Contemporary Management Accounting System Essay

Contemporary Management Accounting System - Essay Example Hopwood (1976), in his book ‘Accounting and Human Behaviour† had stated that, â€Å"Accountants and other members of the management team searching for means of understanding and improving standard setting and budgeting; must therefore see the process in its entirety and respond to it as a complex human and technical problem rather than one standing in technical isolation.† This implies that there has been a paradigm shift in the principles and practices of management accounting. Management accounting no longer comprises of only the technical aspect of accounting, but also the multifaceted management aspect of the business on the whole. The area of management accounting has undergone considerable changes during the past years. One of the major factors that had influenced the modifications in the management accounting practices have been the dynamically competitive and swiftly altering organizational environment that is prevalent today. Additionally, the present day business settings comprise of ongoing reformation in the working atmosphere, as well as continuing progress in the financial information arrangements. With the advent of new information system practices and the development of the Enterprise Resource Planning (ERP) systems, there has been a vast change in the management as well as financial accounting practices of modern day organizations. ... Hence, the role of management accounting professional were considerably influenced by the inclusion of various information systems as well as by the use of superior and efficient reporting tools (Roussoulis, 2007). Consequently, it can be stated that owing to these diverse changes in organizations leading to the emergence of modern contemporary organizations, the responsibilities of management accountants has been varying throughout the previous couple of decades. The modern accounting literature has constantly emphasised that there is a strong requirement for management accountants to diverge and deviate from the conventional bookkeeping role, to a more active role, that offers dynamic support to the organization’s management and comprises of rising involvement in business decision-making (Kaplan, 1995; Granlund & Lukka, 1997; Granlund & Lukka, 1998; Jarvenpaa, 2001). Furthermore, it has also been mentioned that the management accountants in the contemporary organizations are endowed with more responsibilities other than the routine categories of accounting tasks (Roussoulis, 2007). Under the prevalent business conditions, the management accountants of contemporary organizations are supposed to act like business partners for the management of the organization in addition to being change agents for the organization (Anthony & Govindarajan, 2007). The Concept of Management Accounting Management Accounting is one of the fundamental segments of the core management role of an organization. The management accounting practices comprises of the recognition, assessment, accretion, scrutiny, research, interpretation and correspondence of information that are required by the