to a role of organizational cost keeping and budgeting and on delights of process
costing and budgetary variance analysis. Management accountant is intended satisfy top level
management need and to motivate in achieving organization’s objectives. Management
accountants are no longer mere scorekeepers of past performance but become value adding
members of management teams. The management accountant should be highly skilled and
important members of management team.

The strategic management accounting changes the strategic roles of management accountants by
global economic and financial environment. The globalization of products, services and capital
markets is one main management accounting changes. With global distribution networks, faster
and more economical transportation and immediate access to all manner of information via the
internet and digital communication, the competition faced by most of today’s organizations is
international rather than merely national or local. Many organizations now also face shorter
periods of competitive advantage over their potential rivals and must exploit these situations
quickly and with faster reaction times.

The technological change has had a profound impact on management accounting. There has been
considerable advance in production technology, including advanced manufacturing technologies
and flexible manufacturing systems. There have been considerable advances in the way of
products and services are supplied and delivered to customers and clients. Information
technology has also advanced significantly over recent decades. The information preparation and

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dissemination is so much easier than it once was, less expensive and with incredible capacity
nowadays.

There have a change in strategic roles of management accountants are management styles and
organizational forms. The type of organization, particularly its structure and normal ways of
working can have a significant bearing on the nature of management accounting practice within
that organization. The organizational forms is the extent to which an organization as a social
system with the resource and means at its disposal fulfills its objectives without incapacitating its
means and resources and without placing undue strain upon its members. A good match between
the style of management and operating realities of an organization will substantially influence.