International Management Accounting Essay Example | Topics and Well Written Essays - 2750 words

International Management Accounting - Essay Example Answer: In the era of merging cultures and competition in businesses, the criticality of management role and decision-making strategies has increased significantly. Decision making on the basis of estimates and assumptions has far been obsolete. The need of a systematic approach for decision-making has been felt, by companies and organizations to improve the authenticity and accuracy of the decisions made (Gelinas et al., 2010). This need urges the researchers and analysts to devise a methodology, which covers the useful data and information about the company’s revenue, loss and expenditures, which could aid in making company plans and decisions accordingly. Previously, the method used for gathering information, which would be the base of management decisions, was the Management Information System (MIS) (Gelinas et al., 2010). This system was based on manual data collection and there were great chances of human error and delay in forming reports. Maintenance was another viable issue with this system, causing company much time and problems in extracting old data and statistics. Practices show that the ambiguity in the system, leads to unfair approach in the decision-making process, due to lack of accountability of executives to the investors or creditors (Gelinas et al., 2010). MIS was also influenced by the environment and society norms of the region. In many organizations, cultural and economic factors influence the decision-making strategy and proposals of the top level management (Nicolaou, 2000). Managers from two different religions, or two different backgrounds, would have different decision-making criterion and approach. Many a times this factor influences largely on their problem handling and planning approach, which differs from the real interest or objective of the organization. Thus, a functional method was needed, which could curtail the influence of cultural and socio-economic factors from the decision-making phenomenon (Nicolaou, 2000, pp.1 03). These factors accounts for the design of the accounting information method to use in decision-making by executives and managers. It is commonly known as the Accounting Information System (AIS), in the corporate market. Its function is to collect information and generate accurate statistical and financial reports of the company or organization. These reports are available to both the internal management and executives and the external management that are the shareholders, investors or the taxation agencies (Gelinas et al., 2010). With the accuracy and transparency AIS provides in its reports, people related to the company have a clear idea and company’s standing, and the financial ups and downs. Looking into the history of AIS, we can draw a picture, of the limitations and problems in its implementation on a wider scale. Based on computer-aided technology, AIS was installed as legacy systems, which were expensive to install and maintain. Moreover, only professionals could operate the format and language used in those systems, with high complexity in generating report and comparing two or more data (Beke, 2010).