The Impact of Contingencies on Management Accounting...

TABLE OF CONTENTS ACKNOWLEDGEMENT ii TABLE OF CONTENTS iii 1.0 INTRODUCTION 1 2.0 Contingency Theory on Management Accounting SYSTEM 1 3.0 THE IMPACT OF CONTINGENCIES ON MANAGEMENT ACCOUNTING SYSTEM DEVELOPMENT 2 ( i ) Environment 2 ( ii ) Strategies and mission 3 ( iii ) Technology 4 ( iv ) Firm interdependence 4 ( v ) Business unit, firm, and industry variables 5 ( vi ) Knowledge and observables factors 5 ( vii ) Culture 6 4.0 Summary and Conclusions 6 5.0 REFERENCE BOOKs 7 1.0 INTRODUCTION The management of a company needs to develop cost and management accounting systems which will provide adequate information about main impacts on cost characteristics and companies performance. The cost and†¦show more content†¦* Organisation that is continuously launching new products needs more sophisticated forecasting capability from its system than one that is well established in a stable predictable markets. Internal contingencies are determined as organizational aspects, technology and strategy. The effectiveness of performance measurement and evaluation depends on the internal factors and the management accounting practice. Additionally, feedback from the effectiveness of performance measurement and evaluation of the management accounting practice can be considered features within the environment of an organisation that affect the design of an accounting-based control system include its degree of predictability the degree of competition faced in the marketplace, the number of different product-markets faced, and the degree of hostility exhibited. ( ii ) Strategies and mission The adoption of varying corporate strategies and firms’ strategic mission also determine the level of management accounting system to be in place. The strategies may be to lower the cost or differentiation, defending or prospecting and harvesting or divesting. It is observed that with low cost and defending strategies the firms main focus remains towards standardized or limited product lines, lower costs, economies of scale, and ensuring operatingShow MoreRelatedWhy Firms Should Not Be An Effective Functioning State Of The Corporations1647 Words   |  7 Pagesactions and prohibit inadmissible behaviour. There is a lot management control, including financial and non-financial factors. Ittner and Larcker (2000) stress the limitations of control system based on financial data to measure company performance and support the statement by the survey of U.S. financial services firms. Most of the institutions not satisfied with traditional financially oriented, thus made an extensive change in the control system during the past two years. Therefore, this paper is stronglyRead MoreThe Effect of Contextual Factors on the Design of Management Control Systems1766 Words   |  8 Pagesdesign of Management Control Systems. 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