The Rise of Strategic Management Accounting Essay

The Rise of Strategic Management score - Essay ExampleManagement news report systems ideally provide information regarding all aspects of an constitutions transactions by covering all spectrums of the organisation they represent an important source of information for decision making. As mentioned above, traditional counsel accounting has come under attack for failing to provide sufficient information for strategic decision making purposes. This failure lies in the inability of traditional guidance accounting to fulfil those information requirements that would contribute to both the competitiveness of the organisation vis-a-vis its competitors in the industry, and its long term performance. Langfield-Smith states that surveys of practice in the 1990s suggested that the word meaning of SMA was slow others also go on to mention that it was illdefined and it is unclear in terms of coverage. Others have said that there are gaps in the understanding provided by SMA and this is attrib uted to various interpretations that have been put forward by writers advocating its use. This paper explains the difference between prudence accounting and financial accounting. ... Management story versus Financial Accounting Management accounting is distinct from financial accounting in that it provides information to persons infixed to the organisation to facilitate decision making, while financial accounting provides information for external stakeholders. Internal stakeholders are the management personnel of the organisation, based within various departments/sections/divisions working together to achieve organisational goals. External stakeholders complicate shareholders, advisors, potential investors, regulators, government authorities and creditors including suppliers, banks and holders of debt instruments (Atkinson et al, 2003). This however does not imply by any means that financial accounting information is not used for internal purposes it is in fact, crucial. The o nly difference is that it is not necessarily appropriate to apply it in the same format as it is for external purposes although, it does derive from the same interconnected accounting system. While financial accounting information conforms to standards and guidelines that have been instituted by standard setting bodies such as the International Accounting Standards Board (IASB), management accounting does not conform to any particular standard since it is used for internal purposes only. Management accounting deals with both financial and non-financial information. Traditional Management Accounting versus Strategic Management Accounting In his seminal work entitled Strategic Management Accounting (SMA) Simmonds (1981) defined SMA as the provision and analysis of management accounting data about a business and its competitors, for use in developing and monitoring business strategy. Bromwich (1990, p.28) defines it as