Critical Review of the Traditional Paradigm

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The structure of an organization will affect its financial management. Generally financial accounting is for outside use so they emphasize external reporting; which means they report to third parties such as; Medicare, Medicaid and other government entities and health plan payers. Managerial accounting is considered to be prospective as well as retrospective. It is of the upmost importance that the accountant must follow the guidelines principles and ethical standards of planning, controlling, organizing and directing, and decision making if they want to be successful at their job.

Critically examine the above statements by analysing the contribution of traditional management accounting techniques in an organisation, the necessity for modern management accounting techniques and the role of accountants in the implementation of the modern management accounting techniques in an organisation.

We can safely state that no single theory of management is universally accepted today. To provide a useful historical perspective that will guide our study of modern management, we shall discuss five different approaches to management : (1) the universal process approach, (2) the operational approach, (3) the behavioral approach, (4) the systems approach, and (5) the contingency approach. Understanding these general approaches to the theory and practice of management can help you appreciate how management has evolved, where it is today, and where it appears to be headed. Each of the five approaches to management represents a different conceptual framework for better understanding the practice of management.

When talking about accounting, the first thing we should know is the history of its development. Traditionally, the development is from inductive to deductive. Inductive theory assume what is done by the majority is the most appropriate practice. However, It did not seek to evaluate the logic or merit of

A paradigm is a model of a situation or a mindset. Paradigms can be rigid or constantly developing as you learn and grow, physically maturing or emotionally evolving. Initially, a paradigm was referring to an accepted model or pattern. In Structure, Thomas Kuhn defined a paradigm simply as a group of exemplary problem solutions universally accepted by the members of a scientific community (Brad Wray, 2012). According to Kuhn, what constitute a paradigm are not abstract theories, but concrete applications of the theories for solutions of typical problem. Paradigm can provide new ways of understanding behaviors in humans such as in individuals, organization, family, community or group and global context. The paradigm concept can serve us

Bhimani, A., Horngren, C., Datar, S., Rajan, M. et al. (2012) Management and Cost Accounting. 5th ed. Edinburgh: Prentice Hall, p.369 - 378.

It has been become an issue of great concern that the accounting profession must find a common theory in order to address and put the issue at rest. This therefore, has called for the study of this topic under review “the demand for and supply of accounting theories: the market for excuses. As a result of this several questions have been raised. For instance, the question of why accounting theories are predominantly normative has been put forward by this article? Secondly, why no single theory in accounting profession that is generally or widely accepted? It has been argued that the financial accounting theories have been found to be ineffective most especially in the area of impacting accounting practice and policy, though, this has been

The definition of accounting theory according to Coetsee (2010) is described in two different ways. The first philosophy concludes that accounting theory is a set of general principles that guide the evolution of accounting practice. The other philosophy describes accounting theory as activity of explaining and predicting accounting practice. What the viewer can see from the statement of the first philosophy is that the accounting theory exists before accounting practices meanwhile the latter states that the accounting practice exists before the theory. Since there are many arguments about this matter, many academic researchers have concluded that accounting theory can be divided into two categories which are positive and normative theory.

Accounting is the art of measuring and communicating financial information. To maintain uniformity and consistency in preparing and maintaining books of accounts, certain rules or principles have been evolved. These rules or principles are classified as concepts and conventions. One of the important concept in accounting is “Measurement” (Mattessich, 1977)

The Burns and Scapens framework for analyzing managerial accounting change was built on the study of old institutional economics, which sees "economics as a process of social provision, subject to multiple and cumulative causation." This view culminates in a model that argues that the managerial accounting practices at institutions are subject to a process of constant change, influenced by routines and rules. The institutions contribute to these routines and rules, but so do actions on the part of managers within the institutions. By combining multiple influences over time, we arrive at modern managerial accounting practice. In other words, Burns and Scapens tells us that managerial accounting practice changes over time, influenced by a number of factors including rules, routines and actions.

Management accounting is used to provide managers with information, so they can make informed business decisions. The next category is open-book accounting; this is defined as an accounting principle that aims to improve accounting in organizations. Tax-accounting is defined as the accounting needed to comply with jurisdictional tax regulations. In other words, tax-accounting is used to put tax on goods and services. Accounting has revolved into what every company uses today which is the equation of; Assets=Liabilties+Owners Equity. The meaning of this equation is to show companies what they own and what they owe to there creditors and everybody else.