366602 Management Accounting Semester two 2011 Written assignment one

Matthew Zou 0661349

Introduction This assignment is about to analyze how technological advancement; globalization of business and the adverse publicity of accounting scandals can impact on the role of management accountants. The definition of the management accountant roles is helping the company to make decision by collecting, processing and communicating of organizational resources. Organization behaviors can be expressed by three main activities, which are planning, directing and motivating; and controlling. Referring to the roles of management accountant, planning is involved by evaluation of capital, information on products and markets and budgets. Directing and Motivating is involved by developing standards for operation, responsibility accounting, motivating employees to perform better; Controlling is involved by monitoring performance and results, reports on staff, identifying variations from plans, prompt actions on problems. The roles of management accountant in the last decade are more focus on understanding of the business as whole information to maintain a competitive advantage to achieve strategic objectives. Due to those three factors is changing rapidly, the current roles of management accountant is modifying as Lean Production and just in time; Six Sigma; Activity-base costing and management; Strategic positioning; Cross-functional perspective; TQM; and so on. Technological advancement and the roles of management accountant Nowadays, as the technology is developing rapidly, so any management accounting system that advances in technology take advantages on how company operates. As the result of computer industry and E-Commerce became more and more important in business, technology impact the roles of management accountant in many way, for example, if the management accountant implement of an advanced information systems (Enterprise Resource Planning), ERP is a broad term for any software application that integrates all business processes and data into a single system (Waxer, 2006), the system is making accounting information processing and evaluating more efficient, so that the roles of management accountant emphasis shift processing transactions to analysis. ERP can save time that the management accountants have more time to analyze data information and use this information to make management decision, instead of calculating the final figures on the transactions. Before, accountant must spend more time to finish month close, but with the help of ERP, the result data show up straight away, so that the roles of accountant can emphasize other events, like variance analysis, budget and forecast.

In last decade, management accountant can be briefly described as someone prepare accounting information to assist management to make business decision, but now the roles of management accountant have majorly changed because of popularity of advanced information system, such as ERP, SAP. It required management accountant must add more value into company by helping management process through accounting expertise, it have to take decision-making role in cross functional departments; and integrating operational and strategic control. The management accountant must broaden the nature of their role and become a strategic management (Collins, 2000;Murphy, 2004;Parker, 2002;Pierce, 2001). Globalization of business and the roles of management accountant The environment of business is developing in the past ten years and the trend toward globalization, it is not only shift toward a service economic, but only globally competitive. And globalizations made firms more creative and explore and transfer competences across management accounting operation. As we all realized, it is impossible to ignore the globalization if firms was successful, nowadays, the world is more intertwined as lack of tariffs and free trade is active; Globalization of business is bringing the international competitors into local market, which it is unavoidable. As the result, international company with advanced systems is threatening the survival those local laggard firms. Consequently, in order to firms can better adapt a global marketplace, most of them apply advanced decentralization mode, which is the delegation of decision-making authority throughout an organization by giving manager the authority to make decision relating to their area of responsibility. (Garrison et al 2010 pp32). So it required the current management accountant to gain abilities to deal with international accounting information. For example, the economy of New Zealand is so rely on agricultural industry and export/import trade, there are many economic barriers that have been disposed because of the global free-market. Fonterra Group Limited, the biggest dairy co-operative company with nearly 17 billions revenues in New Zealand. Fonterra is kept improving the advanced process management in order to deliver customer value. In the past, those manufacturing firms would produce as many as they can, even if the wholesale do not need it immediately. The diary product of Fonterra cannot last longer day. So the company applied Lean Production (just-in-time production), which can better organize firms sources to operating processes and pull units through those processes in order to react customers demand. The reason of using Lean Production is fewer defects, lower inventories, and much less wasted effort, sooner order response. The theory of constraints and six sigma are another two approaches to improve management process. As global competition intensified, management accountant were awarded that they have to complement the advanced cross-functional orientation to improve the business processes.

The adverse publicity of accounting scandals and the roles of the management accountants Acting ethical behaviors, it is basis thing to do for a management accountant. Unfortunately, there are still some accounting scandals included Enron, Tyco International, HealthSouth, WorldCom, and Rite Aid. It caused extremely bad influence that investors and creditors will lose trust o the company. Accounting to those scandals, most of company found out the value of equity dropped rapidly and decline the trust ratings to creditors, eventually led to bankrupt. As the result of those scandals, some regulatory is issued to restrict the roles of management accountants, such as corporate governance, the statement of ethical professional practice. Moreover, The Sarbanes-Oxley Act of 2002 was issued, which all of companies with stock traded have to follow. Unlike before, the ethical problems have highly impact in the current roles of management accountants. Summary and Conclusion After evaluating those three factors and example analyzing, it is clear that those three factors are not only changing lots in the last decade, but only impact on the roles of management accountants.

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Reference list: Book: Garrison, R.H, NOREEN E.W and Brewer, P.C. (2010), Management Accounting, 13th Edition, McGraw Hill, Irwin, DC Journal articles: Anup Agrawal , Sahiba Chadha (2010) .Corporate governance and accounting scandals 2-35 Aidan O Mahony , John Doran (2011). The changing role of management accounting; evidence from the implementation of ERP systems in Large Organizations 1- 7 Course material: Week 1 and week 2 course PowerPoint slips