CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Management accounting is one of the information systems of firms that permits data to grow from one point in the firms to another and also allows the data selected and transmitted to serve as inputs to managers and works decision process. One of the major functions of management accounting is to furnishing information which is useful as basis for decision making at all levels of the organization. Such function provides managers with the data required for planning co-ordinating and controlling activities. It also includes the operation of a system which assists in motivating individuals to make and implement those decisions that will lead to the accomplishment of organization goals (Horgren 1974 p.12) from the definition given above. It is obvious that management accounting places a heavy emphasis on the influence of behaviour. The organization’s participants react differently to the use of management accounting depending on their perception how the techniques are being operated. Accountants may see that from the preparation aspects, managers from the implementation aspects while workers may view them as devises used by management to manipulate them.
When workers obtained unfaviourable reports from the management accounting techniques used to evaluate them, there is the tendency for them to shi the blame on the techniques used. Consequently, hey may work to circumvent the procedures of such techniques and explain the loopholes in the techniques to their advantage in order to prevent the occurrence of further negative results. Another prominent behavioural problems associated with management accounting is the way the techniques are being designed and operated. In most cases, management operates management accounting techniques with the assumptions that the more sophisticated the techniques are the more likehood of success on controlling and improving performance. Thus, there is a tendency for many firms to accept desirable results merely from the use of the control techniques on the individuals responsible for the activities of the firm. The mere fact that the standard is exceeded warrant the management to often institute or carry out investigations when there are unfaviourable variances, such investigations are frequently followed by reprimands, recommendation for corrective actions to be taken, while favourable reports do not necessarily eclectic commeasurable responses. (Woods, 1966, p.91). When management accounting is operated as noted in the other page, it is capable of generating adverse effects on employees’ morel, trust and motivation. Besides crating resentments, this may cause workers to believe that success is not as important as avoiding failure. The bedrock of behavioural problems of management accounting start firm the set of behavioural assumptions under which managers and accountants operate. There is no statement of the behavioural assumptions of management accounting found in the literature. Despite this, the accounting systems, procedures and attitudes are based on implicit assumption about behaviour which are derived from the classical management theory.