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The Irish Experience : True Innovation or Passing Fad?
Usage of activity based costing / management in Ireland appears high by reference to recent international studies. New research conducted by the DCU Business School provides evidence that despite good evidence that ABC/M has helped accountants to have more input in the strategic development of the organisations where they work, the proportion of Irish companies that have not considered ABC/M remained constant at just over 50%, while the number still considering adoption has shown a substantial drop to 9%. The research received financial support from The Irish Accountancy Educational Trust. Professor Bernard Pierce explains the background and discusses the latest findings.
In response to a question about ABC that we put to a qualified accountant during a recent research study came the frank admission: 'I can't really make any comment about ABC - it's one of the things that came down the tracks after I qualified'.
Few, if any, management accounting innovations have received as much attention as activity-based costing (ABC). Mistakenly seen by some as being simply a more reliable method of allocating cost, ABC is more accurately viewed as part of a wider framework of activity analysis that can enhance the quality of information provided for a variety of management uses and facilitate what has been called activity-based management (ABM). Adopters of ABC/M have reported usage in a wide range of areas, often referred to as strategic cost management and there is also case study evidence of positive organisational consequences such as improved collaboration between managers and accountants. Despite this, numerous international studies have shown relatively low adoption rates and Bain consultants' annual survey of most widely used management tools showed that ABM fell from 1 lth position in 1995 to 22nd in 2003.
Against this background, questions are being asked as to whether ABC is a truly innovative approach or simply a passing fad. The study summarised in this article set out to establish ABC/M adoption rates among large Irish companies and to compare these against recent international findings and previous Irish statistics. In addition, views of adopters were sought concerning the uses and success levels of the ABC/M system across a range of applications and views of non-users were obtained...