Evolution of Management Accounting Practices

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AN EMPIRICAL INVESTIGATION OF THE EVOLUTION OF MANAGEMENT ACCOUNTING PRACTICES

by Magdy Abdel-Kader University of Essex and Robert Luther University of Bristol WP No. 04/06 October 2004

Address for correspondence: Magdy Abdel-Kader Department of Accounting, Finance and Management University of Essex Colchester Essex CO4 3SQ UK E-mail: mabdel@essex.ac.uk

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An Empirical Investigation of the Evolution of Management Accounting Practices

Magdy Abdel-Kadera and Robert Lutherb

a: Department of Accounting, Finance and Management, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ (Correspondence address) b: Bristol Business School, U.W.E., Bristol, BS16 1QY

The authors are grateful for the constructive comments of participants at the EIASM conference on New Directions in Management Accounting: Innovations in Practice and Research, December 2002, Brussels. Financial support from the Chartered Institute of Management Accountants is acknowledged with gratitude.

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An Empirical Investigation of the Evolution of Management Accounting Practices
Abstract

This paper investigates and reports on the status of management accounting practices in UK industry. The analysis operationalises the IFAC statement on Management Accounting Concepts and its description of the evolution of management accounting. The results, based on responses from 123 practising management accountants, suggest that the management accounting employed in many UK industrial companies is not particularly sophisticated. Budgeting, product profitability and financial performance measurement remain the central pillars and some of the newer management accounting techniques are less widely used than might be assumed from a reading of the textbooks. There is little evidence of management accounting concerned directly with ‘value creation’.

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1. Introduction During the 1980s…...

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