Contemporary Developments in Management Accounting

In the last few sections we have briefly surveyed the way accounting is applied in the control of large organisations. In fact, we have noted that accounting control systems not only reflect the type of large, hierarchical, multi-divisional organisational structures that have grown to dominate the corporate environment, but have also played an important role in facilitating the development and maintenance of these organisational structures. We must recognise that accounting controls play a major role in ordering and constraining the actions of individuals within large organisations, and thus they actually help constitute the reality of organisational management structure faced by those individuals.

This section we shall consider a number of features of the traditional accounting control structure that may obscure, constrain or discourage actions within the organisation which might be considered highly valuable in the current competitive economic environment. We shall examine some contemporary approaches which reconfigure the accounting information system to overcome these deficiencies, and help to expose actions and relationships within the organisation that are of crucial importance for successful management in the current environment.

The Traditional Control Structure

The budgetary process provides a framework for systematic planning, coordination, and integration of the diverse activities of a large complex hierarchy which is probably indispensable in such an organisation.