Question

How can the firm's SMA "strategic management accounting" practices have an effect on the ethical behavior of managers, employees, customers, etc?

Answer 1

The following are the techniques or practices which are used under the ambit of strategic management accounting and discuss its impact of ethical on various internal and external stakeholders of the company

1.      Activity based costing – this practice identifies activities which are causes of indirect cost and allocate the same to each department on the basis of cost drivers. This helps the department manager or SBU head the reason and method of indirect cost to department profit and loss account , which in traditional management accounting is based on volumes of sales or production this helps the managers not using unfair means to increase their bottom-line

2.      Customer accounting is practice where all information on cost incurred and sales generated on customers are gathered and suitable strategy is formulated by the company. The customer is benefited by getting most efficient cost of the product with all attributes he requires. the customer is the king and loyal customers are rewarded based on scientific studies not on the whims and fancies of managers of the company

3.      Benchmarking helps in identifying and providing necessary resources to employees and managers to achieve the best practices which are achievable and realistic. This will provide the employees the tools to achieve their targets honestly and ethically

4.      Environment management accounting helps the company to identify and formulate suitable strategies to minimize or eliminates wastages of natural resources. Formulate efficient production strategies to minimize air, Soil, Water and Environment pollution. this will help the society , people both internal and external to the company and government so that illegal exploitation of natural resources will be stopped