The Role of Accountants and Accounting Practices in Managing Contemporary Organisations

The Role of Accountants and Accounting Practices in Managing Contemporary Organisations

In order for an organisation's management to survive in a market economy environment, with intense competition, there is need to have objective information. This information describes the shape and formation of the entity's performance. Such information is often present in the company's financial statement (Abernethy, Bouwens & van Lent, 2010). Fundamental information like this one leads to an increase in the development of management accounting and cost accounting systems that have adequate information regarding the firm's performance. Working under auditing, financial reporting and taxation, management accounting has played an essential role in helping organisations achieve set goals. Though this discipline is often sidelined to the aforementioned disciplines, management accounting has invariably been relegated to a special role of budgeting and cost keeping in organisations.

As Berry & Otley (2005) assert, management accounting has a significant long rich history, and how it contributes to the controlling and planning or organisational operations. Arguably, management accounting is a broad discipline that works hand-in- hand with decision making since it has a core impact on the outcomes of an organisation's strategies. However, it is indisputable to say that with change being inevitable, the role of management accounting has had to change. The forces of change, according to Abernethy, Bouwens & van Lent (2010), are responsible for the creation of an impact on the accounting profession, and thus changing the management accountant's profile in terms of roles and the general accounting work. This paper pays a lot of concern on how management accounting focuses on organisational strategy. It should not be forgotten that the core objective of management accounting is to safe guard and serve all strategic objectives of an entity.

Various terms are in use to describe the present role of a management accountant. Some of the common terms refer to a management accountant as a business partner, a strategic management accountant, hybrid accountant, and a modern business oriented accountant (Baiman, 1990). Nevertheless, common themes are emerging which characterizes the role of a modern management accountant. In pursuit of the new role, it envisages that the management accountant's work methodologies will change particularly, due to an increase in collaboration with outside chores, and working in cross-functional arenas. Despite the presence of a consensus in the changing nature of the roles of a management accountant, there is the existence of empirical evidence which depicts that, translating this into practice will stagger. Ancient and traditional methodologies apparently are still powerful in terms of demands on an accountant's time. According to a research, a management accountant allocates 66% of his time to process transactions, and 11% is put in decision support. Despite this, there is no argument that the role of the management accountant is changing (Roslender, 1996).

Hopwood (1976) highlights how management accounting and control is persistent in developing and evolving with time. As a result of this, it is extremely essential to comprehend the various operations in this discipline in association to modern organisational context. According to the author, ancient approaches in relation to management control have rendered invaluable assistance in the definition of an essential topic of study. However, the methodologies employed in the past had their predictions based on models that revolve around organisational functioning, which has been passed by time. Present organisations illustrate adaptability, flexibility, and constant learning. This is both within its borders, and across organisational borders. These are facts that traditional methodologies fail to encourage (Edwards, 2009).

It is noted that there exists considerable anecdotal prove which suggests that the practices within an organisation reflect the entities' needs. Therefore, as a management accountant and control personnel, it is vital to codify, and observe the numerous developments taking place within this significant discipline. While many concur with the fact that ancient management accounting systems had their own limitations, the form and nature of any possible change still remains open for challenge. It is in this regard that the management accounting control systems that many present organisations employ in dealing with external environment is increasingly not clear, turbulent and subject to unpredictable and rapid change. This still remains an area that needs a lot of examination (Agndal & Nilsson, 2009).

Globalization and business internalization has made it possible for the transfer of information and capital across national boundaries (Johnson and Kaplan, 2007). Though these transfers take place, the economic power still resides with the owners of specific knowledge. Management and business location is currently becoming highly irrelevant and accounting and management is transforming into a multi-discipline (Roslender, 1996). Market power and the number of alliance and non-competitors are growing rapidly. As a result of this, accounting professional associations has no option but to promote a number of qualifications alongside professional accounting studies to all their members. Banks, financial planners and various financial institutions are encroaching on the accounting market.

Similarly, some large and medium sized enterprises have opt to present themselves as business advisors from a multidiscipline point of view, and not necessary in accounting (Agndal & Nilsson, 2009). This shows how things are changing significantly, and the effects this has on management accounting discipline. The present economy is built on knowledge. This implies that it is aware of the fact that the organisation's ability to generate power resides in its intellect and not on financial or physical resources (Saravanamuthu & Tinker, 2003). Therefore, knowledge accountants and managers of the traditional bean-counting phenomenon are no longer valuable to hold mortgage, or act as gate keepers of crucial organisation information. Financial and non-financial means which are electronically available to highly sophisticated managers and clients, currently define the success of an organisation.

According to Hopper, Northcott and Scapens (2007), the contingency theory of management accounting denotes that there are no universal accounting systems within the business environment for all entities. In relation to the contingency theory of management accounting, there is a clear description of situation

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