Management Accounting Systems Are Built Essay

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This is consistent with contingency theory -- not only must the managerial system be broadly appropriate for the firm type, but is must also be fine-tuned to meet the specific structural and environmental needs of the firm. The subsystems must be congruent with the firm's objectives, and firms of the same type do not necessarily have the same objectives (Wade & Schneberger, 2006).

A firm can, if it chooses, use a managerial system that broadly fits its needs, such that the same system is used in a number of similar organizations. However, for a firm to be most effective, it should tailor that broad system to meet its specific circumstances. Management cannot assume that a managerial system used by a similar organization will work for them, because not too firms will have the exact same structure, environment, and objectives.

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Because management accounting is so focused on the provision of information for evaluation, the firm must ensure that the information provided fits with the specific things it wants to evaluate. While management accounting systems can provide a basic framework, management must adapt that framework to provide it with the information it needs. Remember that management's role is to improve the firm's operations, in most cases vis-a-vis competitors. If each firm of the type uses the same evaluation metrics from the same management accounting system, it will be difficult for management to outperform. They must make adjustments for their own circumstances in order to outperform.

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