The impact of globalization on management accounting

With a move toward globalization looming, the shift brought about by it may change the way businesses in the US view their accounts. First, there are two types of accountants, financial accountants and management accountants. A definition of financial accounting, taken from Merriam-Webster, is the systematic analysis of information about the economic affairs of an organization for the use of people outside the organization. Merriam-Webster goes on to explain management accounting as “reporting for planning and decision making”…”Its goal is to provide managers with reliable information about the costs of operations and about the standards by which they you can compare those costs, to help them in the elaboration of the budget”. The key difference to take away from these two definitions is that financial accounting provides information to people outside the organization, and management accounting aims to help managers within an organization make decisions.

The increased globalization of the US will increase competition for businesses within the country, making management accountants more valuable to businesses. To understand what increased competition will do to US companies and their accountants, one must first look at how companies in the US view management accountants compared to another country. In a research article titled “Management Accounting Practices in the US and Japan: Comparative Survey Results and Research Implications (1991)” by M. Shields and C. Chow, the difference in goals is noted. established by American and Japanese accountants. The survey suggests that US accountants “emphasize the use of standards to control manufacturing costs after the fact,” while Japanese accountants contrast with forward-looking practices. This difference here is within the goals established by the companies. While companies in the US are looking at what they can do now to reduce costs, Japanese companies are looking to the future to reduce costs for products that may not yet exist. This kind of thinking for corporate America is not acceptable, and the state companies are in now is less than satisfactory because the current state of management accounting is headed in the wrong direction.

Management accountants look to the future, set budgets, forecast, and steer businesses in the right progressive direction. In increased competition, especially for corporate America, companies will need managers who make the right decisions for the good of the company. In an article by B. Pounder, “How Globalization is Affecting US Accounting (2006)”, Pounder states that one of the main reasons managerial accounting is obscure in this country is because American managers are more likely to make decisions “gut instincts” (usually for personal gain) instead of making the decisions that will be good for the company in the long run. This can be linked to Shields & Chow’s research survey, which looks at companies and their respective goals. It is more common for companies in the US to demonstrate actions for personal gain than in Japan, and in an age of globalization and increased competition, companies cannot survive with that kind of mindset and framework.

A report by N. Miculescu, “Current Trends in Production Cost Accounting (2011)”, Miculescu concluded that companies have an increasing duty to find solutions as quickly as possible to keep up with this increased competition. due to globalization.

The current state of management accounting in the US rewards managers and jeopardizes the company as a whole, and with increased competition on the way, it is in the best interest of companies to hire management accountants. make decisions for the benefit of the company.