Summary of Pushing the Art of Management Accounting
Summary of Pushing the Art of Management Accounting
Hui (Steven) Zhang
Trinity Western University
Instructor: Brent Groen iMBA 521 Management Accounting
Nov 18th, 2013
Summary of Pushing the Art of Management Accounting
In this article “Pushing the Art of Management Accounting”, Alexander Mersereau discusses the bottleneck of the development of management accounting practice. He not only points out the core problem of the bottleneck through vivid metaphor, but also gives several suggestions.
First of all, Mersereau describes relevant backgrounds of the development of management accounting practice. He refers to a rapid development during the early part of the twentieth century. However, by the early 1980s, management accounting had reached a point of stagnation. In H. Thomas Johnson and Robert S. Kaplan’s point of view, the stagnation occurred because “today’s management accounting information, driven by the procedures and the cycle of the organization’s financial reporting system, is too late, too aggregated and too distorted to be relevant for managers’ planning and control decisions’ and ‘Management accounting reports are of little help to operating managers as they attempt to reduce costs and improve productivity” (Mersereau, 2006). These authors regard the functions of the management accounting practice as a failure because of the untimely and inaccurate passage of information to decision makers.
This point of view is widely acknowledged and “set off a wave of innovation and interest in the management accounting profession worldwide”(Mersereau, 2006). The innovations included the activity based cost management (ABC), the Balanced Scorecard (BSC), and the economic value added (EVA), which brought positive results and were considered as another rapid set of developments. However, another point of stagnation appeared.
The stagnation can be understood from the facts given out: “the majority of firms adopting EVA measures
Hui (Steven) Zhang
Trinity Western University
Instructor: Brent Groen iMBA 521 Management Accounting
Nov 18th, 2013
Summary of Pushing the Art of Management Accounting
In this article “Pushing the Art of Management Accounting”, Alexander Mersereau discusses the bottleneck of the development of management accounting practice. He not only points out the core problem of the bottleneck through vivid metaphor, but also gives several suggestions.
First of all, Mersereau describes relevant backgrounds of the development of management accounting practice. He refers to a rapid development during the early part of the twentieth century. However, by the early 1980s, management accounting had reached a point of stagnation. In H. Thomas Johnson and Robert S. Kaplan’s point of view, the stagnation occurred because “today’s management accounting information, driven by the procedures and the cycle of the organization’s financial reporting system, is too late, too aggregated and too distorted to be relevant for managers’ planning and control decisions’ and ‘Management accounting reports are of little help to operating managers as they attempt to reduce costs and improve productivity” (Mersereau, 2006). These authors regard the functions of the management accounting practice as a failure because of the untimely and inaccurate passage of information to decision makers.
This point of view is widely acknowledged and “set off a wave of innovation and interest in the management accounting profession worldwide”(Mersereau, 2006). The innovations included the activity based cost management (ABC), the Balanced Scorecard (BSC), and the economic value added (EVA), which brought positive results and were considered as another rapid set of developments. However, another point of stagnation appeared.
The stagnation can be understood from the facts given out: “the majority of firms adopting EVA measures
References: Mersereau, A. (2006). Pushing the art of management accounting. (cover story). CMA Management, 79(9), 22-27.