Management accounting and current practices

Abstract

There has been much interest recently in the debate for suitable costing systems. This paper is aimed to identify a number of weaknesses of current management accounting practices, and to view how well its practices meet the information needed by management. Most accounting experts point out that current management accounting practices appear lag behind the technological and environmental economic changes and could not produce relevant information for management purpose. The study found that the main reasons for this are (1) traditional management accounting systems provide inaccurate product costs for decision making due to an increasingly significant amount of overheads that are incurred in manufacturing; (2) traditional manage- ment accounting systems are dominated by a financial accounting mentality that provides information periodically which makes production managers unable to deal with the emergent problem immediately; (3) traditional management accounting systems are more concerned with financial reporting systems which only focus on short term performance rather than long term growth; and (4) traditional management accounting lacks applicability in coping with advanced manufacturing technologies.