Future Developments in Management Accounting

Summary of management

Change drivers have taken place in the previous 20 years, which means that the business of
management accounting has been pressured to continue to offer value in the organisation.
Change drivers such as technology and globalisation have allowed management accounts to
have a greater role to play in helping companies and surviving on competitive marketplaces.

The three questions are discussed in this report:

What are the key drivers of change in accounting management?

How have the function of management accountants been changed by drivers of change?

How do you adjust to the changing environment?

This Report further addresses the issues encountered in the near future by management
accountants, which will affect technical and interpersonal abilities as well as management
accountant's competences. In the next couple of years, management accounting will feature
numerous causes of change:

Governance and Regulation

Technology

Globalisation

Ethics

Environment

Introduction

The guiding principles of the transformation in management accounting are presented and
critically analysed in this document. More than 100 causes of change can directly and
indirectly influence the management accounting profession (ACCA 2016). In the current state
of technology and globalisation, Archibugi and Michie, (1995) continue to contend that the
other two drivers are direct or indirectly affected. Management accounting functions are in
place to implement these changes and react to them, successful and sustainable organisations.

The paper also highlights the effectiveness and adaptation of management accountants to the
rapidly changing environment. The job of managers has shifted over the years from being
financially focused, to financially and non-financially, to a new partner in finance. In
addition, Yazdifar and Tsamenyi (2005) have experienced how new approaches and
automated systems have impacted the role of management accounting.

Many articles and books have also demonstrated that managers are not the same as before,
but management accountants are now part of a broader team that has new skills and
methodologies, such as activity-based technologies, to support daily operation and influence
in decision making. (Notes 2014 of the study)

Change drivers

There are numerous drivers of change according to ACCA (2012) and not one change can be
isolated from one another because of their direct or indirect effect on each other. In the
management accounting profession, the drivers of change are:

Economic and financial globalisation

Technology of Information

Source of data (Big Data)

Eco-ethical and environmental issues

Workplace nature

Robbins (2011) says that changing drivers may be divided into internal and external drivers
of change, and that change drivers are entirely independent and natural for organisations,
which can increase quality for organisations. However, research by Robbins also focusses on
three main causes of change, relating to the accounting profession in management.

Information technologies Information

Structure of business

Competition

Oakland and Tanner (2007) suggest that internal change signifies a desire for efficiency
improvement. However, the changes in internal organisational structure and culture that have
been shown by Griffiths and Webster (2010) have led to changes in the attitude of
professionals. Internal changes are both affected by internal and external influences, however
they are mainly due directly or indirectly to external effects. Changes in organisational style,
for example, will influence the way management accountants do the job.

John, (2015) contends that beyond organisations, external changes take place. These changes
are systematic and are not monitored by organisations and are generated through a global
commercial environment. In addition, Gordon and Miller (1976) pacifically imply that taste
and action behaviours of their customers are the greatest cause of outside change.

Technology of Information

The three key drivers of change techniques, business structure, and competitiveness were
identified in Burns and Scapes (2007). Ashton ATL (1995) nevertheless says that the role of
management accounts is changing, globalisation and technology are the two key causes of
change in the past decades. The role of the manager accounts in fitting manager accountants
into internal processes has been reformed by increasing the use of information technology.
The technology of information drives accounting management into new dimensions. Ashton
(1995) survey revealed 58% in Denmark that information technology development is the
largest driver of change and that their function inside the organisation changes.

Traditional versus Modern Accountant Management Function Hansen(2006) describes how

capacity of enhanced technology has changed, and the role of management accounting in
financing business partners has changed with attention to measuring performance and
information. This is expanded by Byrne & Pierce (2007), who notes that information systems
have enabled managers to advance to the "higher levels of analytics" so that new tasks are
taken on.

Structure of business

The organization's structure and style have been shifted from "centralisation" to
"decentralisation" (Quattron and Hopper) during the two recent decades (2001).

Quattrone and Hopper (2001) also support this. These statements clearly decentralise
accountants' influence within the organisation, so management accountants have become new
financial partners who help managers to take decisions. This is why management accountants
now become new partners in finance. Management accountants have previously worked
independently for 'regular financial instruments' management, such as bookkeeping, logging
and monthly reporting (Quattrone, 2010). In 1979 there were no management accounts in
China and they had undergone enormous reforms to replace the planned economy with the
market economy and alter the objective lens from maximising yield to maximising profits.
According to Ashton,(1995). In connection with this, O'Connor (2004) says, in spite of the
Chinese reform, it did not work particularly well for management accountants.

Advance systems of information

Spaarkman (2010) contends that advance information systems take over financial factors in
the course of the declared assignment, allowing accountants to participate in non-financial
instruments as important as financial factors.

Bhimani (2007) further emphasises the significance of looking beyond the increasingly
crucial financial factors within the org.

In addition, it explains the development in automated information systems in Granlund and

Malmi (2007), which does not reflect the role of management accountants. Bruns and
Baldvinsdottir (2005) also support this trend to a new function of hydrid accounting in which
managers are participated in operational and strategic processes to meet managers'
requirements. The role of management accounts has changed via the usage of advance data
systems to enable improved top-to-bottom participation and communication. In addition,
Zarowin (1997) research demonstrates that accountant management is gaining leadership and
risking more.

Great Data

The "value creation" highlights CGMA, (2014), helping organisations achieve success.
Organizations have been driven by data and have left their usual context. SAS study (2013)
has, on the other hand, studied the fact that the number of analyses of data required would in
the near future double in the UK, thus assuming responsibility for Big Data for IT and
Finance.

Johnson (1987) shows that traditional management accountants had access to management
systems and data to report to managers within the organisation. However, Brands (2014)
believes that technology and big data are driving the future of management accounting
experts, which is becoming increasingly complex. This requires management accountants to
combine their financial and non-financial skills in decision making, analysis and persuasion.

According to ACCA (2016), automation procedures are more difficult than ever in the next
fourth generation revolution. Business has turned to knowledge generation through the
development of advanced information systems. In today's competitive market, Leonard K
(2018) reasons that data has become a number one priority for organisations to respond to
shifting needs and to stabilise the future for the longer term. Alternatively, around 53 per cent
of organisations (2017) have found that they continue to make efforts to implement the big
data process. Gartner (2014) also supports Big Data in helping organisations financially and
non-financially to improve their business performance, attaining a ROI profitability of about
20 percent.

Globalisation

Giddens, (2018) points out that globalisation is a method in which firms always seek chances
around the world to develop influences. Park (2003) further contends that the change in
'management' is globalisation. This is also supported by the research of Ernst (1997) that
globalisation is a change in strategic planning and management, which should be adapted to
internationally running firms and management accounts.