Name: __________

Title: ____________________
Introduction:
Management accounting is that technique of accounting which is relevant to supplying
managers with financial and non-financial details to make appropriate decisions as well as
market growth (Bennett and James, 2017) . Executive accounting method ultimately plays a
vital function in the internal administration of every form of organisation. The key purpose of
the project report is to provide comprehensive details on the various forms of accounting
management framework, specific methods of accounting management reporting and the role
of accounting management in solving the financial problems.

Today, the profession of management accounting is witnessing the emergence of new trends,
practices, and even topics, all of which are posing considerable impacts on the quality of the
profession both negatively and positively. Change is setting in on the management
accounting from all sides. For example, globalization is quickly merging markets and thus
affecting both national and organizational cultures considerably. In the same tune,
technological explosions have brought about rewarding promises on the one hand, and grave
threats on the other (Hyvönen, 2003).

Issues and practices of management accounting systems:

The continued growth in new concepts in organizational lives ranging from sustainability
economics to corporate social responsibility has birthed new topics the most classic example
being environmental management accounting. Even further, fast-evolving consumer needs
and preferences, highly competitive markets, and technological advancements have all
produced new accounting techniques. All of these issues are affecting not only the very
conservative nature of managerial accounting but also the future and quality of the
profession. Accordingly, this paper seeks to provide illumination into some of these critical
issues influencing managerial accounting in a bid to aid respective stakeholders respond
appropriately.

1. Management accounting’s quality

The development of modern costing methods is one of the most important problems affecting
the standard of management accounting. Targeted costing, life-cycle costing, and kaizen
costing are among the most common management costing strategies. These advances in
accounting a host of advantages over conventional approaches. Taking an example of the
target costing technique, for example, it goes a long way in helping a firm only produce
goods that match consumer needs, desires, and preferences. Ideally, this approach is involved
with the evaluation of the cost of producing a product at the design stage; before production
commences (Sisaye, 2006).

Practice solution:

Goal pricing helps to assess the rates that customers are likely to pay for a commodity,
measure the real cost of the product, investigate opportunities to minimize manufacturing
costs and evaluate profit margins well before output starts. Inarguably, therefore, target
costing improves the quality of management accounting in terms of continuous product
improvement, enhanced decision making process as more information is available, informed
planning, and better control (Hansen and Mowen, 2012).

While target costing focuses product designing and planning of the production process,
lifecycle costing involves the determination a firm incurs after a product is sold. Plant
decommissioning costs and warranty costs are examples of such costs. Lifecycle costing
helps predict these costs and thus make more informed decisions regarding issues like
environmental cleaning, research and development, and warranty claims.

2. Emergence of new topics / Shooting of new branches

Emergence of new topics or shooting of new branches is other most prevalent issue facing
management accounting. As mentioned in the outset, environmental management accounting
provides the best example of this trend. Principally, these new topics and branches have been
precipitated by contemporary trends and outcomes. For example, increasing uncertainties
about topics such as natural resource depletion, global warming and the destruction of natural
resources are some of the reasons that have contributed to the advent of accounting for
environmental management.

Practice Solution:

This new division is primarily charged with helping corporate decision-makers produce and
interpret the financial and non-financial details necessary to address environmental protection
issues. Simply stated, it has to do with the identification and distribution of costs related to
the environment.
 3. Conventional management accounting systems adequacy
Conventional management accounting systems are unable to adequately address issues to do
with environmental risks and costs. As a result, these conventional accountants attributing
these costs to general overheads. Consequently, Decision-makers of the company who are
usually executives do not have any knowledge on environmental costs that impedes their
ability to handle or even control them.

Practice Solution:

In the long-run, therefore, conventional management accounting endanger the reputation of

the firm as far as environmental conservation is concerned. Thus, the emergence of new
branches and topics are playing a pivotal role in improving the quality of management
accounting.

4. Digitization:
Digitization is the other big problem that has gone a long way towards improving the
standard of accounting management. Information technology has greatly decreased the
workload of firms; monitoring structures and financial ledgers, and that accounting
administration will no longer survive without its (Brick, Palmon and Venezia, 2015).One of
the most certain ways through which IT is revolutionizing management accounting is through
enterprise resource planning systems (ERPS). ERPS provide faster and easier access to
standardized data which then quickens data interpretation and implementation (Su, 2019).

Practice Solution:

Digitisation also affects financial operations via cloud storage. In theory, cloud computing
can be characterized as a platform that enables access to a common pool of computing
resources internationally, easily, and on demand. There are two categories of clouds: publics
and private clouds. Cloud computing technology offers the benefits of cost savings and
flexibility to accountants. The technology allows for the integration of document scanning
including invoices and also automatic sending to the accounting system on a routinized basis.
The accountant can then confirm entry. The technology thus helps management accounting
departments save on time and the cost of book keeping services.

Cloud computing is making it possible for managers to access needed information wherever
they are as long as they are having internet connection. This technical innovation thus
increases the efficiency of accounts management, especially in the area of availing needed
information for the purpose of enhancing decision making. However, cloud computing does
not offer all these benefits without areas of concern chief among them being data security.
Given that the information is not in-house, accountants see at too-risky storing their data in a
cloud. Cyber-terrorism and crime magnify risk.

5. Financial issue:
The financial issue means lack of money to implement all the functions. Due to this all other
activities of the organisations get impact negatively (Otley, 2016). There are many financial
issues some of them are mentioned below:

 Lack of fund- In this issue, companies face the issue of lower fund and because of it
various operations get stuck.
 Spending more than income- If companies continuously spend more and earn less
then after some time period, this arises a big financial issue.

Practice Solution:

There are various kind of accounting methods to solve the financial issues. Some of them are
mentioned below:

 Financial governance- Financial governance refers to way which states about the
process through which company manage the financial data and information
(Quattrone, 2016).
 Benchmarking- It is a kind of framework which is related to the comparing process,
plans and policies with other companies of environment (Rikhardsson and
Yigitbasioglu, 2018).
 KPI (key performance indicator) - The KPI is a type of method which analyse about
the way in which organisation achieving its goals effectively (Ruch and Taylor,
2015). As well as it emphasis on focusing those activities which are more beneficial
for the companies.

The quality of management accounting is simply under revolution. Technological

developments have led to new costing techniques, easier and on-demand access to
information, and automatic entry systems. Similarly, growing concerns on different issues
affecting consumers around the globe are leading to the emergence of new branches that
further improve the quality of accounting. One thing is clear though; managerial accountants
must embrace a new life of constant self-evaluation just to make sure they are well updated
on new branches, techniques, and terms. The link between information technology and
managerial accounting has improved the acquisition, analysis, and provision of information
to decision makers. The changes in managerial accounting have made decision making,
planning, and control very easy.

Management Accounting System Impact on performance

management systems:

Management accounting has a crucial function to play in the strategies to be implemented by

executives and other leaders of the company. Measuring performance as part of the
monitoring mechanism is of vital importance: it will be impossible to render reliable output
performance without management accounting knowledge and to assess how priorities and
targets have been met.

Measuring performance
Measuring the performance ought to be used to explain how well a person has
completed a mission. These metrics can be used to assess efficiency, particularly
though the function itself is not easily apparent. For example, success indicators for a
salesperson may involve overall sales volume and income.

A well-designed performance indicator should:

 show how effectively an person has done his or her duties

 inspire them to accomplish organisational objectives;

Rewarding individuals
Since incentives and rewards are dependent on performance measures, individuals
and organisations are encouraged to work to affect performance measures; as a result,
performance measures impact the course of an organization's person and collective
commitment.
Communication
The management accounting method involves the budgeting phase, which explains to
its employees the company's goals, goals and strategies and how it aims to accomplish
 them. This is a means to include all team members and that they are informed of their
positions in the big scheme of things and their value to the organisation.

The usage of management accounting method for performance evaluation has significant
consequences. The budgeting mechanism and schedules may serve to inspire supervisors and
other workers when implemented properly. Inadequate budgeting can contribute to unhealthy
behaviours.

Theory, concepts and approaches to Performance Management

and people:

The performance improvement program's overarching aim is to establish an environment

where people can compete skilfully in order to achieve their highest performing results. The
first step in the performance improvement system is to establish an overarching strategy and
specific priorities for the company (Aarseth et al., 2017).

6. Goal setting theory:

The organisations employ goal-setting strategies as part of a performance-assessment
method. Such processes originated from the goal-setting hypothesis, introduced during the
1960s by Edwin Locke. The organisations lay down individual targets for the workers
according to this principle. Such targets help to create the job opportunity based (Pulakos,
Mueller-Hanson and Arad, 2019). Staff are moving their work in a specific direction and
trying to demonstrate improvement at each point. Often workers fail to meet those targets. In
these situations, it is the management's duty to change such goals and make them more
functional and achievable. It was found that this change helps to attain the organization's aims
and objectives.
 7. Competency Approach for performance management
The recent market culture is extremely competitive and so any company has to be successful
in the global world. This can be accomplished by the promotion of competent employees.
According to a paper written by Tripathi and Agrawal, a competence-based management
system was suitably applied in the organizational context. One of the major principles of
performance is the structure of KSA skills (Osagie et al., 2014).This definition describes the
principle of competency correctly across four separate categories. Such modules are a
collection of competencies, comprehensive expertise, qualities and outstanding job results.
The abilities describe individuals' capacity to conduct a specific task. The domain of
awareness is the domain linked to facts, and the characteristics are linked to the qualitative
features and personal attributes of individuals. The last field addresses the worker's
persuasive success over assignments and events.

8. Mechanism:
The two major mechanism are:

Appraisal Technique
The performance evaluation method is a very important methodology for the analysis of
workplace success quality and efficacy. Performance evaluation aims to improve committed
and hard-working workers' morale and trust so that they can do well in the future (Palacios-
Marqués, Popa and Pilar Alguacil Mari, 2016). The methods of performance assessment can
differ within organisations; however, most organisations adopt similar systematic procedures.

Aggarwal and Thakur also extensively studied such processes. There has been a shift of the
performance evaluation phase, and companies have adapted new approaches to achieve the
task. Two of these conventional approaches include task setting, BARS process, human
resource accounting, 360 degree techniques, and 720 degree techniques (Hosain, 2016).
There are also several other strategies along with these simplistic strategies which have not
achieved much attention in the organisations. Any of such strategies include integrated
scorecard, scale of behavioural evaluation, and combined strategies of contrast.

360-degree feedback
360-degree input feedback is a growing performance evaluation tool. Under this
methodology, workplace efficiency is measured across several parameters covering the
organization's whole atmosphere (Raffoni, Visani, Bartolini and Silvi, 2017). Feedback on
the workers' success is obtained from peers, supervisors, subordinates. Inputs are often
obtained from the workers' employers, vendors or family members. Input is collected
depending on the individual employee's actions and disposition when executing the assigned
function.

Via this mechanism the management will personally get to know the employee and be
informed of the employee's behaviour. This approach may also be employed to determine the
impact of the employee's actions on certain employees of the company (Schlüter et al., 2017).
It would include information into the employee's temperament that will be helpful in the
course of evaluating his efficiency.

Charts:
Conclusion:
It can be derived from the aforementioned knowledge that management accounting plays an
important role in an organization by helping to achieve its goals. It consists of various types
of systems such as cost accounting system, job costing system and inventory control system
etc. There are various kind of reports like performance report, budget report and others are
defined in the assignment in context of selected firm uses for management accounting.
Management accounting reports are prepared with the use of financial and non-financial
information to make the interim decisions for the organisation.

It can also be inferred that performance management is a critical process which helps to
improve an organization's competence in its business environment. Via this approach,
employee performance can be measured, and top performers can be graded accordingly. The
management should also follow correct evaluation methods, as outlined in this article.

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