According goal of management accounting is to provide information

Topic: BusinessLeadership
Sample donated:
Last updated: September 24, 2019

According to (Bell and Ansari 1995). Management accountingis a system of measuring and providing operational and financial informationthat guides managerial action, motivates behaviours, and supports and createsthe cultural values necessary to achieve an organization’s strategic objectivesThe primary goal of management accounting is to provideinformation for internal decision making, with an emphasis on planning andcontrol purposes.

Decisions made by managers rely substantially on accountinginformation because financial accounting information does not provide enoughdetail for internal decisions so it must be subdivided into the detail of theindividual products or services provided by a company. According to (CIMA). Strategicmanagement accounting was later on introduced in 1981 and was defined as theprovision and analysis of management accounting data about a business and itscompetitors. The sole purpose of SMA is to help developing and monitoringbusiness strategies. Since then several attempts have been made to refine thisdefinition and identify a set of techniques classified under the banner ofstrategic management accounting.

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In other words this is the merging of thebusinesses strategic objectives with management accounting information toprovide a forward looking model that assists management in making businessdecisions. Strategic management studies how to organize the structureof a firm such as what products the firm should sell, how it should positionitself in the marketplace, where it should get its supplies and whether itneeds to adjust or compete on costs. Strategic management also involves withother types issues, such as human resources policies, employee compensationplans, competitiveness and productivity. Awareness of competitive conditions isthe primary difference between strategic management accounting and traditionalmanagement accounting systems. SMA focuses on the company’s environment. Oneenvironment a firm focuses on revolves around its relationship with suppliersand customers.

Another environment involves a company’s current and potentialcompetitors. Hence, a firm’s intelligence may indicate a need to reduce pricesto compete. SMA would evaluate the organization’s up-stream (suppliers) coststructure to determine if it can renegotiate with suppliers, or if it must seeksuppliers with lower price points.See appendix 1 for an overview of the two differences There is also a traditional approach which according to involves 

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