Management accounting practices in the British food and drinks industry

Abstract

Acknowledgement:The authors would like to thank the two anonymous reviewers and participants at the EIASM conference on new directions in management accounting: innovations in practice and research (Brussels December 2002) for their valuable comments on earlier drafts of this paper. Financial support from the Chartered Institute of Management Accountants is acknowledged with gratitude. ABSTRACTPurpose -This paper investigates and reports on the management accounting practices in the British food and drinks industry.Design/methodology/approach -The data is generated by a large-scale postal questionnaire which was informed by preliminary interviews. Further interviews were carried out to aid interpretation of the responses. Descriptive statistics on the importance and frequency of use of individual practices provide the basis for discussion.Findings -Direct costing is widely practised and important, by contrast with activity-based costing and full absorption costing. Despite the limitations of conventional budgets, they remain a central management accounting 'pillar' and are frequently used in 'what if?' analyses. The balanced scorecard and other non-financial performance measures are perceived to be important but never or rarely used by 40% of companies. Product profitability analyses are frequently applied, and, surprisingly, the profitability of supplying individual customers is frequently calculated by over 50% of the population. Respondents were sceptical about sophisticated DCF investment appraisals.Practical implications -Traditional management accounting is 'alive and well' but there are indications of likely increased use of: information concerning the cost of quality; nonfinancial measures relating to employees and analyses of competitors' strengths and weaknesses. There is evidence of a gap between current textbooks and actual practices.Originality/value -The survey provides a unique detailed examination of actual management accounting practices and an indication of future trends.

The Adoption of Management Accounting Practices in Malaysian Small and Medium-Sized Enterprises

“…Phadoongsitthi (2003) in Thailand supported the view by Joshi (2001) by stating that the reasons for such similarities of low adoption of newly developed management accounting practices between Thai and India is because both countries have cultural similarities like large power distance and low individualism group and both countries facing similar problems like the lack of training and expertise. Research in developed countries (see, for example, Chenhall & Smith, 1998;Pierce & O'Dea, 1998;Abdel-Kader & Luther, 2006), although reporting an increasing usage of modern management accounting practices, agreed that basic or traditional management accounting practices are still dominant in most firms. It is argued that high acceptance of traditional techniques may be attributed to the fact that information on these measures is the most readily available as opposed to modern management accounting techniques.…”

“…Similarly, Phadoongsitthi (2003) reported this technique at rank 20 th which is relatively low. Meanwhile Abdel-Kader & Luther (2006) in their study among British firm revealed that ABC was ranked 32 out of 38 MAPs.…”

“…A number of studies have researched the adoption of management accounting practices in developed countries such as in Japan, U.S, U.K, other Europe countries and Australia (see for example Drury et al, 1993;Abdel-Kader & Luther, 2006;Shields, Chow, & Kao, 1991;Scarbrough et al, 1991;Chenhall & Langfield-Smith, 1998;Wijewardena & De Zoysa, 1999;Hyvo¨ nen, 2005). In developing countries comparable empirical studies did not emerge until the mid-1990s.…”

“…This claim is evidenced by the series of literatures examining the use of management accounting practices since three decades ago. For example research by Scarbrough, Nanni, & Sakurai, 1991;Bright, Davies, Downes, & Sweeting, 1992;Drury, Braund, Osborne, & Tayles, 1993;Anderson & Rohde, 1994;Innes & Mitchell, 1995Chenhall & Langfield-Smith, 1998Abdel-Kader & Luther, 2006 focused on the use of management accounting among large firms in the developed countries. Whereby a substantial body of research investigating current management accounting practices in large organizations from developing countries was conducted by Ghosh & Kai Chan, 1997;Joshi, 2001;Szychta, 2002;Islam & Kantor, 2005;Wu, Boateng, & Drury, 2007;El-Ebaishi, Karbhari, & Naser, 2003;Van Triest & Elshahat, 2007;Frezatti, 2007;Leftesi, 2008;and Nimtrakoon, 2009.…”

An Organization Budgetary Control System Links with Performance Management and Financing Strategy in Entrepreneurship

“…Budgets are central to the process of planning and control which are major activities of management in all organizations [2]. The major objective of budgeting is to keep control of the activities done in an organization by providing a roadmap for future activities and setting a series of goals to be achieved and the means to achieve them [3]. A major aspect of financial management involves providing the financing necessary to support assets financing is classified as either debt financing or equity financing.…”