Accounting and management control

Citation

Mundy, J. (2011), "Accounting and management control", Journal of Applied Accounting Research, Vol. 12 No. 3. https://doi.org/10.1108/jaar.2011.37512caa.001

Accounting and management control

Article Type: Editorial From: Journal of Applied Accounting Research, Volume 12, Issue 3.

Accounting and management control are major concerns for organisations of all types. Management control, including management accounting, involves the use of a variety of problematics and methodologies to help organisations to achieve their objectives. This special issue of the Journal of Applied Accounting Research (JAAR), co-guest edited by Oliver de la Villarmois of the University of Lille, Yves Levant of the SKEMA Business School, and myself, presents a series of studies that demonstrate the range of topical issues, as well as the variety of both traditional and interdisciplinary perspectives, that focus on the role and use of accounting and management control in practice. It aims to contribute to the existing theoretical and methodological literature in the field of accounting and management control while also responding to calls for greater practical relevance of our research.

This special issue has the unusual distinction of containing only one British author among its five papers. With three articles from France, one from Canada, and an Egyptian co-author, the issue provides insights into theoretical themes that are of recurring interest to researchers and practitioners in countries not highly represented in previous issues of JAAR.

The edition includes five papers that each addresses a different aspect of the use of accounting and control from a range of perspectives. The first paper, by Cavélius, is concerned with an issue little explored by researchers but of great relevance to practitioners: the reconciliation of internal communication of financial measures with those required for disclosure. The paper aims to develop theory by drawing on data collected from 55 large firms to construct a typology of “practice” that characterises firms according to how they use information from accounting systems to disclose financial information to their investors. By defining two dimensions (static/dynamic and voluntary/conformist), the paper presents a taxonomy for categorising four different approaches to financial disclosure.

In addition to contributing to both the theory and practice of financial disclosure, Cavelius’ paper demonstrates the importance of undertaking empirical research at the interface of management accounting and financial accounting. Research that combines both fields of accounting are relatively scarce, but this paper serves to remind us that they are inextricably linked, and that this link is likely to have crucial implications for the use of reporting and control throughout the organisation.

The balanced scorecard (BSC), an enduring topic for management control research, is the focus of our second paper. The well-documented problems with the BSC since its appearance 25 years ago partly explain its continuing appeal to both researchers and practitioners alike. Naro and Travaillé's paper aims to address the criticisms surrounding the theoretical underpinnings of the Balanced Scorecard. They employ Simons’ (1995) levers of control framework to investigate how two firms use the BSC to align intended and emergent strategies. The study offers insights into how the design phase during implementation of a BSC represents an interactive lever of control that firms can exploit to formulate strategy and build consensus around its strategic plans. The levers of control framework has been used in a number of academic studies to investigate various aspects of management control but has received much less exposure in the practitioner-focussed literature. Simons developed the framework partly from inductive studies based on direct observations in a number of large organisations, a fact that alerts us to the potential for utilising the framework more directly to investigate issues of relevance to practitioners. For example, while practitioners may be interested in acquiring a range of tools and processes to help them implement organisational strategy, the levers of control framework can provide insights into how their use, rather than their existence, affects organisational outcomes.

The third paper in this special issue, by de la Villarmois and Levant, explores the implementation phases and associated uses of data arising from a French costing method, UVA (Added Value Unit). While similar to ABC, UVA has a number of apparent methodological advantages that render it popular with smaller firms, particularly in France, that lack the resources necessary to implement more complicated costing methods. The high utilisation rate of UVA suggests that these advantages warrant further investigation in the ABC literature.

Comparisons between ABC and UVA are reminiscent of a similar debate concerning the Balanced Scorecard and its French equivalent, the Tableau de Bord. This raises questions about the extent to which accounting innovations that are common in one country can be transplanted to firms in other countries. Studies of other innovations that deviate from the traditional Anglo-American models have the potential to increase the quality of tried and tested techniques available to practitioners, and journals such as JAAR provide a vital means for identifying and communicating the variety of accounting innovations in use across the world.

Gosselin's paper, the fourth in this special issue, employs a survey questionnaire to examine the influence of a range of contextual factors such as strategy, structure, and environmental uncertainty on the use of innovative performance measures. By providing insights into the use of a wide variety of financial, non-financial, outcome, and process measures across different contexts the study enhances our understanding of the influences over the implementation and use of innovative performance measures.

Finally, Elmassri and Harris explore a recurring theme in the management control literature; namely, how managers create and use budgetary slack. Elmassri and Harris extend recent research on the positive aspects of budgetary slack by reconceptualising it in terms of risk management. The paper contributes to the risk management literature by showing how budgetary slack can help organisations to mitigate planning and operational risks by providing contingencies to budgets beyond those included at higher levels of the organisation. The consideration of budgetary slack as an important element of risk management may cause practising accountants to view their budgeting processes in a different way.

In summary, the five papers included in this special issue demonstrate the range of accounting and management control issues that interest both researchers and practitioners alike. They raise a number of important points for researchers in the field of accounting and management control who wish to explore issues that are relevant to practice. First, there exists plenty of scope to investigate issues at the interface of different fields across management and financial accounting. While academics are careful to delineate their research into different fields of accounting, this dichotomy often does not exist in practice, particularly in smaller firms where accountants continually face challenges that cross the boundaries of research fields. Researchers can contribute to the practice of accounting and control by questioning the extent to which their research is both relevant and appropriate to practitioners. Second, Anglo-American models inevitably dominate our literature, potentially restricting the range of innovations and approaches available to practitioners. If we are to increase our engagement with practice, then as researchers we have a responsibility to seek and investigate alternative models. Third, by taking different perspectives on popular themes, such as budgetary slack, researchers have the potential to radically alter the way that practitioners view common practices within their firms.

In a previous guest editorial to a JAAR themed issue, Brown (2009) expressed regret at the relatively small number of audit researchers who apply their expertise to problems that are rooted in audit practice. A similar criticism is often levelled at accounting and control research. Together with my co-guest editors I hope that this special issue illustrates just a small range of accounting control issues potentially of interest to both researchers and practitioners, and that it will encourage contributions from other researchers with similar ambitions to explore issues that are relevant to practice.

Julia MundyGuest Editor