Changing Role of Management Accounting: Lithuanian Experience Case Studies

Abstract

The preconditions of knowledge economy have influenced global changes, which, consequently, had an impact on the nature of organizational equity. Furthermore, a dynamic and competitive climate urges managers to perfect their skills in global orientation, strategic flexibility and quick response to changes as a prerequisite of working under ever-transforming conditions, where an organization should be in the state of continuous development, responding to new technologies, new markets, new businesses, and new people (employees and consumers). The above-mentioned business environment and information access alternate the nature of market competition as well as determine particular information demand. Quick response and flexibility could be achieved, only if decisions are based on timely and adequate information, knowledge and experience in managing the external business environment and internal capacities of an organization. Thus, the new measurement tools are in demand, which should assist in measuring, planning, evaluating and managing the value-creating process inside the organization. The role of modern management accounting systems has extended from data accumulation to strategy implementation. The most popular management accounting conceptions, namely, activity based costing (management) and balanced scorecard, disclose how changed management accounting role integrates a focus on three key stakeholder groups: employees, customers and shareholders. Built on previous management accounting studies this article explores Lithuanian experience implementing modern costing and performance measurement systems. In order to point out the changing role of management accounting in Lithuanian organizations an empirical research was performed. This research consists of two main stages. 1) Implementation level of modern management accounting conceptions and the availability of information for decision making were analyzed using quantitative data (survey). 2) A deeper analysis was performed in Lithuanian organization disclosing the changing role of management accounting after implementation of modern costing and performance measurement system (case study). Results of empirical research indicate that there is quite a strong correlation between implementation level of conceptions (ABCM and / or BSC) and a range of management areas where information generated with the help of those conceptions is useful. Case study organization has started integration stages and has created information basis for cross functional and vertical communication through different management levels, but meanwhile there is an absence of communicative relations between top and lower management levels. The results of the research disclosed that modern management accounting conceptions might be precondition for changing role of management accounting but it depends on implementation level and organization’s ability to manage all capacities of these conceptions.