Management Accounting Systems

Table of Content

         This paper seeks to make a critique on the Article entitled “Did Kaplan and Johnson get it right?”  (Otley, 2008) by determining whether the author has supported his claims, assumptions and recommendations compared with the declared objectives of the article.  The criteria to be used is whether the recommendations are appropriate and practical in relation to this researcher’s personal experience as well as own interpretations and opinions.  Discussion on the relevance of the article to this researcher’s perceptions will also be included.  Agreements or disagreements about the article’s major contentions will be presented supported in terms of knowing the strengths and weaknesses of the claims and arguments made by the author.

        The article aimed to demonstrate a conceptual structure for the study of performance management systems, which the author claims to have subsumed one major aspect of management accounting activity, that is, performance evaluation and control (Otley, 2008). The author reviewed management accounting practices and their change over the past 20 years, to give insight into how research can become more fruitful in the future.  He found  management accounting to be obstructive conceptual category in developing insight and theories in the field of organizational control practices and for which reason, the author is proposing a wider framework with fewer limitations (Otley, 2008).

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        As to practical implications, he argued that many of the practical implications have already been observed in the organizational practices for academic research, and that there is now the need to move beyond the confines of an artificial management function and seek to establish a more appropriate basis for theorisation. The author hopes to give guidelines and criteria for evaluating the likely contribution of research approaches and which will be helpful in encouraging researchers to move outside conventional boundaries as they develop fresh approaches to understanding long-standing issues and practices.

        The main idea of the article is need to move outside the confines of management accounting and use a broader framework for conducting future research. The suggested framework is described by author to be incremental or must build on what is already known (Otley, 2008).  The research project must be interpretative or must include individual perceptions that drive behaviour.  The same must also be integrated or keep a holistic focus. The same must also inclusive or it must consider all stakeholders. Further it must international or not confined to a single culture and imaginative or not formulaic.  The same must also be interesting or the reasons for doing the same must be clear and that it must be influential or relevant to practice (Otley, 2008).

       The main message for the article is for the need to conduct better research on management accounting based on the framework as suggested by the author.   From this message, the objectives or motives of the article could be inferred, which is to convince and explain to readers about the misconceptions and justifications about decreasing use of management accounting in practice and to use his suggested framework for future research.

        The author’s has criticized the following management accounting concepts: activity-based costing (Kaplan and Johnson, 1987) where it is was argued that management accounting has outlived its purpose and its usefulness and value have decreased in practice. The other management concepts criticized by the author include Strategic Management Accounting (SMA) (Simmonds, 1981), Value-Based Management (Young, et al, 2000) and Beyond Budgeting (Hope, J. and Fraser, R. 2003).

       The author’s criticisms of the many concepts in relation measurement of performance sound to have logical basis. In addition, his proposition that at the heart of every control system lays the predictive model (Berry and Otley, 1980) is easy to accept.  He was saying that without the value of predicting what could be expected given the assumed knowledge of the surrounding circumstances, organizational control could not be expected to materialize.

         The author assumed that there is confusion among terms because of misconception on term “performance” which he described to be multidimensional of performance. What he meant was that when viewed from a broader perspective—that is by considering all stakeholders—accomplishing the objective of performance management system (PMS) as viewed under management accounting of may not cover the greater purpose of what constitute the better decisions that must be made in organizations.

        Based on his assertion, the author has recommended for  the need to move outside the confines of management accounting and even management control systems, which impose according to him imposes blinkers on people’s thinking that must be removed. He suggested that thinking more widely in terms of performance management system might not be a complete solution, but that it at least opens the door to more inclusive ways of thinking. In short, management accounting is only one part, and a possibly diminishing part, of ways in which there is a need to think about designing and using information and performance management systems for organizational control. The author is therefore recommending a new framework for future research in management accounting.

        It is this researcher’s assessment that the author’s recommendation may be considered appropriate and practical in relation to the declare objective of the article.  Research is never confined to what is known already and rehashing the same but rather in discovering more and this could be achieve by the requirement of the suggested framework that is be interpretative, integrated and incremental.

       The personal experience of this researcher on matter appears to confirm the limitation of management accounting as described by author if it will remain within its own confines. However if it allows researcher outside its confines, there are more things that could be learned and that could benefit organizational control in a broader perspective.  Management of business has evolved from the time management accounting has started and with the many changes in the environment, there is need to go for new frameworks for developing and research topics on the subject. Management accounting must therefore understand other concepts, which are relevant to how management organizations should behave in the light of the changes that continue to happen.

        This researcher’s interpretation and opinion about the article is that management accounting is still the generic thing on using accounting information for the purpose of organizational control. This means that the use of information is a material part of decision making that cannot be dispensed with and the need to move outside the confines of management accounting is indeed very much timely relevant. There is basis for the suggested framework about the author’s suggested framework particularly in having to address the need of all stakeholders instead of viewing only the concept of performance in the context of management within the organization. At the end of the day, the effect of every organization is in the life of stakeholders. Any assumptions about management of resources like management organizations must go back to delivering and addressing the needs of society or its people. In the first place, if there are no people asserting their needs and wants, there are no reasons for business to exist.  After all, all business activities are but ways to satisfy needs and wants of people (Doyle, & Stern, 2006; Hill, & O’Sullivan, 2003; Dlabay, et al, 2005) not only the management and stockholders but the rest of the society.

         Is the article relevant to this researcher’s perceptions about the topic discussed?  The answer is in the affirmative on the premise that

if things are not explained in proper perspectives, there is tendency for people to stay within their own confines and blinders as the same would result to neglecting the bigger nature of things and the great failure that would eventually be felt by the people.

        Is there basis to with the major contention of the article? This researcher agree with the major contention of the article because business terms comes with the need of the particular time but if these terms are taken as a whole, the same would reconcile to view the attainment of objectives by considering all the stakeholders.

       The strength of the lies in its giving credit to what have been achieved in the past in terms of management accounting concepts and pointing the need for address evolving problems in management  accounting that could be addressed in the research. Weakness may depend on the reader, as this may sound theoretical for some who have limited view of management.

        To conclude, this research finds the assertions of the author to valid and appropriate in relation to his declared objective in making or writing the article.  The criticisms made by the author on the management accounting concepts are valid and the essence of organizational control remains to be focused regardless of how terms may have changed or evolve through the years.  The author was very much logical in pointing the need to move outside the confines of management accounting.  As confirmed by the researcher in term of practicality and appropriateness, this researcher agrees substantially by the claims of the author.


 Berry, A.J. and Otley, D.T. (1980), “Control, organisation and accounting”, Accounting Organisations and Society, Vol. 5, pp. 231-44.

 Bromwich, M. and Bhimani, A. (1989), Management Accounting: Evolution not Revolution, CIMA, London.

Dlabay, L. et al (2005); Intro to Business; Cengage Learning

Doyle, P. & Stern, P. (2006), Marketing management and strategy; Financial Times Prentice Hall

Hill, E & O’Sullivan, C. (2003) Creative arts marketing;  Butterworth-Heinemann

Hope, J. and Fraser, R. (2003), Beyond Budgeting: How Managers Can Break Free From the Annual Performance Trap, Harvard Business School Press, Boston, MA

 Johnson, H. and Kaplan, R. (1987), Relevance Lost: The Rise and Fall of Management Accounting, Harvard Business School Press, Boston, MA.

Otley, D. (2008) , Did Kaplan and Johnson get it right?, Accounting, Auditing & Accountability Journal, Vol. 21 No. 2, 2008 pp. 229-239,  Emerald Group Publishing Limited

Simmonds, K. (1981), “Strategic management accounting”, Management Accounting, Vol. 59 No. 4, pp. 26-9.

Young, S. et al (2000), EVA and value based management: a practical guide to implementation,  McGraw-Hill Professional, 2000

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Management Accounting Systems. (2016, Jul 10). Retrieved from

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