Management Accounting

“Management accounting systems are inadequate for today's markets and economic environments.

In a time of warp speed technological change, vigorous global and domestic competition, and enormously expanding information processing capabilities, management accounting systems are not providing useful, timely, and meaningful information for process control, product costing, and performance evaluation of managers' activities.

Accounting information, driven by the procedures and cycles of external financial reporting, is too late, too aggregated, and too distorted to be relevant for planning and control decisions.

And accounting reports are of little help to operating managers in their attempt to reduce costs and improve productivity.

Frequently, reports even decrease productivity because they require managers to spend time to understand and explain reported variances that have little to do with the economic and organic reality of their business”.

Excerpt from: "Relevance Lost, The rise and fall of management accounting", Johnson & Kaplan, 1987 - pp. 1-2.