Question

Discuss how the current global situation from the COVID-19 pandemic is likely to affect the management accounting role in organisations. Explain how management accounting can ensure that organisations make quality strategic and operational decisions for the maintenance of their competitive advantage in the current situation.

Answer 1

Effect of the COVID-19 pandemic on the role of management accounting in an organisation.

To answer this question , firstly we need to understand what is management accounting.

• Management accounting is a practice of using financial data by managers of an enterprise to help them in decision making .
• Objective of management accouting is to use financial and statistical data in taking better and accurate decisions for business enterprise, its functioning, and development.
• management accounting uses Financial accounting, costing, business analysis, economics etc as a tool for decision making.

under the current situation management accounting plays a very crucial and important role in an organisation in following areas in business organisation.

Planning :

as business growth has suffered adversely under this pandemic , better planning for survival is necessary. management needs to analyse financial data and other data related to market demand and supply, production cost etc . , to understand the current market situations , and develop a plan to cope up with these challanges .

Stategic management:

Business in current situation is going though a tough time as this COVID 19 has affected every line of business , such as production, distribution and sales.

that is why there is a very urgent need to make stretegies for better implementation of controls , to make optimum use of resources.

Costs are also need to be cut down as the market in current situation is going through a downfall .

Management needs to take financial decisions regarding business by taking into consideration the strengths, weaknesses , opportunities and threats of current situation.

Operational decisions:

competetion always has been a factor of consideration for management decisions. but it has not become a major factor now as the current challanging situation arising out of this pandemic creates a greater competition in market.

all business are trying to survive through it. thus management needs to make high quality decisions regarding the operations of enterprise to keep the organisation profit making .

for example: financial data regaring production capacities, cost structure, distribution channels , Market demand are important arears ,based on which management takes quality decisions to have a competitive advantage in market under current situation.

Finish.