The Role of Management Accounting in Organizational Control Systems: Preliminary Evidence of an Organic Approach

15263 Words Jun 21st, 2013 62 Pages
THE ROLE OF MANAGEMENT ACCOUNTING IN ORGANIZATIONAL CONTROL SYSTEMS: PRELIMINARY EVIDENCE OF AN ORGANIC APPROACH

Associate Professor Chris Durden School of Business James Cook University PO Box 6811 Cairns, Qld 4870 Australia Phone: +7 4042 1015 Fax: +7 4042 1474 chris.durden@jcu.edu.au

Professor Hector Perera Department of Accounting and Finance Division of Economic and Financial Studies Macquarie University, Sydney Australia hperera@efs.mq.edu.au

THE ROLE OF MANAGEMENT ACCOUNTING IN ORGANIZATIONAL CONTROL SYSTEMS: PRELIMINARY EVIDENCE OF AN ORGANIC APPROACH

Abstract There seems to be recognition in the literature that traditional management accounting and control systems (MAC) have limitations. However, there is limited
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A focus mainly on conventional financial and non-financial based measurement and control is considered too narrow in scope (Otley, 2003, 2001). There is an increasing expectation that MAC systems should be innovative in design, flexible in operation, and should enable rapid organisational change in response to capricious environmental circumstances (Otley, 1994; Otley et al, 1995; Otley, 2001; Nixon & Burns, 2005). This implies an extension beyond traditional ideas of management accounting and organisational control.

The research presented in this paper examines the interface between MAC and organisational strategy by means of a case study of a New Zealand manufacturing business operating in a turbulent environment. Key findings relate to the important role of an organic approach in the development and support of a strategic focus to MAC. A relatively small privately owned business was selected for the research because it has been suggested that, unlike large public corporations, such organisations often have strong visionary management and may adopt a broader and more inventive management accounting focus (Mitchell & Reid, 2000; Dillard et al, 2005). Further, such organisations could be seen as potential innovators in relation to MAC practices.

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The remainder of the paper is organised into five sections. The next section discusses literature relating to a contemporary MAC framework, which underpins the focus of the case study. The
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