Strategic Management Accounting
STRATEGIC MANAGEMENT ACCOUNTING
This report will attempt to explain what Strategic Management Accounting (SMA) is, how it developed, why Traditional Management Accounting (TMA) is not sufficient to provide information for strategic decisions and the difference between SMA and TMA. It will further outline some of the essential analytical tools or techniques in SMA such as Activity Based Costing (ABC) and the Balanced Scorecard (BSC). SMA is an extremely broad concept, so in order to give a bird’s eye view of the subject this report mainly focus on comparing SMA to TMA and finally describes the importance and criticisms of SMA.
What is Strategic Management Accounting?
“A form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information.” (CIMA Official Terminology)
“Strategic management accounting is a crucially important activity because it is outward-looking. It focuses specifically on the market, hence its common description as market-driven accounting. The main data it produces is on customers, products and competitors. This is softer in form than the hard numbers associated with financial reporting, but it forms a part of the inclusive strategy process that is linked to the pursuit of competitive advantage.”
(Roslender and Hart, 2006)
As mentioned above, SMA emphasis on information external to the firm, such as information about competitors and customers, and non-financial information such as product quality and customer satisfaction, along with emphasising on firm’s internal factors such as information regarding company’s overheads and management of raw materials. The professional strategic management accountant engages with the organization’s top management team and contributes to strategy development and implementation with the aim of creating customer value and a strong competitive position for the organisation.
The
This report will attempt to explain what Strategic Management Accounting (SMA) is, how it developed, why Traditional Management Accounting (TMA) is not sufficient to provide information for strategic decisions and the difference between SMA and TMA. It will further outline some of the essential analytical tools or techniques in SMA such as Activity Based Costing (ABC) and the Balanced Scorecard (BSC). SMA is an extremely broad concept, so in order to give a bird’s eye view of the subject this report mainly focus on comparing SMA to TMA and finally describes the importance and criticisms of SMA.
What is Strategic Management Accounting?
“A form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information.” (CIMA Official Terminology)
“Strategic management accounting is a crucially important activity because it is outward-looking. It focuses specifically on the market, hence its common description as market-driven accounting. The main data it produces is on customers, products and competitors. This is softer in form than the hard numbers associated with financial reporting, but it forms a part of the inclusive strategy process that is linked to the pursuit of competitive advantage.”
(Roslender and Hart, 2006)
As mentioned above, SMA emphasis on information external to the firm, such as information about competitors and customers, and non-financial information such as product quality and customer satisfaction, along with emphasising on firm’s internal factors such as information regarding company’s overheads and management of raw materials. The professional strategic management accountant engages with the organization’s top management team and contributes to strategy development and implementation with the aim of creating customer value and a strong competitive position for the organisation.
The
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