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The authors define and evaluate traditional and new management accounting methods for the purpose of affirming and promoting the IMA's commitment to investigating and improving these methods.
The Institute of Management Accountants (IMA) has published a number of recent articles that suggest that management accounting (MA) is in disarray and in need of change. This seems to be an issue that managers have already recognized as the 2003 IMA/E&Y survey would suggest. Here's a quick rundown of some relevant results:
* Data: 80 percent say MA data is important, but only 23 percent are satisfied with their decision support information; 98 percent say their MA information is distorted; but 80 percent say change is not a priority.
* Respondents complain of impaired cost visibility but say new tool adoption is not a priority-80 percent currently use traditional approaches.
* The predominant belief is that costs are distorted, allocated costs are increasing-allocation is where most distortion occurs-and yet there is little urgency to change.
Other recent studies confirm similar results in New Zealand, the U.K., and Australia ( Waldron, 2005; Adler, et al. 2000).1 Waldron states that for "advanced management accounting techniques ..." [the] "adoption has been less rapid than would have been expected (p. 245)." Moreover, there is plenty of evidence of ebb and flow for support of the vast array of methods, and unfortunately there has often been inconsistency with their application causing more confusion.
Another problem may be that managers do not know how to compare the array of methods that litter the MA landscape. This lack of clarity is exacerbated by the management accountant's insatiable appetite for new and advanced concepts and lack of guidance on what's important, what's merely fashionable, and what's been used successfully. For example, an article (dated fall 2003) described the "cost of unused capacity" as a "relatively recent issue" in MA. But the fact is, Gantt and Church were seriously debating this issue in the early 1900's.2 Another example is the recently emphasized German approach, Grenzplankostenrechnung (GPK), which has been in practice for 50 years or more. Although neither GPK nor the proper treatment of unused capacity is widely practiced in the U.S., both could easily be considered advanced by U.S. standards. Thus, everything that...