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Managerial Accounting Practise in Saudi Organizations - Essay Example

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Managerial Accounting Practise in Saudi Organizations

The State and Extent of Using Modern Management Accounting Techniques In Particular in Making the Right Decisions Decision making is considered to be an all inclusive and widespread process that consists of various activities such as identification of the problem or the concerns, allocation of certain weights or ranks to the identified problem, evaluation and implementation of the alternative plans. Management accounting on the other hand is related to the appropriate use of relevant information in order to facilitate and direct managers to undertake informed business decisions effectively and efficiently. The most advantageous fact of management accounting practices is that is does not require conforming or following the national accounting standards which further gives a liberty or room for the business people to adopt customized management accounting techniques that are most effective in terms of their business operations. For realizing the affectivity in the decision making process, organizations combine or merge the advanced quantitative and qualitative techniques. According to Johnson, The use of modern management practices has helped in focusing on the problem which inclines more towards how accounting information can be made more useful for decision making rather than how we could improve things we do . The recent developments in the modern management accounting techniques have enabled the managers to make sound decisions so that excessive costs incurred by firms could be pruned down and at the same time, the value of the products and services rendered could be enhanced. The extent to which the management accounting practices have been put into action is tremendous and quite rigorous, especially in the past two decades. Lot many research work and in-depth study in various countries across the world have undertaken to find out the relevance and significance of the modern practices to various sectors in the economy. For instance, in a research conducted by Philip and Kerckhoffs Christian (2005), the significance of Activity Based Costing (ABC) and throughput accounting (TA) was brought forward and was revealed that MAP’s are more used as accounting tools to “make-up” the technical insights from an accounting viewpoint. The research indicated the use of working-floor insights and production process data in the formulation of a company’s income statements that are utmost essential for managerial decision making. When most of the countries have already adopted the MAPs, there are countries like Bangladesh which still need to incorporate the changes in the accounting practices. Bidhan has conducted one such study whereby it was found t modern techniques like Activity-Based Costing, Cost-Volume-Profit, Target Costing, and Just-in-Time (JIT) etc were not applied in the public and private sector manufacturing enterprises but used by just a few Multinational Corporations (MNC). (8) Most of the companies in Saudi were still found to use the conventional and traditional accounting practices. Traditional management accounting techniques are generally perceived by the Saudi manufacturing and service sector firms to be highly important and frequently used by the responding firms. As per Ei-Ebaishi, the managers rely less in comparison to ...Show more

Summary

STATE OF MAPS IN SAUDI ORGANIZATIONS MAPs and its significance Management Accounting Practices is considered to be an important tool for an organizations management to promote both affectivity and productivity. Especially keeping into consideration the small enterprises, MAPs prove to be a vital information system for well structured and well defined information processing…
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