STRATEGIC MANAGEMENT ACCOUNTING: HOW FAR HAVE WE COME IN 25 YEARS?

Strategic management accounting can be defined as strategic cost management also. There are three well known authors gave different definition in different perspectives. As for examples, Roslender and Hart defined in the simplest way whereby they defined strategic management accounting as a process of making management accounting more strategic and reliable. But in other hand, Bromwich (1990,p.28) defined that strategic management accounting focused more on performance relative to competitors and there is limitation for financial information. This is in tandem with definition by Simmonds (1981, p.26) whereby he defined that strategic management accounting analyze data about a business and its competitors for use it in developing and monitoring business strategy. Strategic management accounting also known as strategic cost management (SCM) whereby described as the blending of the financial analysis element which are consists value analysis, strategic positioning analysis and cost driver analysis. However, still got commentators give view that SMA are broader than SMC but through descriptions that given by Lord (1996) whereby he mentioned that SMA consists six stage of process as follows: collection of competitor information, exploitation of cost reduction opportunities, matching of accounting emphasis with strategic position and it cycles back. Theoretically, its in tandem with SMC definition. As mentioned before, SMA and SCM get different descriptions with different perspectives. One of it is A North American perspective which is done by the late John Shank. John Shank tried to encourage growing professionals, management accounting researchers and practitioners in UK and US to use SCM as their tools to teach. He is also provides ideas to use activity based costing (ABC) and activity based management (ABM) as a tool to standardize the accounting more strategically. Year 1990s, the ideas of John Shank gave him positive feedbacks whereby many SCM used as tool for pilot studies in US companies and some published it as teaching case studies and also as chapters in text books. But in some internal accounting of corporations less involve in implementations of SCM. However, there was doubts arose by his colleague, Robin Cooper. He expressed that accountants did not have the ability to adopt with new transformations. Besides that, he added that SCM activity more to outside of the view of the accounting profession and accountants are literally and emotionally unprepared for this transformation and at the time, John Shank disagreed with him. In year 200-2005, John Shank was shocked with the turbulence whereby companies and corporations that he had documented case studies no more use it in pilot studies. It is due to the decline in management accounting as professions in USA apparently change their focus. Besides that, the North American profession bodies that had been dedicated to management accounting, IMA in the USA and CIMA in the Canada faced declines in membership and failed in their attempts to reposition their professional magazines. At last, John Shank concluded that the implementation of SCM failed due from shadow accounting staff.

Clearly, we can see that SMA and SCM started with great responses but at the one time, it was not accepted due to increasing pressures of the capital markets for quarterly profit earnings results. Besides that, there are surveys showed that low level acceptance and adoption of SMA techniques but the respondents show their intent to adopt ABC in the future rather than SMA. As for example, surveys in the UK and North America in the late 1980s and up to 1994. In order to address adoption and implementation of SMA and SCM, National Association of Accountants (NAA) in the USA and CAM-I handled a survey which was sent to 1,000 preparers and 1,000 users of management accounting information and 217 others who are working in manufacturing industries. It was followed by 22 on site interviews in order to study about the acceptance and adoption of SMA techniques in manufacturing industries in that time. As a result, the survey found that the preparers expressed high level of dissatisfaction with the cost data because they did not find SMA useful for them makes decisions. Even though, the manufacturing industry still practicing traditional management accounting and less in practicing modern accounting practice although sophisticated manufacturing technologies were adopted by the industry. In the consequences from this, two surveys were conducted and NAA revealed the result similar with the previous result. Other than that, Bright et al. (1992) also conducted a survey at 677 UK manufacturing companies with more than half over 500 employees and as a result, they reported confusion in which various advanced costing tools were adopted and used. There have been many surveys of SMA, SCM and ABC adaptation. As for example, in Innes et al. (2000) there were a comparison made between surveys of ABC practice in the UK which took place in 1994 and 1999 and found that there were few changes in that period. As a conclusion, even though in 25 years, SMA, SCM AND ABC did not get a well response but in future, the research should be more on the output of accounting departments and understand about management accounting practices and how they are implemented and developed will continue as a source for the future research.