An Exploratory Study of the Level of Sophistication of Management Accounting Practices in Jordan

Abstract

Purpose – The research aims to provide a view of the present role of management accounting to identify the extent of usage of management accounting practices (MAPs) and finally to determine the sophistication level of MAPs by employing International Federation of Accountants model (IFAC) in the Jordanian financial sector. Design/methodology/approach – To attain these objectives, the research used the questionnaire method 64 valid questionnaires were returned, giving a 67.3% response rate. Descriptive statistical analysis was used to analyse the responses. Findings – Regarding the life-cycle stages, it was revealed that 67.2% of the respondent companies are located in the first two stages. The research reported that traditional practices are still widespread and highly used, rarely using the more sophisticated or advanced practices, and that there is a diversity of practices used in the financial sector context. In general, the research revealed that budgeting practices and financial measures are heavily used, and there is a lack of usage of decision making practices and strategic analysis practices. Concerning the sophistication level of MAPs, the research revealed that almost all of the Jordanian financial sector companies are located in the first stage by 64.1% and 29.7% of companies in the second stage based on the IFAC model, thus indicating the simplicity of information that they require. This, in turn, reflects the simplicity of practices that are used in the Jordanian financial sector. Originality/value – Provides a broad overview of management accounting practices in the Jordanian financial sector, indicates is a lack of using MAPs in the developing countries, and indicates the improvement which would take place in the Jordanian financial sector in terms of the adoption of more sophisticated or advance MAPs.

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