BY (KHAIRI MOHAMED OMAR) April 14, 2016

Conceptual Foundations of Management Accounting

The new foundations of management accounting
Book summary
By: Khairi Mohamed Omar

The author details:

AHMED RIAHI-BELKAOUI is Professor of Accounting at the University of Illinois at Chicago.
His previous books with Quorum include Judgment in International Accounting (1990), The
Coming Crisis in accounting (1989), Behavioral Accounting (1989) and The New Foundations of
Management Accounting (1992).

Bibliographic information
QR code for The New Foundations of Management Accounting
Title : The New Foundations of Management Accounting
Media and Communications; 32 Morality and society
Publisher : Quorum Books, 1992
ISBN : 0899307000, 9780899307008
Length 175 pages

Book overview:
The book is designed to provide a conceptual framework for management accounting. It is
important for student as well as the practitioner in management accounting to be aware not only of
the new multidisciplinary scope of the field but also of the conceptual foundations which justify
this extended scope. Contrasting with verity of management accounting books which do not
introduce or integrate all these foundations and are generally restricted to an exposition of cost
accounting techniques, in fact the book both asserts that the management accounting professional
needs a grounding in various disciplines and justifies the adaptation of their techniques to
managerial problem solving. The book reviewed some summaries of prior studies in the field of
cost and managerial curriculum.

However, five conceptual foundations envisioned for management accounting are presented:

1- Accounting foundations,
2- Decisional foundations,
3- Organizational foundations,
4- Behavioral foundations, and
5- Strategic foundations.

A recurrent theme in each of these chapters is that a failure to grasp any of these conceptual
foundations of management accounting may result in deficiencies in the management accounting
system and inadequacies in the provision of the diverse services required by both the small and the
complex organizations of today.

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 BY (KHAIRI MOHAMED OMAR) April 14, 2016

However, the literature of management accounting over the last century includes a number
of articles and a few books that have been labeled as frameworks. For example, the Management
and Accounting Website which has a category titled Framework for Management Accounting,
but the subject matter is extremely broad. This framework is unique because its focus is neither
cost accounting nor management accounting. Cost accounting-oriented frameworks, at least those
since the 1930s, are inevitably constrained by cost accountings contribution to external financial
reporting, where it is viewed as a servant of financial accounting and reporting. Frameworks
focusing on management accounting also tend to retain financial accounting and reporting as a key
customer of cost accounting, but they also bring in decision making, organizational, and behavioral
theories to shore up the management focus as has been discussed by professor Ahmed Riahi-
Belkaoui in his book Conceptual Foundations of Management Accounting.
Also, professor Belkaoui, classified the functionalists as an Interested in explaining the social order
from a realist, positivist and deterministic standpoint. It is very characteristic of mainstream
accounting. These, theories that fall in this category view the behaviour of the employee as passive
and determinable by managerial manipulation. Organizations are treated as stable empirical
phenomena that are independent from any social and historical influences as was mentioned by
Hopper and Powell (1985).
He also however stated that, in contrast with functionalist theories that accept that people are
formed and constrained by the social world which they inhabit, interpretative theories primarily
focus on the peoples' perception of reality and individual meaning.

Conclusion:
In conclusion, there appears to be a balanced view regarding the origin of management accounting.
Two major schools of thought subscribe to the functional framework while three other (less
prominent) points of view approach the origin from a radical frame of reference.
However, from my reading of the subject of the management accounting, it can be noticed that
management accounting research and development seem to follow trends. however, the majority
of the management accounting developments between the origins of cost accounting and the 1970s
were of a functionalist nature, whilst during the period between 1970 and 2000, several approaches
that can be categorized as interpretative or radical came to the fore.

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