Issue Management Accounting, Essay Example

The managerial sense-making activities play an important and invaluable role in connecting the processes of the management of knowledge and strategic decision making. In accounting this information is pivotal to the success of the company as accounting information displays the financial and procedural errors and flaws within the organization. This information is pertinent to manner in which the organizations makes crucial financial and procedural decisions.

The author had recorded findings that suggest that the accounting function is essential in gathering information about the company’s competitor’s plan and performance, and the company’s operations external environment.

The term ‘strategic management accounting’ forms an essential part of management accounting. Even though it is one of the SMA practices that have been appraised, it is rarely used by managers. Strategic management accounting has influenced business language and strategy. However, it is only appreciated in other parts of the country as other never use it at all. By virtue of the strategy not being adopted, businesses will continue to underperform as certain aspects of the accounting functions will not be performed.

After a research on 20 general management accounting literature used in universities, the term strategic management accounting was not used. The research went further to find out that the managers at almost all the companies listen in the Tehran stock exchange were employing traditional tools of management. The problem lies in the definition of SMA, its methods that are somewhat unclear and the lack of efficient managers capable of implement it and use its tools. These companies employed outdated tools of management accounting such as target costing, allocation of overhead costs using direct labour and operation budgets and others used quantitative techniques such as the spreadsheet.