Ifacs Evolution Model of Management Accounting - 2827 Words

Introduction In 1989, the understanding of the scope and purposes of management accounting and the concepts which underpinned it was summarized by the International Federation of Accountants (IFAC) in a statement. Later on in 1998, the statement was revised and released as Management Accounting Concepts – Number 1 in the series of International Management Accounting Practice Statements. The purpose of this article is to explain the IFAC’s perspective of the change in management accounting. This can be justified by the author when he surveyed the stages of evolution of the management accounting practices in the food and drinks companies in United Kingdom and used it to further develop and apply the IFAC-based model. Since the 1980’s†¦show more content†¦According to Horngren et al. (2005), management control system is an integrated technique for collecting and using information to motivate employee behaviour and to evaluate performance. The information provided are used by most of the managers to plan the way they want people to perform, then they implement procedures to determine whether actual performance complies with these plans. The information provided are very important to the organization because the information is used as a guide in running the operation and the actual performance of the operation should be measured at the end of year to match with the planning made by the organization. It is a very beneficial way for them to detect when there is underperforming occurred and then appropriate action will be taken. After that, IFAC‘s attention was focused on the reduction of waste in resources used in business processes, through the use of process analysis and cost management technologies by 1985. In this stage, the rapid technological development such as the use of robotics and computer- controlled processes improved the quality of production and also greatly reduce costs. The use of the computers and information technology (IT) is to improve the efficiency and competitiveness of production in the business. The last stage of evolution of the management accounting identified by IFAC is the generation or creation of value through the effective use of resources, which examine the drivers of customerShow MoreRelatedCons and Pros of Internet16245 Words   |  65 PagesAccounting and Business Research, International Accounting Policy Forum. pp. 5-27. 2006 5 International Financial Reporting Standards (IFRS): pros and cons for investors Ray Ball* Abstract—Accounting in shaped by economic and political forces. It follows that increased worldwide integration of both markets and politics (driven by reductions in communications and information processing costs) makes increased integration of financial reporting standards and practice almost inevitable. But most