Management accounting systems and organizational configuration: a life-cycle perspective

This study adopts a configurational approach that captures possible variables (strategy, structure, leadership and decision-making styles) and their relationships with management accounting systems (MAS) from an organizational life-cycle perspective. Using Miller and Friesen's life-cycle model Miller & Friesen, 1983, Miller & Friesen, 1984, a set of hypotheses were tested with data from mail survey and field studies of firms in the clothing and footwear industry. Results indicated that MAS formality changed to complement organizational characteristics across life-cycle stages. In uncovering how and why MAS formality changed during organizational development, our results indicate that it is growth firms that pay particular attention to increasing the formality of their MAS. Furthermore, between stages, it is the selection of management accounting tools that dominates the presentation of information in explaining the different MAS life-cycle stage designs. While based on cross-sectional data, the homogeneity of organizational configurations at each life-cycle stage does suggest that these results imply a longitudinal development of MAS.     

Management accounting and control practices in a lean manufacturing environment

A lean strategy is rapidly becoming the dominant paradigm in manufacturing. Kennedy and Widener (2008) use a case study to develop a theoretical framework of management accounting and control practices for firms following a lean manufacturing strategy. We build on Kennedy and Widener (2008) by examining a structural equation model that provides evidence on the extent to which a lean manufacturing implementation is related to five management accounting and control practices. Using survey data from 244 US companies with an interest in lean manufacturing, we find a direct positive relation between the extent of a lean manufacturing implementation and a simplified strategic reporting system, value stream costing, visual performance measurement information, and employee empowerment. We find a direct negative relation with inventory tracking; however, we find it is conditional on the extent of top management support for change in production strategies such that firms decrease reliance on inventory tracking in the presence of strong management support. We also conclude that the management accounting and control practices work together as a package in a lean manufacturing environment as evidenced by the many direct associations among the five management accounting and control practices.     

The role of performance measures and incentive systems in relation to the degree of JIT implementation

The shift to world-class manufacturing strategies has necessitated complementary changes in management accounting systems (MAS). Using survey data obtained from top manufacturing executives at 253 US firms, this study empirically examines the relationship between the level of just-in-time (JIT) practices implemented by US manufacturing firms and the performance measures and incentive systems that are incorporated in their MAS. The statistical tests provide empirical evidence that the use of non-traditional performance measures such as bottom-up measures, product quality, and vendor quality, as well as incentive systems of employee empowerment and compensation rewards for quality production are related to the degree of JIT practices implemented.     

Management accounting: Are new techniques making in-roads with practitioners?

Despite numerous criticisms and the examples of specific companies changing to a particular technique, there are few empirical studies providing evidence of the status of management accounting practice. The primary purpose of this study was to examine trends in the adoption of the new managerial accounting techniques by manufacturing firms. Evidence of changes in the direction of managerial accounting would have significant future implication regarding the direction of management accounting education and of accounting theory. The results of this study indicate that new techniques are being adopted while traditional systems are being maintained, suggesting that a broadening of innovations in management accounting may require the development of a new and separate course dealing strictly with these innovative techniques in the transition to world-class manufacturing.     

FACTORS IMPACTING ON ACCOUNTING LAG: AN EXPLORATORY STUDY OF RESPONDING TO TQM

The academic literature is critical of management accountants for their failure to initiate change and their inability to promote changed accounting information systems and performance measurement. The motivation for this study is provided by Kaplan (1986) who suggests that ‘when manufacturing operations change, the last and most difficult component to change is the accounting system’, and by Dunk (1989) who finds that accounting innovations lag operational innovations and that there are benefits arising from minimizing the time taken to adopt new accounting measures.The introduction of new management accounting systems to support management initiatives, provides the opportunity to investigate those factors contributing to accounting lag, and to determine those strategies which might usefully be employed to reduce accounting lag. This study examines the responses of accounting systems to TQM implementations at six diverse manufacturing sites in Adelaide, South Australia.Wolfe (1994), Rogers (1995), Gosselin (1997) and Bjornenak (1997) provide a theoretical framework for the investigation of the diffusion of accounting innovation and suggestions of the contextual factors which will influence its impact. This study suggests that industry sector, management commitment, organizational structure, participation and financial performance are all influential in the diffusion process, but in an inconsistent manner.     

The relations among competition, delegation, management accounting systems change and performance: A path model

This paper is concerned with an empirical investigation into the relations among competition, delegation, management accounting and control systems (MACS) change and organizational performance. It follows a standard contingency type path modeling to propose that intensity of competition causes firms to change their MACS and that this change enhances their performance. Delegation of authority is implicated in the model as competition encourages delegation, and this in turn causes the change in MACS, as well as enhancing performance directly. The results from a sample of Australian strategic business units indicate that (1) increased competition results in improved organizational performance indirectly through a greater number of changes in MACS, and (2) increased delegation of authority to lower level management leads to higher organizational performance. These results contribute to the management accounting change literature by providing empirical evidence that the relationship between competition and organizational performance is mediated by a decentralized organizational form and changes in MACS of the firm.     

Accounting for the horizontal organization: A review essay

There have been many approaches that have sought to identify the principles of best practice organizational management. The Horizontal Organization (HO) has been proposed as a method that draws on ideas from marketing, production, organizational behaviour and human resource management. It identifies specific value propositions with a customer-oriented focus and then develops process efficiency and continuous improvements, flattened structures with a team-based focus, human resource policies concerned with empowerment and a supportive and committed culture to help institutionalize change. The key distinguishing feature is to move away from traditional vertical, functional structures to lateral structures, processes and information to support the HO. This essay reviews three approaches, which when taken together, distil the key elements of the HO. These are Ostroff (1999). The horizontal organization, New York, Oxford University Press; Schonberger (1996). World class manufacturing: The Next decade, New York, The Free Press; and Galbraith (2005). Designing the customer-centric organization, a guide to strategy, structure, and process, San Francisco, Jossey-Bass. Of particular interest is how these authors envisage a role for management accounting in the design and application of the HO. The essay will review the essence of HO and critically examine the extent to which there have been complementary developments in management accounting, and how effective practice and research have been in developing a horizontal dimension to management accounting. It is concluded that innovations in management accounting, such as activity-based accounting and holistic performance measurement like balanced scorecards, have not had any significant affects on those developing ideas related to HO. Reasons why this is so are canvassed and areas where accounting innovations may provide valuable input to implementing the HO are discussed. Recent developments in management practices that elaborate on HO and implications for a horizontal dimension to accounting are examined.     

The organizational culture of public accounting firms: evidence from Taiwanese local and US affiliated firms

This study examines the organizational cultures of public accounting firms with data from US affiliated international accounting firms in Taiwan and Taiwanese local firms. Hypotheses are tested about the impact of the national culture of the US firms on their Taiwanese affiliates, and about cultural differences across function and rank. The study extends previous research by (1) examining an oriental country whose culture is significantly different from that of the US, (2) using the Hofstede, G., Neuijen, B., Ohayv, D. D., & Sanders G. (1990). Measuring organizational cultures: a qualitative and quantitative study across twenty cases. Administrative Science Quarterly, 35, 286–316 practices-based measure of organizational culture, and (3) examining the importance of the fit between employee preferences and organizational culture in influencing organizational commitment, job satisfaction and propensity to remain with the organization. Support is found for the cultural impact and fit hypotheses. Additonally, while culture is found to be relatively homogeneous across function, differences are found across rank.     

Customer-focused manufacturing strategy and the use of operations-based non-financial performance measures: A research note

This note follows and extends Abernethy and Lillis (Accounting, Organizations and Society, 1995) by examining: (i) whether firms which maintain a customer-focused manufacturing strategy also maintain an emphasis on non-financial (operations-based) measures in their performance measurement systems; and (ii) whether such an emphasis is associated with enhanced performance for those firms. Data are obtained via questionnaire survey of a random sample of manufacturing firms in Sydney, Australia. Support is found for the hypothesized association between customer-focus strategy and the use of non-financial performance measures (and hence for Abernethy and Lillis) but not for the link to organizational performance.     

Anticipating the Impact of IFRS on the Management of German Manufacturing Companies: Some Observations from a British Perspective

The introduction of International Financial Reporting Standards (IFRS) in 2005 marked a significant departure from Germany's traditional financial accounting practices. This paper questions whether this change may have consequential effects on the distinctive traditional management accounting practices in the field of Controlling. We examine the possible impact on manufacturing companies drawing upon perceptions and expectations of managers in three Bavarian companies and two management consultancy firms. We consider whether financial accounting will assume an increased importance within firms, and whether this may lead to abandonment of some traditional management accounting practices and the adoption of different techniques in internal reporting compatible with the new IFRS regime for external reporting. This prompts consideration of whether such changes would lead to financial accounting domination of management accounting in Germany analogous to that argued by Johnson and Kaplan in 1987 in their ‘Relevance Lost’ thesis. We conclude that, at this juncture in the development of their information systems, German managers face an important choice between integrating external and internal reporting in ways that might fundamentally change established Controlling practices, or of continuing to operate dual accounting systems in much the same way as in the past so that adoption of IFRS is restricted to external reporting.     

The organizational context of professionalism in accounting

This study analyses the degree to which change in the organizational context, content and location (both of the individual within the organization and the organization within the field) of professional work has contributed to variation in attitudes toward professional ideology and institutions. Through an online survey of Canadian chartered accountants we observe that, contrary to current accusations, a majority of accounting professionals remain committed to their profession, despite profound changes in the context, content and location of their work. We do find, however, that the strongest espoused deviation from core professional values and logics has occurred in traditional work contexts (i.e. public accounting firms), and for the distinctive value of commitment to independence enforcement, the deviation is most pronounced in the elite core of the profession – the Big Four professional service firms. Accountants in higher ranks also tend to identify more with commercialistic values. We speculate on the implications these findings hold for the professional project of accountancy.     

Quality Consciousness in Japanese and U.S. electronics manufacturers: an examination of the impact of quality strategy and management control systems on perceptions of the importance of quality to expected management rewards

This study examines the implementation of quality strategies through management control and reward systems in Japan and the U.S. It focuses on electronics manufacturing, an industry in which the Japanese have successfully gained global competitive dominance. The study applies causal modelling methodology and incorporates the effects of company size and management level on quality strategies and the related management control systems for quality. In turn, the impact of these quality strategies and control systems on managers' perceptions of the importance of quality to promotion is explored. Data were gathered from 698 Japanese manufacturing managers in 50 Japanese electronics firms and 789 manufacturing managers in 64 U.S. electronics firms. The results evidence a consistency between quality strategy, management controls and reward systems, especially in the U.S., that support the normative model for strategic control systems.     

Integrating business strategy,organizational configurations and management accounting systems with business unit effectiveness: a fitness landscape approach

This study adopts a fitness landscape approach to test contingency hypotheses about the relationship between business strategy, organizational configurations, management accounting systems, and business unit effectiveness. Central to this approach is the notion of contingent fit between strategic priorities and its contextual variables. Building on Kauffman’s N-locus, two-state additive fitness model, this study predicts that the degree of contingent fit, defined as the weighted sum of independent fitness contributions of each contextual variables, will have a positive association with business unit effectiveness.Based on a mail survey and personal interviews of 106 business unit managers of publicly held companies listed under consumer goods industry, this study indicates that the degree of contingent fit has a positive association with business unit effectiveness. Further analysis reveals that strategic priorities affect the types of controls and management accounting systems used by the business units.     

The Effects of Management Accounting Systems and Environmental Uncertainty on Small Business Managers' Performance

This study examines the interacting effects of management accounting systems (MAS) and perceived environmental uncertainty on small business managers' perceptions of their performance. Results obtained from using a multiple regression and partial derivative analyses of responses to questionnaires distributed to a sample of 42 managers/owners of light engineering manufacturing firms in Australia, confirmed the hypothesis that the effects of MAS on performance were dependent on environmental uncertainty. Under high levels of uncertainty, sophisticated MAS had a positive effect on performance but under low levels it had a negative effect.     

Organizational culture in public accounting: Size, technology, rank, and functional area

This study examines the nature of organizational culture in public accounting and demonstrates that different aspects of culture exist across and within public accounting firms. Organizational culture is defined in terms of values shared by members of an organization (or organizational sub-unit) that manifest themselves in the practices of that organization. Practices particularly important to the development and maintenance of culture include selection and socialization. The hypotheses state that different aspects of organizational culture vary across public accounting firms of different size and technology, and public accountants of different rank and functional area. These hypotheses are tested and largely supported with responses to a paper and pencil instrument, the Values Survey Module (Hofstede, Institute for Research on Intercultural Cooperation, 1982), which was completed by 338 public accountants across the United States. Implications for accountants and future research are also discussed.     

我国现阶段会计师事务所组织模式研究

具有市场经济监督职责的会计师事务所是一种特殊的自主经营的企业组织形态。随着中国市场经济的迅速发展,提供独立、客观、公正的第三方审计和鉴证服务的会计师事务所应在各种制度上做出相应的调整与变迁。会计师事务所组织模式的选择,是行业其他制度变迁的原因,又是行业制度变迁的主要内容,关系到委托者、被审计者及会计师事务所各方经济权益的实现及法律责任的合理规避,因此,在独资型、公司制与合伙制中选择适应市场经济体制发展、与国际接轨、具有竞争力、符合注册会计师自身执业和道德规范的组织模式是现代会计师事务所值得关注的问题。会计师事务所的三种组织模式中,合伙制较公司制和独资型更合理有效,而有限责任合伙制更是当今国际社会推崇的组织模式。     

Tests of time: organizational time-reckoning and the making of accountants in two multi-national accounting firms

There has been remarkably little study of the recruitment, training and socialization of accountants in general, much less the specific case of trainee auditors, despite many calls to do so. In this paper, we seek to explore one key aspect of professional socialization in accounting firms: the discourses and practices of time-reckoning and time-management. By exploring time practices in accounting firms we argue that the organizational socialization of trainees into particular forms of time-consciousness and temporal visioning is a fundamental aspect of securing and developing professional identity. We pay particular attention to how actors consciousness of time is understood to develop, and how it reflects their organizational and professional environment, including how they envision the future and structure their strategic life-plan accordingly. Also of particular importance to the advancement of career in accounting firms is an active engagement with the politics of time: the capacity to manipulate and resist following the overt time-management routines of the firms. Rather than simply see trainees as passive subjects of organizational time-management devices, we noted how they are actively involved in ‘managing’ the organizational recording of time to further their career progression.     

Contingencies influencing the management accounting practices of Estonian manufacturing companies

Having regained independence in 1991, Estonia has undergone fundamental political and structural changes over the last decade, which have also affected the operation of its companies. This paper examines the management accounting practices of Estonian manufacturing companies, exploring the main impacts on them within a contingency theory framework. The methodology comprises an analysis of 62 responses to a postal questionnaire survey carried out among the largest Estonian manufacturing companies. It is comparatively infrequently that Estonian manufacturing companies have made improvements in their cost accounting methods, although the majority of respondents appear to acknowledge the importance of these practices in finding and lowering real product costs and modernizing the cost accounting systems. The effectiveness of an accounting systems’ design depends on its ability to adapt to changes both in external circumstances and internal factors. We have found some evidence that changes in cost and management accounting practices are associated with shifts in the business and accounting environment as external contingencies, and with those in technology and organizational aspects as internal contingencies. This research aims on the one hand to confirm earlier findings related to the ‘contingent factors’ that influence management accounting and on the other, to identify possible new factors, such as, for example, the legal accounting environment and shortage of properly qualified accountants.     

Organizational and environmental influences in the adoption of computer-assisted audit tools and techniques (CAATTs) by audit firms in Malaysia

Despite the usefulness of computer-assisted audit tools and techniques (CAATTs) in increasing audit productivity and reducing costs, their adoption by audit firms is low in developing countries. The aim of this study is to investigate whether organizational and environmental factors can help explain CAATTs adoption in less developed countries, such as Malaysia. The research framework was developed based on the Technology-Organization-Environment framework (TOE). The results reveal that for environmental factors, the complexity of clients' accounting information systems (AIS) and perceived level of support of professional accounting bodies (PABs) affect CAATTs adoption. For organizational factors, firm size, top management commitment and employee IT competency were found to be significant factors. Moreover, firm size partially moderates the influence of clients' AIS complexity on CAATTs adoption. This paper contributes to existing adoption theory by extending our understanding of the impact of factors unique to CAATTs adoption.