The stage of development of management accounting in the Eastern Cape

Abstract

The theory and practice of management accounting has been the subject of much criticism and debate in recent years. Accusations of relevance lost and financial reporting bias, resulting in distorted information being provided to decision-makers and strategists, are at the centre of these criticisms. During this period the manufacturing and business environment has undergone major and far-reaching changes that impact on management accounting. The question arises as to how the theory and practice of management accounting has evolved during this period. This research sought to establish the stage of development in terms of the conceptual framework as formulated by IF AC, and the effect of nature, size and culture on the practice of Management of Accounting in the Eastern Cape. The implementation of Activity-Based-Costing and the existence of Financial Reporting bias were also investigated. A literature study was undertaken reflecting the vanous influences and perspectives of the theory and practice of management accounting from a historical, current and futuristic point of view. The empirical component of this research consisted of structured interviews conducted with management accountants in large organisations in the Eastern Cape. Analysis and interpretation of the findings led to a series of statements indicating the stage of development of management accounting in the Eastern Cape. No conclusive statement could be made, although a significant leaning towards the Third and Fourth Stage of development was evident. Arising from these statements were a number of implications for management accounting practitioners, academia and the professional institutes. It was suggested that practitioners involve themselves more in the operative processes of their organisations; that academia focus attention on the issues surrounding strategic cost management and that the professional institutes be facilitators of change.