Toward the recovery of a conceptual framework to cost-accounting in the light of the developments of modern environmental

Abstract

Introduction: This conceptual framework has been written to fill a long-standing gap in the field of management accounting. What is missing is a clear foundational set of principles for costing that focuses on managers and employees, organizational insiders, as the primary users—who we frequently refer to as the customers of the information. The framework defines the principles, concepts, and constraints that must be considered when doing costing in order to fulfill the information needs of managers and employees who require insights for making decisions about their operations. These insights and decisions, made with detailed operational and financial information at all levels of an organization, are what create sustainable economic value. Financial statements, often for regulatory and compliance purposes, are produced in accordance with generally accepted accounting principles (GAAP). These financial statements report the results of decisions and actions to investors and creditors, who are the primary customers of GAAP financial statements, in a structured model and format. The purpose of this framework is to help companies expand the use of managerial costing in order to improve the decisions that managers and employees make to optimize operations. The framework will create greater value by achieving managers’ objectives as efficiently and effectively as possible—at all levels of the organization. Organizations won’t invest in advanced costing approaches if they see their acquisition and implementation as a high-risk venture with poorly quantified results and questionable benefits. This framework seeks to provide clarity to the objectives an organization seeks to achieve from the use of improved costing approaches and systems. Practitioners can use the framework to define their costing needs and evaluate costing solutions against objectively established criteria embodied in the principles, concepts, and constraints described in the framework. Doing so will help eliminate the risks associated with poor costing methodology and poor system design and selection. Benefits of a Conceptual Framework for Managerial Costing A clear framework with a set of principles and concepts can logically model and value an organization’s operations to generate high quality information for insights, analysis, and decision making. Management accountants will be able to more efficiently and effectively provide managers and employees with managerial casting’s unique insights into the operations and economics of organizations. The benefits of the framework are numerous and are as follows: 1. A framework and principles for developing cost and decision-support information for internal use will allow companies, including midsize and smaller organizations, to more consistently enhance their operational modeling and decision-support information, thus improving their competitiveness and sustained profitability. 2. Expanding the effective use of cost information among nonfinancial managers who use or would like to use cost information will improve the effectiveness and efficiency of their operations. 3. Insight into the limitations of external financial reporting models will have beneficial effects on evaluating risk in the economy because it will highlight the limitations of these models to predict the long-term value creation of companies. 4. Investment in managerial costing expertise and systems should expand when decision makers see a clearer, more accepted, and less risky path to creating the effective operational models that provide the cost and decision-support information they need. 5. Consistent use of similar cost and decision support concepts and principles across organizations and industries will improve the general understanding of decision-support information and clarify why it is not the same as that used for external financial reporting. Research Objectives : Researcher seeks to build this conceptual framework to achieve the following objectives: 1. to provide assistance to companies in the expansion of the use of cost accounting methods to generate information to improve decision-making that are taken by managers and employees within the organization in order to upgrade and improve operations. 2. Try to use this framework to add value through the achievement of the desired objectives by managers through the decision-making the most efficient and effective as possible at all levels in the organization. 3. This framework seeks to provide assistance to companies and help them regarding the choice of style and method of cost measure that fit with the productive system applied within them, as well as assist in the goals the organization is trying to achieve from behind the selection and use of appropriate costing system and to assist in understanding the behavior of cost elements and strengthen its ability to do manage costs and maximize the utilization of available resources as well as the costs that can be reinvested in the application of systems are not commensurate with the nature of their operations reduced. Results and recommendations: This paper has explored the conceptual nature of management accounting routines. Based on a review of the management accounting change literature, we argued that accounting routines are more often associated with stability rather than change. We also argued that previous studies have relied on other theoretical concepts, such as loose coupling and dialectics, to explain changes in management accounting practices. Yet, management accounting routines are very relevant to studies of management accounting change (Lukka, 2007; Burns and Scapens, 2000). Therefore, we posed the research question: through what processes do accounting routines in organizations change? we drew several conclusions about the nature of management accounting routines and the processes through which they change. We observed that the process of reproduction of accounting routines could lead to instances of loose coupling; where the performance of the routine becomes increasingly detached from the original rules that prompted the existence of the routine. We also learned that conceptual differences between routines might be attributed to differences in the ways that routines are reproduced. As we pointed out in the Discussion section, the routine we explored was not institutionalized. This means that the process of reproduction was not governed by wider institutionalized principles, but rather by the routine itself. These findings provide insights into routines that are relevant for studies of management accounting change. Management accounting routines are part of many institutional explanations of management accounting change, but, until recently, this paper contributes to the ongoing discussions about the concept of management accounting routines. It unveiled how routines can emerge and how they change. It also discussed that different concepts of routines employ different assumptions about the nature of their reproduction. But more importantly, this paper has problematical the notion of routines. It emphasized that we need to move away from overly simplistic notions of routines in order to fully appreciate the complex nature of routines and their process of change.