Decision Rights and Managerial Accounting System Order Instructions: Decision Rights Assignment and Managerial Accounting System Design
When an organization establishes its presence abroad, a primary aspect of its foreign operational architecture is a decision-rights assignment. Decision rights assignment forms the fundamental basis for what must be controlled in any organization: managerial decision making. Unless decision makers have reasonably accurate, complete, relevant information, enterprise planning decisions are not likely going to succeed, especially in cross-cultural business settings.
The most optimal managerial accounting systems are designed to provide decision- and control-relevant information to such decision makers. This week’s Discussion will explore how decision rights assignment in multinational enterprises influences managerial accounting system design.
Decision Rights and Managerial Accounting System Requirements
Your presentation should present an analysis and synthesis of prior research and will begin the interaction with your colleagues. You will prepare an academic paper of 5–7 pages in APA format
post your initial paper !!!
Decision Rights and Managerial Accounting System Sample Answer
In business, proper decision making is important towards the process of achieving the objectives of an organization. This is because the type of decisions made is what determines the output of an organization, something which Gray, Salte and Radebaugh (2011) say is the backbone of an organization. This means that when the decision making organ of an organization is poor, then the organization will always move towards the wrong direction. Therefore, the people who make decisions in an organization should be selected well. This is usually made possible through the presence clear policies regarding decision rights assignment. Decision rights assignment deals with the way in which the decision-making model of an organization is set up. This means that not everyone is authorized to make decisions in an organization but specific people. Specific individuals are authorized to make specific decisions in the organization.
With decision rights assignment being an important aspect in management mostly in multinationals, it influences managerial accounting system design in the organization. Williams and Seaman (2011) say this is always brought about by the fact that there is need to avail the relevant information to the specific individuals with decision rights assigned to them. It is worth noting that good decision making depends on the information available to a decision maker. To achieve the best results, the design of a managerial accounting system should be influenced by the decision rights assignment in an organization. This is usually the case in multinationals that move into new territories. There has to be a proper approach into the issue of decision rights assignment.
There are various ways through which decision rights assignment in multinational enterprises influences managerial accounting system design. First, the need to decentralize information in decision rights assignment influences the way the managerial accounting system is designed. This happens when the managerial accounting system is required to transmit certain information to the holders of decision rights. It is worth noting that for better decisions, information should be transferred to all the relevant individuals effectively. This leads to an accounting system design that allows this flow of information. Experts in matters related to the position of information for decision making argue that it should never b at one point. This means that it should be distributed to all relevant individual for the purpose of analysis for a concrete decision to be made. This means that the design of a managerial accounting system should be able to allow all the holders of decision rights access the decentralized information. Even though the information should be decentralized, the designers should ensure that the accounting system design does not give access of classified information to irrelevant people in the organization.
Secondly, assignment of decision rights influences accounting system design through the need to have the capability of proper allocation of resources. Organizations usually end up succeeding whenever proper allocation of resources takes place. It is always the fear of decision makers to have resources which are poorly allocated among all the entities of an organization (Kaplan, Robert & Bruns, 2011). For proper decision making, there is always need to have proper allocation of resources; financial or workforce. This need by those assigned decision rights influences the designers of a managerial accounting system come up with this capability in the system.
Another influence of assignment of decision rights comes through the need to have a system which is able to come up with proper strategies and work plans especially on the part of the business owners. The individuals tasked with an organizations decision making will always need proper strategies and plans so as to achieve the organizations objectives. This need is usually driven by the importance of knowing the best way of action towards achieving the organizations objectives. This means that the managerial accounting system designers should come up with a system which is able to give this function to the decision makers.
Another way through which assignment of decision rights influences the design of accounting system is brought about by the need to bring out risks. Risk is always a factor to consider in business and should always be managed well to avoid losses (Anthony & Govindarajan, 2012). Therefore, the decision makers in an organization should ensure that they are in look out for any risks facing an organization. The decision makers are always looking forward to an accounting system that is likely to bring out the risks involved in all projects of an organization. This is for the purpose of being able to identify and reduce the apparent risks. This forces the designers of a managerial accounting system to think outside the box on how to incorporate the function of identification and monitoring of all the risks facing an organization.
Many a times, the individuals who are assigned decision rights tend to have interest in carrying out various tests through the system to check efficiency or overall state of affairs. According to Chew and Parkinson (2013), these tests are usually related to various variables affecting the processes of organizations systems. This need for testing the variables by the assignees of decision rights influences the form of design created for the managerial accounting system. The process of designing an accounting system under this influence pushes the designers to ensure that the system offers a test enabled platform.
Within the group given decision rights, there might be individuals who are supposed to identify and make decisions regarding growth in the company. This means that the assignee of growth related decision rights will require an accounting system which is able to bring out this aspect well. Therefore, this will bring about influence to the design of the managerial accounting system design. With this need, the designers tasked with coming up with the accounting design system will be influenced into incorporating a function which is able to identify movements related to growth in the organization.
The need to know the overall benefits of an organization by the people authorized to make decisions influences the design of a managerial accounting system. It is common knowledge that all the decision makers in an organization are always focused on the outcome of ll projects for the organization (Burns, Warren, & Oliveira, 2013). This means that the designers of an accounting system should be able to put it in a way that makes it easy for the decision makers to identify the overall benefits achieved. This means that any system that is developed and falls short of this capability I not suitable.
Decision Rights and Managerial Accounting System Conclusion
Managerial accounting system should always be able to present the decision maker with the right information that can be relied upon at all times. This information should always be available at the earliest time possible for timely decision making. According to Heely and Nersesian (2013), decisions which are not timely end up reducing the chances of achieving the objectives of an organization. This means that competitors in the same industry will be able to thrive and beat an organization in the market. Therefore, it is important to come up with a managerial accounting system that bears in mind the needs of individuals with decision rights assigned to them.
Decision rights assignment influences the design of accounting system through the need of handling projects systematically. According to Gray, Campbell and Shaw (2014), it is worth noting that a systematic way of dealing with projects is most likely going to bring about a positive output. Therefore, the decision makers should be able to look at all projects in a systematic manner something which brings about pressure to the managerial accounting designers. The influence here is brought about by the need to have a system which integrates projects, monitors them with respect to plan and the laid down budget. This makes the designers of the systems find ways of fulfilling this need for the decision makers to be able to understand his aspect and make up their minds.
The designers of managerial accounting systems should be able to understand the various needs of the individuals to whom decision rights have been assigned to (Heely & Nersesian, 2013). This will be an important consideration for the purpose of coming up with a near perfect accounting system. This should be followed by regular reviews. This is necessary for the purpose of incorporating additional decision makers as well as changed needs.
There is need to have proper research by the designers of accounting systems for the decision makers. This is necessary for the purpose of understanding the needs of a given organization. It is important to have this information and understanding so that tailor making a system becomes much easier. It is evident that the influence of decision rights assignment on the managerial accounting system is beneficial to organizations, thus the need to embrace it always.
Decision Rights and Managerial Accounting System References
Anthony, R. and Govindarajan, V. (2012). Management Control Systems, Chicago, Mc-Graw-Hill Irwin.
Burns, Q., Warren, B. & Oliveira, J. (2013). Management Accounting, McGraw-Hill, London,
Chew, L. & Parkinson, A. (2013). Making Sense of Accounting for Business. Harlow: Pearson
Gray, S., Campbell, L., Shaw, J. (2014). International financial reporting (A comparative international survey of accounting requirements and practices in 30 countries). London, UK: Macmillan.
Gray, S., Salter, S., & Radebaugh, L. (2011). Global accounting and control: A managerial emphasis. New York: Wiley.
Heely, J., & Nersesian, R. (2013). Global management accounting: A guide for executives of international corporations. Westport, CT: Quorum Books.
Kaplan, Robert S. and Bruns, W. (2011). Accounting and Management: A Field Study Perspective, Harvard Business School Press.
Williams, J., & Seaman, A. (2011). Predicting change in management accounting systems: National culture and industry effects.
