The Preliminary Study of Management Accounting Practices (MAPs) in Small Business

Abstract

Introduction The role of managerial accounting is very different now than it was a decade ago. This process is known as identifying, measuring, analyzing, interpreting, and communicating information in achievement of organization's purpose and goals. It's also an integral part of the management process, managerial accountants which are important strategic partners in management team. This is on the needs of managers within the organization, rather than interested parties outside the organization (Hilton, 2008). At various times cost accounting has been driven by financial accounting and the need to supply information on inventory value and costs (Johnson & Kaplan, 1987) and the environment that management accountants work in has changed in the last century therefore traditional economies has moved from a state of mass production to mass customization (Ross, 1990). However, Kaplan (1984) has argued that there has been no development of management accounting techniques during the period of 1925 to the 1980s. Furthermore, Atkinson (1987) confirmed a crisis of management accounting profession that has lost relevance in Canada. But, Boer (2000) acknowledges that there is a change in management accounting practice, but is unsure what the change has been to. Thus, researches implement this survey in order to investigate the behavior of management accounting practices particularly in small business. The objectives of the study are: 1. To determine the Management Accounting Practices (MAPs) in Small Business 2. To indicate the most important objective for Management Accounting Practices (MAPs) in Small Business The remainder of this paper is organized as follows. A review of related literature on management accounting practices and research questions is discussed. Next, the methodology employed in this study, research instruments used and data analysis method involved are described. Finally, the empirical results and discussion of the study are drawn. Literature Review Previously, Chenhall and Smith (1998) have done a study on adoption and benefits of management accounting practices in Australia. They found that traditional management accounting techniques were widely adopted than recently developed techniques. However, most of the companies intended to adopt newer techniques in future especially activity based technique and benchmarking. In adoption of new and developed techniques, the most important factor is the size of company perhaps since the adoption will be too costly and the changes are too complex. According to Chenhall and Smith (1998) that suggested the large size and business environment of Australian companies will be the reasons for the practices adoption. Drury and Tyles (1994) also found that recently developed management accounting practices particularly in activity based costing has shown that adoption rates are much higher in larger firms. Furthermore, Innes and Mitchell (1995) found high adopters of recently developed management accounting practices are their relatively greater access to resources to experiment with administrative innovations. The study of Abdel-Kader and Luther (2006), report the current state of management accounting practices in UK food and drinks industry that focused on costing system, budgeting, performance evaluation, information for decision making and strategic analysis. They found that traditional management accounting practices are still alive and well but there are indications of likely increased use of cost of quality, non-financial measures and the analysis of the strengths and weaknesses of competitors. Besides that, they also have done a study on the impact of firm characteristics with management accounting practices. Management accounting practices survey has been conducted by Dick-Forde et al. (2007) and also consists of the importance of management information to management decision making in organization. …

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