Flamholtz, E. G. 1992. Relevance regained: Management accounting - Past, present and future. Advances in Management Accounting (1): 21-34.Summary by Zuwena De Freitas
Master of Accountancy Program
University of South Florida, Summer 2002 |
In this article Flamholtz examines the past, present and future of managerial accounting with two main objectives. One objective is to identify certain aspects of the progress made in managerial accounting in the last 20 years, while simultaneously pointing out the direction in which the field must grow if it is to continue to be relevant and useful. The second objective is to examine progress in two areas of managerial accounting that emerged during ...view middle of the document...
The growth of the service industry and the rapid growth of financial institutions further changed the environment in which accounting existed in the beginning of the 1960s and managerial accounting began to mean more than just cost accounting. Along with this change came the development of the field of behavioral accounting as more scholars began to see that accounting had a significant behavioral impact. During this same time human resource accounting also began to emerge. Managerial accounting also experienced change in the area of research. During the 1960s and the 1970s there was an increasing attempt to become more quantitative through the use of mathematical models. This was carried to such a degree that the journals seemed to have lost any sense of reality and research got further and further away from reality.
Behavioral accounting was concerned with looking at the impact of accounting measurement systems on the behavior of the people in organizations while simultaneously looking at the impact of human behavior on the effectiveness of accounting measurements and systems. Most of the systematic studies in this field were done in the 1970s and during this period behavioral accounting research studied issues such as budgeting and human behavior, human information processing and problem solving, and the impact of organizational structure on managerial accounting. According to Flamholtz, the very notion of behavioral accounting (accounting measurements can simultaneously affect and be affected by human behavior) has affected the way people view the world. This notion of behavioral accounting has become part of managers’ mindset.
Human Resource Accounting
The development of human resource accounting came about as a result of an increasing recognition of the importance of human assets in economics, psychology, and personnel management. Human resource accounting involves accounting for people as organizational resources and its development has progressed through several stages. The first stage involved the recognition by academicians that a method to account for human resources was needed. The second stage involved development of concepts and models for measuring the cost and value of people as organizational resources. The third stage involved experiments to apply the measurement in actual companies. The difficulties involved in finding organizations that are willing to serve as research sites has limited the number of these types of studies. The fourth stage involved empirical testing of human resource accounting information in a behavioral context. The fifth stage like the third one involved additional experiments to apply human resource accounting technologies to a variety of managerial problems.
Flamholtz uses definitions of the objective and purpose of managerial accounting given in 1966 by a committee of the American Accounting Association to show how little progress managerial accounting has made...