Question

How globalisation has influenced management accounting in a modern organisation.

Answer 1

Management Accounting:

Management Accounting is otherwise called as Cost Accounting. It is the process of identifying and analysing the operations and costs of the business ,preparing the financial reports to provide the decision making to the managers. Hence it is aso called as Managerial accounting.

Globalisation :

Globalisation is the process of interaction and integration among the people,companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. It aims to benefit individual economies around the world by making markets more efficient, increasing competition, limiting military conflicts, and spreading wealth more equally.

Influence of Globalisation on Mangement Accounting in a modern organisation:

Due to the Globalisation Management Accounting has been continuously changing its role in order to be more effective. Modern organisations are becoming more complex due to rapidly changing and high competetive environment.Globalisation , liberalisation and technological advancements and interconnectivity has made the oraganisations more competeive than ever before.Now people can get anything around the world in a matter of time due to the gloabalisation and tecnological advancements. In order to fulfill the customers requirements the organisations are giving tough competetion to each other in terms of service, quality , reliability and faster delivery. Accordingly the Management Accounting has its need to change to face the competetion, It need to be transparent, reliable and give corect statistics quickly.

Moreover Adavncement in production technnologies,, including advanced manufacturing technologies and computer aided designs and systems gave significant impact to the companies.There has been changes in supply and delivery of products . Information tehnology has reduced the time in process of communication between customers and suppliers.Preperation and dissemination of information has become much easier resducing the responsive time.

Managerial Accounting technique represents a genuine initiative for implementing change, this involving the need for change, vision of change and strategy. the transformation of production technologies and Management Accounting techniques has predominent implications at the information flow in todays modern organisation. Modern Management techniques must overcome the gap between Accounting and technical information.It is the role of management accounting to create and add value to a business. Management accounting plays this role by managing resources, people, and activities in a business for the realization of the business’ objectives.

The roles of Management Accounting vary from one business or organization to another depending on the size of the business, type of the business, industry or operational niche, culture, and other factors. Moreover, the factors determining the role of management accounting are constantly changing based on time, technology available especially in the globalized economy. The roles of management accounting have not changed significantly overtime or through the technology available, but rather influenced how the roles are executed. Therefore, the change in the roles of management accounting can only be viewed as being parallel with the business circumstances.