The business environment has undergone significant changes due to globalisation and developments in information and production technologies Burgstahler et al. These have collectively resulted into significant changes in the management and organisation of companies. These changes have indirectly and radically affected the field of MA, especially its information functions within an organisation. These unfolding realities have generated the need for MA to shift concern from its traditional preoccupation with numbers and accounting measures and instead focus on value addition and integration within a company.
Critics have regularly complained that MA focuses too much on internal business functions of accounting in order to meet the requirements of the internal managers. For instance, Chapman argues that while special attention is given to the internal affairs of the business sight is lost of the external opportunities and potential business threats. It is, therefore, reasonable to conclude that there is a rising chorus over the failure of MA in delivering what it had promised when it replaced cost accounting as a core discipline of accounting. The underlying assumption of this discipline is that it improves upon the traditional management accounting by enlarging its scope and realigning it more tightly with other disciplines such as strategy and marketing.
The research question which guides this paper draws its inspiration from the title of the paper. We have examined the discourse found in the literature with a view to answering the question: In order to answer the research question we adopted the analytical method of research Norreklit, ; Wilson, , In this method an attempt is made to improve the level of clarity and precision in the meaning of the concepts used in a given theory or a model. The benefit of using analytical method is that a given answer is evaluated for its accuracy and a model is assessed for its robustness Norreklit, In this way it helps in making any theoretical framework more useful and contributes to its further development.
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Just as MA was developed and introduced as a recipe for the shortcomings of the traditional cost accounting textbooks, SMA has, arguably, been launched by the accounting scholars as the new state of the art discipline. It has been claimed that the development of the field of SMA would render the old fashioned MA extinct as the newer version focuses not only on the internal financial information, but also upon the external aspects of the business operations Smith Simmonds , who is credited with phrasing Strategic Management Accounting SMA , differentiates it from MA on the basis of its greater focus on the comparison of the business with its competitors.
In this way a major hallmark of SMA is its inclusion of non- financial aspects for the purpose of decision making ibid What is this?. Lords identifies the following functions which are commonly associated with SMA: Collecting information related to the competitors. Using accounting for a strategic decisions. Cutting costs on the basis of strategic decisions. And, gaining competitive advantage through it. Traditional MA Strategic MA 1 Historical Prospective 2 Single entity Relative 3 Introspective Out-ward looking 4 Manufacturing focus Competitive focus 5 Existing activities Possibilities 6 Reactive Proactive 7 Programmed Un-programmed 8 Data orientation Information oriented 9 Based on existing systems Unconstrained by existing systems 10 Built on conventions Ignores conventions As stated in the earlier section, strategy writers have been complaining that the accounting discipline had failed to make use of strategic management.
For instance Porter and Hergert and Morris argue that the cost analysis based data of accounting systems inhibit instead of helping strategic level analysis. In order to address such concerns authors of management accounting have been advocating the use of analytical tools which were developed in the fields of strategy and marketing. Given next is a brief review of those tools which are now considered an essential part of SMA toolbox.
In this costing system the attributes of a product are emphasised, including the products features, certain purchase agreements, or after-sales services. The information inspected, however, has to be relevant to current or future competitors. Competitor Appraisal Based on Financial Statements: It is another effective concept as it permits comparison and benchmarking, the process is also reasonably inexpensive.
In their CORE framework, Moon and Bates , argue that the information contained in financial statements can be strategically used with the help of ratio analysis. The BSC was proposed by Kaplan and Norton in which financial and non-financial measures were integrated for strategic performance management purpose. It aimed to create a balance by linking vision and strategy of the business with multi-dimensional perspectives of customers, internal business processes, learning and growth, and financial position. A further concept of relevance as costs are broken down to measure them for strategic relevance, such as matching the amount competitors spend on areas such as marketing and pricing.
Valuing Customers as Assets: It is a concept that illustrates the importance of a customer or particular group of customers, Guilding and McManus state that it can be assessed through a method where the present values of estimated profits are discounted from the trading correlation of particular customers. The technique has been developed from value chain analysis proposed by Porter for gaining competitive advantage. In this analysis all value-creating activities related to the development of a product or service are linked in the form of a chain.
Those activities which are vital for adding value are given more importance.
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Roselender and Hart carried out studies on implementation of this concept which links accounting information with brand improvement and customer loyalty. The ABC is a costing system in which manufacturing overhead costs are assigning to products through a cogent approach, as opposed to allocating the costs on the basis of a pre- determined rate.
How Handel's Messiah went from cost-saving strategy to annual ritual
It initially assigns costs to an activity that is directly linked to overheads; and subsequently assigns the costs to those products that require the production activities. Scholars are not unanimous in their verdict on the question that whether SMA has been able to deliver what it had promised. On one extreme there are authors who are very skeptic and even question the role of accounting information in decision making. They contend that managers often first make decisions and then use accounting information to justify and rationalise those decisions.
In this way accounting is used as an ammunition machine rather than a facilitator for decision making Thompson and Tuden, There are other authors who believe that the hype around SMA is not proved by empirical results. For instance Lord contends that the techniques advocated by SMA are ordinarily used in all organisations and that those techniques do not need management accountants. They concluded that not much evidence was established that such methods were widely practiced.
There are other authors, however, who believe that the future of management accounting relies heavily on diffusion of SMA practices see for example Hopper et al. SMA utilises the traditional management accounting methods of acquiring and understanding financial information and then goes on using the same to strategically formulate informed business plans thus aiding improvement in the performance of such enterprises at a strategic level.
In this way it differs from management accounting as it broadly looks into internal and external issues that directly or indirectly affect a company or business Hopwood It is claimed by some authors that whereas MA fairly supports implementation and management of quality improvement by applying various methods, it is conspicuously evident that there are gaps in this approach. Strategic management accounting fills the gaps by promoting and supporting mechanisms of implementing total quality management and its improvement. This, therefore, goes a long way in enhancing improvement of product quality as well as ensuring the existence of cost efficiency Khan and Jain In fact both MA and SMA generally offer similar functions at an operational level however SMA endeavors to develop these ideas and to refine them further to meet the requirements of the increasingly developed accounting industry.
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It is further contended that SMA focuses on an in-depth review of decision making compared to traditional MA. SMA is able to look beyond financial aspects through competitor analysis and market analysis. With so many scholars stressing the need for adopting SMA practices does it mean that SMA will deliver what it has promised?
There is a need for some caution as the supporting empirical evidence is not overwhelming. According to Guilding et al. The underlying assumption in this assertion is that SMA addresses all the criticisms that have been leveled against traditional MA. Various authors have indicated that SMA has bridged the gap that existed between strategic management and MA.
It is suggested that SMA can help MA moved away from simply monetary concerns and closer to multi-dimensional business matters Mike et al, This leads to a greater emphasis on the information related to the external factors of the business including internally generated and non-financial information Inman, Another promising feature of SMA is that performance measurement is not based on profit related measures but strategic tools such as BSC are utilized for strategic performance management purpose.
Authors, therefore, pin their hopes on SMA to rescue the beleaguered discipline of MA from going further down the hill Jablonsky et al, There is a growing realisation for pedagogical changes in the teaching of accounting if it has to recover and retain its relevance. By way of illustration, this season there will be or has been at least one performance of Handel's oeuvre-eclipsing masterpiece in every provincial capital except Fredericton though excerpts were played at this concert. And that's not counting Vancouver, Montreal or Calgary.
The world over, choirs and orchestras mount all kinds of Messiah s: It takes some serious ubiquity for performances of a classical work to calcify into familiar "types. Or, at least, its genre was.
This is the story of why Handel started writing oratorios, and how one of them became possibly the most famous piece of music ever. Handel didn't invent the oratorio, lest anybody misunderstand. Composers were writing large-scale religious dramas for performance in concert halls and churches a century before Handel tried his hand at them.
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Handel demonstrated no interest in oratorio at all until he moved to Rome in the early s and found that opera — his primary calling — was outlawed there. Pope Clement XI undoubtedly thought that such decadent theatre would lead to fornication in the streets, or people reading Quesnel. But Roman composers had developed a technique to get around this edict: Handel composed his first couple of oratorios, Il trionfo del tempo e del disinganno and La resurrezione , with that in mind.
The latter even risked the papal wrath by featuring a set and painted backdrops. Handel didn't stick around Rome for long. By , he had moved to England's greener pastures. Though he had escaped from the restrictions of the Roman Catholic Church, it turns out that he had not escaped Rome's operatic limitations entirely. At that time, English opera houses did not permit depictions of biblical stories on their stages.
Crazily, that policy was still in place nearly years later, when Richard Strauss failed to have Salome mounted in London. Fortunately, Handel's time in Rome had taught him a workaround that he could now apply in a new country and a new language. Esther , Handel's first religious choral drama in English, was premiered to rapturous applause in The Earl of Egmont is said to have found it "exceeding fine.
Thus it was that a German dude single-handedly single-Handeldly? By , the year of Messiah , Handel had been churning out hit oratorios in English for years.