Strategic Management Accounting : The Beginning Essay

1797 WordsApr 19, 20158 Pages
Executive Summary Introduction Discussion 1. Strategic Management Accounting: The Beginning To survive and succeed in the ever-evolving global business climate requires an understanding on how to formulate business strategies that are future proof (Daud, 2012). In reaction to this growing pressure firms are looking for innovative ways to remain competitive and apply a strategic perspective in every aspect of their business. This led to a close up on conventional management and cost accounting practices and sparked criticism for its lack of a strategic focus. It was argued that traditional methods fail to provide relevant information for strategizing due to time delay, bias towards financial reporting requirements and its short term perspective (Johnson and Kaplan, 1987). This saw the emergence of Strategic Management Accounting (SMA). Despite growing interest globally, there is still no definitive consensus about what SMA actually is, what it involves and how it is distinguished from management accounting (Agasisti et al, 2008). 1.1 What is it Essentially SMA falls within the management accounting umbrella. It is management accounting practices becoming strategic through its use within business activities through which strategy is enacted (Cuganesan et al, 2012). The term was coined originally by Simmonds who described it as a collection of management accounting information about the business and its competitors, which are then used in the development and maintenance of the

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