Activity-based techniques and the death of the beancounter

Abstract

In a study of eleven medium and large sized companies we found clear evidence that management accountants were seen by operational managers as 'beancounters'. This term has become common in the literature in recent years and we define a beancounter as, 'an accountant who produces financial information which is regarded as of little use in efficiently running the business and, as a result, its production has become an end in itself.' Furthermore many management accountants recognized this image. All of the companies had attempted to implement activity-based techniques and this process had led to a substantial improvement in the beancounter image. We propose three scenarios for the future of activity-based techniques and the management accountants' image as a beancounter. These are based on our understanding of the history of management accounting and trends that have been visible in recent years. Further we suggest the most likely contingent variables which may lead to one or other of the scenarios becoming reality. Some of the scenarios are more likely to occur in the short or medium term, whereas others are long term possibilities. We conclude with our own view on the likely future for activity-based techniques, suggesting that there is a promising future for these techniques in the medium term.

Struggling for the New Role for Business Controller

“…The mill controller had allowed 'outsiders' -both the production engineers and external consultants -to work on ABC models without management accountants actively taking part in them (cf. the third scenario by Friedman and Lyne, 1997). As a result of this the mill controller did not feel very familiar with ABC tools, and did not create information which others would have found useful in activity-based costing projects.…”

“…On the basis of the earlier literature we examined John's role change from the following viewpoints that evinced as areas having a possible impact on management accounting role change: changing cost accounting techniques (Friedman and Lyne, 1997;2001), changing ICT systems (Granlund & Malmi, 2002;Scapens & Jazayeri, 2003;Caglio, 2003;Newman & Westrup, 2005), John's interest in business development that allowed him acquire expertise beyond the traditional bean counter job description (Granlund & Lukka, 1997, 1998aBurns & Baldvinsdottir, 2005;Vaivio 2006;Järvenpää 2007) and his ability for social networking in order to make allies and downgrade competitors in the organizational jungle (Ezzamel & Burns, 2005;Vaivio & Kokko, 2006).…”

“…A well-known example of a static study focusing on the role of technologies is the study by Friedman and Lyne (1997) presenting three scenarios of what might happen to the role of management accountants when ABC/M techniques either are or are not adopted 1 . Another body of technology oriented literature deals with modern ICT and its impacts on the management accounting function and management accountants (e.g.…”

How does contact with accountants influence perceptions of accounting?

“…Hoffjan (2004) on the other hand is more specific in his claims that the negative perception is a consequence of accountants' obsessive focus on cost reduction. McHugh, Fahy and Butler (1998) and Friedman and Lyne (1997) found that the tension is reduced and the perceived image is more positive when there is a flatter organisational structure which generally results in increased interaction between accountants and their co-workers. This study found that most non-contact participants formed either abstract or very specific perceptions of accounting and accountants thus supporting Allport's claims that the application of the contact theory is complicated.…”

“…The contact hypothesis has led Dodson and Price (1991), Fedoryshyn and Tyson (2003), Friedman and Lyne (1997), Larkin (1991) and Cory (1992) to recommend increased public exposure to, and contact with, accountants as a strategy for better informing people of the duties undertaken by accountants. Regrettably, however, the effectiveness of this strategy on people's perceptions of accounting and accountants has received little attention from researchers.…”