These factors indicate an accounting system of good governance

For countries with economies in developed markets, the role of management accounting has been identified as support for business activities and can help administrators reversed. One story illustrates this claim was the author Shahid Ansari (California State University Northridge), Jan Bell (California State University Northridge), Thomas Klammer (University of North Texas), Carol Lawrence (University of Richmond) presents in "Strategy and Management Accounting":

"Reel Tape is a big company established in the year 60. We are one of the first business company in the field of magnetic tape. We have very few competitors in the West Coast and we have a very beautiful land. When cassettes began to appear we've launched the product but not the familiar but we kept the style business the old way. But the market has changed. We have more competition from Europe, Japan and the producers from the Far West. Our opponents have a lower selling price to our price. They have also improved product quality, punctual delivery, introducing new products such as magnetic tapes by chromium that while we do not produce them. When we realized, was too late. We found out that was lost too many customers. Many customers have left us, why so?

I suppose there are many reasons, but the most important problem is the absence of the accounting system of good governance. We think that the system is only necessary accounting tax accounting and financial accounting. We started to study carefully the issues that we face, we found that the accounting system was not our supply us with information about the many questions that the administrators like we need to know. Such as:

• What makes the proportion of sales of high bounce?
• What causes problems is not good quality product?
• Information on where timely delivery?
• File will record the competitors?
• The market segments and potential customers most?
• Type cassette that lead to the greatest return?
• Expenses for the introduction of new products will be? "

The story above shows the accounting management system plays an important role in implementing the strategic objectives of the organization, it includes the provision of information to assist in the manufacture of products with low cost , quality is maintained, punctual delivery and encourage the initiative, this also means:

• In essence: management accounting is the process of measuring.
• The scope: management accounting including financial information such as the cost, operational information such as product ratio down etc ...
• On purpose: Management Accounting helps organizations achieve strategic objectives, but it is not the objective of financial reporting and tax reporting.
• About Attribute Management Accounting consists of three attributes: technique, behavior and culture.
  • Technical Properties: Increasing understanding of the phenomenon being measured and provide the appropriate information for strategic decisions.
  • Properties Behavior: To encourage actions consistent with the organization's objectives.
  • Cultural Properties: Support or create cultural values, beliefs and moral values ​​and social organization.

An accounting system of good governance is a good measurement system, aimed at the production process and have a positive impact on the behavior of individuals in the organization and direction in implementing the strategic objectives of the organization .

Good measurement system must have two main characteristics:

• Information which provides appropriate to have an impact and alter or improve the decision in a positive direction. If managers do not know or are unable to make the right decisions, the information given is no longer appropriate. For example, management accounting systems continue to collect and report information on the use of labor in factories even as production has been automated, making the cost of labor accounts for a small proportion of the total cost, so information is never used.
• Focus on measurable results by center of responsibility in the organization. Managers today understand that tomorrow's results in implementing work producing products or services within today. Due to the production process or services takes place horizontally, that is taking place in parts of the organization and measuring system through responsibility system of the organization.

Management accounting system oriented production processes mainly focused on the measurement result calculation of the production process, each department involved in the process in order to satisfy customer demand.

With accounting system oriented manufacturing processes will help the corporate governance on the following aspects:

• The first is to understand the cause and effect relationship. For example, what do incurred costs; why these activities are not profitable.
• The second is to identify those activities that do not add value eg identify redundant tasks or activities do not meet the requirements of customers from it can reorganize production processes for reasonable .
• The third is to understand the relationship between events in the sequence of events, such as management accounting information may indicate the influence of suppliers or distributors to the value of the product or service customers pay.
• Fourth, separate the impact inside and outside the organization, such as management accounting could indicate which part of the production process hinder the ability to produce and lead to dissatisfaction for customers .

Management accounting system has an impact on the behavior of individuals in the organization is: by how measurement of management accounting can affect human behavior in organizations, manifestations in for:

• Changing perceptions: What is measured, calculated, usually prominent and it is clear that more animals. So usually the decision will be made after the measurement has specific calculation. For example, the calculation of the cost of environmental protection would make administrators decided in favor of the purchase of equipment is not environmentally harmful emissions even though prices are more expensive.
• To encourage appropriate behavior: When a sum is calculated, it is a sign of the desire to change attitudes and behavior, such as calculating the percentage of on-time delivery is a sign of the desire more timely delivery and after calculate this ratio will lead to behavioral choices reputable suppliers about delivery deadlines.
• Changing attitudes and expectations: The calculation is the basis for the evaluation tends to change the attitude and expectations of each individual. For example, setting norms time for a job, the key is to set goals for achieving the expected time. When achieved norm, people will recall the efforts of the past and expected to try to achieve higher performance, but without reaching the level it can lower performance in the period ahead.
• Changing perspective: People tend to explain the cause of the success associated with decisions and their actions, but they explain the cause of the failure to mount with the objective factors beyond their control. So that people can change the view by the calculation of management accounting and leads to changes in behavior.

All these expressions indicate: The calculation of management accounting have created the variable psychological impact - social and its outcome is to change human behavior in organizations. The behavior of individuals in the organization will create cultural values ​​of an organization. Cultural values ​​of the organization include: trust and moral values, attitudes distribute economic benefits, and the symbol of the organization. These are cultural variables is affected by the calculation of management accounting.

Such a management accounting system makes good decisions, help understanding the process of production and business, encourage appropriate behaviors, reflect moral values ​​and faith. And all of those things in order to achieve strategic objectives: quality, time and price. This also means that management accounting itself is not the end point, it is an important tool to achieve strategic goals for the organization.