Management Accounting Methodology

Question: Discuss about the Management Accounting Methodology in the 1970s and 1980s. Answer: Management Accounting Accounting occupies a significant position in the operations of modern industries. The field of management accounting has been evolving and changing over the last 35 years. Accounting managers have continually shown more interest in changing management accounting approaches (Burns Scapens, 2000). The assignment compares the accounting methodologies between the 1970s and 1980s. 1970s Methodology The broad view of management accounting in the 1970s used mathematical modeling based on economics. All management accounting researchers sought to form mathematical models which would quickly assist the practitioners in decision-making processes (Brechling, 1975). The integration of contigency models and economic reasoning helped managers design a most viable cost decisions for their firms. The transition period of management accounting in the 1970s was based on academic accounting. The researchers thought regarding quantitative models and marginal economic analysis (Burns, Ezzamel, Scapens, 2003). The economic approach to managerial decisions, planning, and control was mostly used by researchers. Both complex and simple mathematical models helped practitioners describe exactly what they were needed to do. The fact that researchers had a narrow conception of management accounting meant that an extensive research needed to be done on the subject. The mathematical models used were thought to solve all management accounting problems (Burns Scapens, 2000). Mathematical models modified complicated situations, and thus researchers developed as many mathematical models as possible. Research methodology in management accounting field was an era of economic driven mathematical models where modeling was core. The researchers had found a management accounting approach that would assist practitioners in making decisions, planning, and control (Burns Scapens, 2000). The accounts managers employed the use of research findings that quantitative models were effective and efficient in cost and profits management for their firms. 1980s Methodology In the 1980s, the same management accounting researchers found out that a huge gap existed between theory and practice. This brought an essence that quick research to expound practice was needed. The 1980s research methodology used the conventional positivist methodology. The positivist methodology employed by management accounting researchers was grounded on a contingency approach (Burns, Ezzamel, Scapens, 2003). The researchers would visit firms in the sector and carry out industrial research on the accounting managers to find out what they normally do to make sound decisions. All research conducted in the 1980s was aimed at understanding management accounting policies. In the early of 1980s, researchers presented their management accounting research paper findings at a conference. The researchers had a consistent conclusion that knowledge on management accounting practices was narrow and grounded on anecdotal prove(Johnson Kaplan, 1987). The academic researcher's findings showed that they lacked a clear understanding of the current management accounting techniques. The positivist methodology was adopted in the 1980s when the researchers initiated studies on management accounting techniques which differed from formulating a normative model. The researchers went from generating mathematical models and instead utilized these quantitative models in studying managerial accounting approaches. In the late 1980s, researchers adpted theuse of case studies and in-depth interviews to investigate the major functions of accountability and accounting practices in a firm. (Brechling, 1975). In general, the positivist methodology was highly employed by the researchers. References Brechling, F., 1975. Investment and Employment Decisions. University of Manchester Press, Manchester. Burns, J., Ezzamel, M., Scapens, R., 2003. The Challenge of Management Accounting Change: Behavioural and Cultural Aspects of Change Management. CIMA Publishing/Elsevier, London/Oxford. Burns, J., Scapens, R.E., 2000. Conceptualizing management accounting change: an institutional framework. Management Accounting Research 11 (1), 325. Johnson, H.T., Kaplan, R.S., 1987. Relevance Lost: The Rise and Fall of Management Accounting. Harvard Business School Press, Boston, MA