Strategic Managment Accounting

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 There is no agreed definition of SMA in the literature. At its very simplest, SMA is about making management accounting more strategic (Roslender and Hart, 2003, p.272). Simmonds defined it as “the provision and analysis of management accounting data about a business and its competitors, for use in developing and monitoring business strategy” (Simmonds, 1981, p. 26). In 1981, Simmonds claimed that SMA was “spreading rapidly in practice” and that “management accountants are spending a significant proportion of their time and effort in collecting and estimating cost, volume, and price data on competition and calculating the relative strategic position of a firm and its competitors as a basis for forming business strategy”(Simmonds, 1981, p. 26). This is a curious claim, as in later years, several writers maintained that such practices have not been adopted widely (Guilding et al., 2000; Lord, 1994, 1996; Shank, 2007). Was Simmonds exaggerating, or was he using the term SMA, or viewing SMA, more loosely than subsequent researchers and writers? Both quotations from: Langfield Smith K (2008), Strategic Management Accounting: How Far Have We Come in 25 years?, Accounting, Auditing & Accountability Journal, Vol 21 No 2, pgs 204-228 Background : You are a management consultant with a specialism in the area of performance management. One of your clients, a large listed company, has engaged you to help them implement strategic management accounting (SMA). Their Chief Executive Officer (CEO) is very keen on the idea as she thinks it sounds as though it is the kind of thing that might give her company an “edge”. However, she has read a little in the area, including the paper by Langfield-Smith (above) and several others, and has explained to you that she remains confused by what it actually is. She has asked you to write a paper for board discussion in which you outline : what SMA is, how it has developed (if at all), what techniques/tools are actually involved in it and what you might suggest her company should do with regard to adopting SMA. A relatively recent graduate, the CEO expects a paper which makes reference to relevant literature throughout. “I need to see that what is being suggested is informed by academic research”, she has told you, “but likewise I won’t adopt something just because an academic thinks it’s a great idea in theory.
Instruction:

Write a paper for board discussion which addresses the points made above – what SMA is, how it has developed (if at all), what techniques/tools are actually involved in it and what you might suggest her company should do with regard to adopting SMA.
Whereas the marking scheme below suggests a broad manner in which the assignment will be marked, this is fluid and we will mark on the basis of where you have placed the emphasis. There is potentially a great deal of coverage in the paper and if, for example,
you chose to focus a great deal of time on what SMA might be, to the detriment of tracing its development, then we will adjust the marking scheme accordingly as long as what you say is relevant and evaluative. We would expect that you might take 2,000 to maybe 2,500 words to complete the paper but you will not be penalised for excessive length. If it is relevant, it will be read and marked. Please be aware also that the marking scheme details the broad areas we would except you to cover but, to reiterate, we are looking for analysis and evaluation of literature within these areas. So for example, when it comes to the area of techniques, you won’t get very far by listing a few techniques. Who says these are SMA techniques, who agrees, who disagrees, why? We need to see this part of the debate to show you have consulted the literature to inform the comments/justifications that you make.

ASSIGNMENT There is no agreed definition of SMA in the literature. At its very simplest, SMA is about making management accounting more strategic (Roslender and Hart, 2003, p.272). Simmonds defined it as “the provision and analysis of management accounting data about a business and its competitors, for use in developing and monitoring business strategy” (Simmonds, 1981, p. 26). In 1981, Simmonds claimed that SMA was “spreading rapidly in practice” and that “management accountants are spending a significant proportion of their time and effort in collecting and estimating cost, volume, and price data on competition and calculating the relative strategic position of a firm and its competitors as a basis for forming business strategy”(Simmonds, 1981, p. 26). This is a curious claim, as in later years, several writers maintained that such practices have not been adopted widely (Guilding et al., 2000; Lord, 1994, 1996; Shank, 2007). Was Simmonds exaggerating, or was he using the term SMA, or viewing SMA, more loosely than subsequent researchers and writers? Both quotations from: Langfield Smith K (2008), Strategic Management Accounting: How Far Have We Come in 25 years?, Accounting, Auditing & Accountability Journal, Vol 21 No 2, pgs 204-228 Background You are a management consultant with a specialism in the area of performance management. One of your clients, a large listed company, has engaged you to help them implement strategic management accounting (SMA). Their Chief Executive Officer (CEO) is very keen on the idea as she thinks it sounds as though it is the kind of thing that might give her company an “edge”. However, she has read a little in the area, including the paper by Langfield-Smith (above) and several others, and has explained to you that she remains confused by what it actually is. She has asked you to write a paper for board discussion in which you outline : what SMA is, how it has developed (if at all), what techniques/tools are actually involved in it and what you might suggest her company should do with regard to adopting SMA. A relatively recent graduate, the CEO expects a paper which makes reference to relevant literature throughout. “I need to see that what is being suggested is informed by academic research”, she has told you, “but likewise I won’t adopt something just because an academic thinks it’s a great idea in theory.” Required: Write a paper for board discussion which addresses the points made above – what SMA is, how it has developed (if at all), what techniques/tools are actually involved in it and what you might suggest her company should do with regard to adopting SMA. Whereas the marking scheme below suggests a broad manner in which the assignment will be marked, this is fluid and we will mark on the basis of where you have placed the emphasis. There is potentially a great deal of coverage in the paper and if, for example, you chose to focus a great deal of time on what SMA might be, to the detriment of tracing its development, then we will adjust the marking scheme accordingly as long as what you say is relevant and evaluative. We would expect that you might take 2,000 to maybe 2,500 words to complete the paper but you will not be penalised for excessive length. If it is relevant, it will be read and marked. Please be aware also that the marking scheme details the broad areas we would except you to cover but, to reiterate, we are looking for analysis and evaluation of literature within these areas. So for example, when it comes to the area of techniques, you won’t get very far by listing a few techniques. Who says these are SMA techniques, who agrees, who disagrees, why? We need to see this part of the debate to show you have consulted the literature to inform the comments/justifications that you make. The category of the assignment: Category What SMA is 10% SMA development 20% What is involved 50% What to adopt 20%

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