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The impact of globalization on management accounting

2019-04-09 Business No comment

As globalization approaches, the changes it brings may change the way American companies view their accountants. First, there are two types of accountants, financial accountants and administrative accountants. The definition of financial accounting, taken from Merriam-Webster, is a systematic analysis of economic affairs information used by people within the organization. Merriam-Webster continues to interpret management accounting as “reporting for planning and decision making”… “The purpose is to provide managers with reliable information about operational costs and cost criteria. Can be compared to assist them in budgeting.” The key difference in eliminating these two definitions is that financial accounting provides information to people outside the organization, and management accounting is designed to help managers within the organization make decisions.

Increasing globalization in the United States will increase competition among domestic companies, making management accountants more valuable to businesses. To understand how much competition affects US companies and their accountants, you must first understand how American companies view accountants compared to other countries. A study by M. Shields and C. Chow entitled "Management Accounting Practices in the United States and Japan: Comparing Survey Results and Research Implications [1991]" points to differences in the goals set by US and Japanese accountants. The survey shows that US accountants “emphasize the use of standards to control manufacturing costs,” while Japanese accountants adopt a vision for the future. This difference lies in the goals set by the company. While US companies are considering what they can do now to reduce costs, Japanese companies are looking to the future to reduce the cost of products that may not yet exist. For American companies, this idea is unacceptable, and the company is not in a satisfactory state because the current management accounting situation is wrong.

The management accountant looks to the future, they set the budget, predict and guide the company to move in the right direction. In the case of increased competition, especially for US companies, companies need managers to make the right decisions for the company's interests. In an article by Pounder, “How Globalization Affects American Accounting [2006],” Pounder points out that one of the main reasons for management accounting to be ambiguous in this country is because American managers are more likely to make “intuitive” choices. [It's usually for personal benefit rather than making a good choice for the company in the long run. This can be traced back to Shields&Chow's research survey, which studies companies and their respective goals. For US companies, it is better to show action for personal benefit than Japan is more common, and in an era of globalization and increased competition, companies cannot survive with this mentality and framework.

Miculescu concludes in N. Miculescu's report “Current Trends in Production Cost Accounting [2011]” that companies have a responsibility to find solutions as quickly as possible to keep up with the increased competition from globalization.

The current management accounting status in the United States rewards managers and puts the company as a whole at risk. As competition intensifies, competition between companies and companies becomes increasingly fierce. Hire a management accountant to make the best interests in the best interests of the company.

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