Academic journal article Journal of Managerial Issues

The Changing Organizational Structure and Individual Responsibilities of Managerial Accountants: A Case Study [*]

Academic journal article Journal of Managerial Issues

The Changing Organizational Structure and Individual Responsibilities of Managerial Accountants: A Case Study [*]

Article excerpt

This study examines organizational structural changes within the finance and accounting function following the adoption of a new information system. Many accounting researchers have predicted a changing environment and role for management accountants resulting from competition, regulation, and manufacturing and information technology (see Baker, 1992; Cooper, 1996; Cox, 1992; Drucker, 1990; Elliott, 1992; Epstein, 1993; Ezzamel, 1994; Flamholtz, 1992; Johnson and Kaplan, 1987; Kaplan, 1984, 1986; King et al., 1991; Madden and Holmes, 1991; McNair, 1996; Siegel et al., 1997; Shea and Kleinsorge, 1994; Spicer, 1992; Tyson, 1996; Weaving, 1995). Disagreement exists regarding the nature of the changes, and whether change is actually taking place. Cooper (1996) foresees an increased need for management accounting, but a decreased need for management accountants. He predicts the management accounting function will be decentralized to those on the shop floor. After new management accounting systems are in place, "m uch of the day-to-day management accounting can be transferred to the workforce" (Cooper, 1996: 36). Elliott (1992) also predicts an increased reliance on blue-collar workers as they become knowledge-workers, and a part of the aggregate brainpower of the organization; they are supposed to help figure out how to improve quality, speed production, and contribute to customer satisfaction. The management accounting department may adopt a supportive and monitoring role rather than a more proactive decision-making role, as advocated by Kaplan (1995) and Boer (1995), among others.

In a study of the evolving role of management accountants, King et al. (1991) report that "a sea of change" is taking place as management accountants become more proactive in the decision-making process. McNair (1996) disagrees with the premise that management accounting has become more relevant. "In general, we see a desire for change, but little evidence that management accounting has had the courage to let go of its ties to financial accounting and external reporting requirements" (McNair, 1996: 40). According to McNair, there has been much discussion about a changed emphasis in management accounting, but she describes the changes as "old wine in new bottles."

Since the early 1980s, numerous research projects have been conducted to gain a better understanding of the management accounting function in organizations (Keating, 1995) and to develop a theoretical basis for management accounting research in the future (Kaplan, 1986). This article seeks to add to that literature by identifying changes taking place in accounting functions as hypothesized by a set of literature-based expectations.

The most significant finding of the study is support for flattening the organizational hierarchy and developing a networked organization within the accounting function. The levels of management within the accounting function at one site were reduced from four to two over the course of five years; accountants began reporting to supervisors located at sites worldwide. At the second site, shared services activities were centralized at one location for the North American continent. The centralization resulted in a reduction of accounting function costs from 1.7 percent of sales to 1 percent of sales. Our study reveals that accountants became less involved in many routine tasks of cost accounting and began providing a support role both to plant personnel and to business managers in making strategic decisions.

The remainder of the article is divided into four sections. The next section develops three research propositions for fieldwork, based on a review of the accounting, information technology (IT), and organizational change literature. Then we consider research design issues including site selection, field research, and data sources. After this we present the field research findings in relation to our research propositions. The final section discusses conclusions, limitations, and opportunities for future research. …

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