The Changing Role of Managerial Accounting in a Dynamic Business Environment

In the paradigm of management, empowerment is viewed as losing authority and control over people and resources. Generally, people resent being driven, controlled and being seen as part of company equipment. This breeds apathy in employees towards the organisation’s intents in the market place and destroys accountability.

Managerial accounting focuses on the needs of internal users (managers) and on data relevant for decision making.

Reduced employee turnover. Employees often leave because they feel not valued. Empowerment increases employees value, understanding their role in company’s success. They are motivated

- Helps to identify opportunities in the market place. - Minimize the risk of doing business. - Uncovers and identifies potential problems. - Create benchmarks and helps track progress. - Evaluating the success of the business.

Dynamic companies use their internal budgets to make course adjustments throughout the year. For instance, if a product or service is not doing well in the first half of the year in comparison to the forecast or budget, the management team can use that information to make necessary changes or to scale back operations until market trends or the economy changes. Managerial accounts are the value creator for the organization (Collier, 2003). Their forward-looking capacity will help the organization to plan and make decisions for future profitability. The management accountants have a dual role to perform in an organization. The management accountant works as a strategic partner to provide strategic based financial and operational information (Collier, 2003). They are also responsible for business team management in organizations. The management accountant plays a prominent role in preparing financial reports, risk, and regulatory reporting, aggregating financial information, forecasting and planning important organizational information. Managerial accountants often perform cost analysis of products and divisions, which include variable and fixed costs. The production decisions made by managers are a direct result of information received from managerial accountants.

Empowerment is a process that increases organizational power by including team working, sharing and solidarity. This relationship is based on trust which is considered as an output of empowerment. Empowerment deals with employees’ cognitive growth which enables them to control their fundamental behaviour towards their work environment. Implementation of empowerment is a holistic reorganization of the way a business thinks and does things (Page,

While the traditional management accounting techniques may have contributed to planning, controlling and decision making processes at the nation state level, the requirements of globalisation in which nation states now compete for survival in the global market rather than state market, has rendered traditional techniques obsolete and therefore calls for the mobilisation of modern techniques of management accounting. It also calls for the service of accountants with modern management accounting techniques for a successful implementation.

Employee empowerment is to give workers a greater voice in decisions about work-related matters. Their decision-making authority can range from offering suggestions to exercising veto power over management decisions. The range of decisions could go as far as: how jobs are to be performed, working conditions, company policies, work hours, peer review, and how supervisors are evaluated.

In many companies, operational employees also need information to handle tasks and make decisions that were assigned to supervisors. This trend, called empowerment, gives employees more

Furthermore, it is our goal to ensure that all of the necessary visibility and metrics currently being used by each department remains as transparent as possible. The ability to manage and view the general ledger, accounts payable and receivable, inventories for each manufacturing vertical and project, and provide these through customized reports that should be not only tailored to each group but they should provide for greater control of the enterprise as a whole without the reliance on individual accounting teams to maintain accuracy and performance of their business units.

Baruch Lev and Feng Gu authors of “The End of Accounting and The Path Forward for Investors and Managers” indicate that over the past 110 years, the structure and content of financial reports has not changed, and that the role that these reports play in influencing the decisions of investors has greatly diminished. Lev and Gu make a case that non-transaction events that are not captured by the financial reports such as those disclosed through 8-k filings with the Securities and Exchange Commission (“SEC”) have a greater impact on stock prices, and thus more useful to investors. In addition, they suggest that one of reasons for the decline in usefulness of financial reports stems from the increase of estimates that has made its way into these reports (Lev and Gu 2016).

Empowerment is the best way to promote a good long-lasting employee-customer relationship (Fragoso, 1999). Empowerment can also bring certain benefits to employees of an organization. It makes the employees give more input to company improvements; it promotes higher productivity, and is a good balance between their personal and professional lives. It exercises employees’ minds to find better solutions to problems on the job and increases the employees’ potential for promotions and job satisfaction. It results in personal growth, feelings of confidence and control in themselves and their companies. It makes workers utilize their potentials and it enables them to stand behind their decisions, assume risks, participate and take actions. It is a win-win-win situation: customers benefit from employees, organization benefit from the employees and the customers, and employees benefit from higher confidence and self-esteem (Fragoso, 1999).

Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4

For instance, the concept of cost estimation which assists in estimating future expenditure as the expenditure depends on the cost of the respective activities can be applied in the setting of a budget which is simply an estimate and schedule of all costs required to be assigned to an activity. One can make an estimation of the resources required for an activity by applying the cost estimation techniques. Since there are limiting factors to each activity such as scarcity of resources for activities, the concept of constraints can be applied together with the concept of cost volume profit analysis to ensure that maximum benefits are driven from the scarce resources and the number of activities that are available. This facilitates the allocation of resources that most equitable and profitable. The theory of constraints is also applicable in the process of setting up budgets. In setting up budget one considers the amount of resources that are available and cannot therefore set a budget plan that exceeds the amount of resources that are available. This implies that the budget is constrained by the amount of

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.