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Management Accounting is the use of accounting data by individuals within the subject organization. Management Accounting improves the decision-making process through the use of accounting data.
An alternative view is that management accounting is a mechanism for management control basically through the process of surveillance and what Foucault called "The Gaze". It is therefore connected closely to management control theory.
Internal control it is the device which assures the mastery of the piloting and the performances of the company. Control interns been a part of the usual life of the company. The vocation of the company being the creation of wealth measured by the profit the search for earnings productivity and for efficiency is a part of its activity. But up to here the internal device was strongly dependent on the expertise external.
Besides, before governmental measures 2002/2003, internal control was confused with the management control. If one judges it by certain reactions some believe that it is always case.
But established internal control would not know how to be a set of scattered activities. Various forms must be integrated to establish the system of economic regulation made compulsory by the law; the transparency of the internal reports established by the management control being guaranteed by an external listener. The solution of integration of the internal control, (the missing link of the device of piloting of the internal consequent chain), must be found by every begun and automated according to the level reached by the computer technology.
The traditional company needed councillors, firms of auditors or external consultants of whom role was to understand what happens within the company, to help it to set up and to support the mechanisms of regulation being able to make it more effective.
The modern company endowed with new information technologies and with the communication needs councillor’s experts, internal executives responsible for process, (coordinator, coach or a co-pilot). Their activity carries from the point of view of actions to which elaboration and mastery allow to get closer at most of final result. This type of qualified management “control of the piloting " is liable for the control of the strategy, for the control of the exploitation and for the management control integrating the control of the income.
The income gets in the social purpose of the company: to produce some profit or the prestige not only for the shareholders, the leaders, and the employees but also and especially to supply the possessions and the services asked with the community (consumers, job-seekers, and state, regional and local authorities). It is towards this function that is organized economic public law, corporate law and governance of companies.
The responsible for company, notably the financial responsible who assume a dominating role need to have a plan, a model explicative which gives them locations: a point of departure, the evaluation of the crossed road, the place of destination.
Model explicative of such processes is said “genetic structural ". The function is to make understandable observations and to interpret the information which one arranges on the situation, to elaborate significant syntheses for the action to be engaged.
• Model is constituted by positions or recurring situations. This means that even though observed phenomena take place in more or less long temporal cycles, described positions would not know how to represent sequences of evolution or stages scheduled beforehand as when W.W. Rostow (1970) speak about stages of the economic growth (The stage of Economic Growth), or imply that all the companies cross them inevitably, the some, the others in the order supposed with the logical plan. • Genetic structural logic supposes only that the realization of a position must be considered as the level of almost still balance engendering elements necessary for the passage in the following position. It supplies indicators for a railing of reading and the decision-taking which are convenient for the establishment of new balance integrating the set of current data, so constituting a progress, a significant overhang.
• Structural genetic model is dialectical, that is that it articulates three positions to loosen a logical plan: an initial position where is expressed the thesis of the management, a passing position said by expertise where are engaged corrections and experiment of the processes of control; a position of auto control or auto regulation where are realized syntheses allowing the implementation of the mechanisms of systematic regulation.
Hawthorne's inquiry is often quoted as the first search for this kind. It was realized by * Elton MAYO at the request of the leaders of Western Company. It was a question of studying the likely reports between conditions of employment and variations of return on the workers.
Study ends in the following results: • The environment of any work is soaked with a set of psychological and social meanings; • The group of task engenders an informal structure which recovers from the affectivity and not only from the cognition. This informal structure has for function to maintain the model of collective behaviour adopted by the group to protect itself at the same moment from itself and against the attempts of change begun outside.
The impact of the works of * K. LEWIN: later, more exactly in 1946, Kurt Levin’s searches were going to direct definitively the development of structures collaborative. It is in this date that was lawful the * Centre of Search on the Dynamics of the Groups. It is in this centre that were realized experiences become famous on the informal structure of the groups, the change of food customs and the processes of decision of the groups. The dynamics of groups became the central element of any process of organizational development. It explains: - The evolution of the individuals in the sense of a better socialization; - The increase of the cooperative sense and the sense of responsibility; - The intensification of the general capacity of participation; - The capacity of the people to be learnt continues it to improve competence and to stay in grip with a society in accelerated development.
Practice preceded really theory; the preoccupation of costs is as ancient as industrial economy and beyond: industrialization is not a sufficient condition of the appearance of the accounting of costs (Nikitin, on 1992).
The preoccupation of costs is the result of the competition; it obliges the elaboration of strategies. Already during the recession of 1772, industrial earthenware English, * Josiah Wedgwood, felt the need to finalize a system of accounting information on: - The costs of each of the products, - The state of the finance, - The cost price, - Economies of scale, - Wage politics. It is clear that a situation of monopoly does not pull a significant preoccupation of cost (J. To eat Fells, on 1919).
Positivist step began however only with the concern to direct behaviour to act on costs. Taylor’s doctrine is in it the precursor with the theory of costs. Taylor (1896) and his followers * (L. Gantt, 1915, Nemours's Coleman Dupont, 1920, Alfred Sloan, 1921, HP. Buxton Going, 1922 …) showed that business accounting does not limit itself to the calculation of the costs of returns from products, but to follow streams, to watch, to compare obtained result and forecasts; but also to measure competitiveness, to pilot the performances of the responsible which can act on costs by improving the processes which they steer.
They forged for it the concept of " management accounting " well to stand out opposition enters the approach which privileges the fact that they are the human beings who use figures and who try to influence the behaviour of the decision-makers, and those that take charge only of the " mechanics of figures ", which have for only objective to discover the costs of products (a certain cost accounting).
Originally, after the second war, management control is only a control of costs moving closer to forecasts and to realizations. The environment of the company considered as stable during its years of growth evolved with the crisis stemming from oil crisis towards a context turbulent and inclined to strategic surprises. Management control filled out then. Besides the budgetary control with financial dominant, it comes along also with a tool of follow-up anticipative tendencies of the market.
Distribution, marketing, management of products and strategic economic planning of the company are the essential beneficiaries of information in grip about the market, supplied by the management control.
Earnings reports established according to the calculation of analytical results on sales give information in real time about margins. It is so possible to analyze his location on the market and to arrest new segments of the market. Costs and incomes from sales are not only brought back to products and to variously structured fields of activity, but so integrated into systems of control.
Often placed except structure, the management controller is then confronted with two logics: concerns financier emanating from the hierarchy and the message of the performance in the concrete coming from the ground. The role is to help the managers in the grip of decision and to influence the behaviour of the objectives of costs. The definition of * Anthony of 1988, translates this evolution: ‘’management control is process, by which the manager influences the other members of the organization to implement the strategies of the organization ".
Creative and qualitative dimension tends to get the upper hand over the quantitative dimension. This last one consists of tools however indispensable to the management controller: the management of costs, the budget management, the dashboards, and the organization of the company.
The difficulty of the management control lives in the adaptation of methods pre-established as complete costs or express costing. Every company possesses a structure of costs an appropriate organization composing with its activity an only environment.
Principles and methods of the management control evolve according to the structure of the costs which depend besides on the nature of the activity: the indirect loads (Advertisement, search, and development) can be superior to direct costs, making obsolete the traditional cost accounting. The method of the ABC (ACTIVITY BASED COSTING) establishes in 1984 takes into account this new structure of costs with the concept of activities and inductors of costs. The corollary is the ABM (Activity-based management)
The ABC suggests returning traceable links between the indirect expenses of the company and their final object: the product, the customer, the project etc. This best allocation of resources leans on the notion of activities, as well as on the choice of the inductors of costs (costs drivers) on model proposed To carry.
R. COOPER will make of this tendency a decision-making instrument. The real reach is less bound to the strategy than to the motivation of the operational. Then will follow perspectives such as the EVA (ECONOMIC VALUE ADDED) conceived by the Stern cabinet and Steward. This concept which measures the operational profit of the investors is taken away well from the notion of “government of company ".
One fast realized that accounting treats only certain aspects of the internal control and the costs; accounting is competent to analyze and to calculate the distances from accounts. Certain direct and indirect costs totally escape the accounting. It is case for example direct costs of absenteeism bound to salaries and social advantages and indirect costs relative to overtime, replacement, decline of the profit, etc. On the column "absenteeism" only, sums are considerable. One estimates them in the United States in 30 billions and in Canada in 14 billions, or 80 000 $ a year and a person.
On the other hand the structure of costs is the determining element of the management control; now it live in the adaptation of methods pre-established as complete costs or express costing. Besides every company possesses a structure of costs an appropriate organization composing with its activity an unique environment. Principles and methods of the management control evolve according to the structure of costs depending on the nature of the activity.
One noticed as well as the indirect loads (Advertisement, search, development) are superior to direct costs, making obsolete the traditional cost accounting.
• The method of the ABC (ACTIVITY BASED COSTING) establishes in 1984 established its reputation on the consideration of this new structure of costs with the concept of activities and has to show efforts with sound hanging ABM for the search for the causes of heaviness of costs: the inductors of costs.
• The ABM if support STILL on the classification of the inductors of costs in 10 categories made by Michael Porter to carry in 1986.
• The cost accounting was never able to normalize, or standardize the inductors of costs.
All the specialists, including the founders of the step ABC agree to recognize that: • Accounting is competent to analyze the behaviour of the costs of activities, the calculation of the cost price and to calculate it distances. • The strategic piloting of costs is of the domain of management and not accounting operations. • Management understood as set of the measures by which a responsible influences the behaviour of his co-workers to reach fixed objectives acquires scientific legitimacy only when he if support on the psychology (science of the behaviour), notably social psychology in the part " psychology of organizations ", science of the interaction, the working relations or the processes of collaboration, (dynamics of the groups / development of the organization). • Psychology is besides only experimental science in the vast domain of economics, social and human.
HUMAN FACTOR is indeed the main inductor of costs; it is also the main inductor of the performance. The cost accounting bases on the inductor of activity, the event which activates foreseen activity. It can not logically seize or to normalize the inductor of costs, the phenomenon or the abnormality which provokes the increase of costs.
The inductors of costs are not governed by the same logic as the inductors of activities with which charged costs are seized with the accounting tool. So methods stemming from the cost accounting or financial accounting should again it be discussed their typology, while description in socioeconomic management bases on concepts and standards of the established possessions.
For methods stemming from the accounting, the reduction of costs is not a practice; it is rather a search in posterior for causes and for solutions by the manager and her frame by means of methods such as the ABM. The managers assume the financial consequences of their strategic choices. Still it is necessary that the accounting operations of costs (the ABC) seized and analyzed the true inductors of costs or causes of heaviness of accounts. How do they can it, if the costs of dysfunctions are not charged? These costs escape the standards of seizure of data in financial accounting.
• Certain individuals of the group take some influence and become informal leaders; their influence extends in processes: organization of the group with the aim of the task, the definition of what happens and of what it is necessary to make in unpredictable situation, activation or reduction of tensions, maintains and promotion of the values of the group, representation of the group with the other groups.
• Tensions give rhythm to the life of the group: tensions among individuals, tensions between sub-systems, tensions provoked by the concern or the feeling insecurity, the tensions determined by the conflicts of leadership, tensions resulting from repressed dissatisfactions.
• The level of cohesion of the group is a function of the feeling membership. This feeling strengthens when interests and personal expectations are satisfied or are susceptible to be it. The concepts of stake work it which ensue from it are two orders:
• The convergence of interests: when individuals contact in situations which present them important purposes, but which can not be reached(affected) by the isolated resources of a minority or the only one, they will tend to cooperate to reach(affect) this purpose above orderly; this cooperation eventually reduced the negative attitudes and the possibilities of conflict.
• Participation and solidarity: without any ambiguity, the actions of the individuals tend to favour the members of the intra-group to the detriment of those of except group. However, they act as well as in a situation where their individual profit is not in cause.
(This aspect makes suspect all the balances of control not subjected to one against expertise).
The reformulation of the effects of the informal structure of the groups under the concept of “costs hidden from dysfunctions ‘’is a major fact. It allowed the management to reach a determining level of efficiency because it normalizes the causes of variation of costs, making of the express costing reference method in accounting of management; the accounts of variable costs (count loads and produced accounts) in front of the axes of mastery of the inductors of costs and of connection of the management with the financial accounting.
The interaction of structures and behaviour within the company creates six families of dysfunctions: - Bonuses: past by a person holder of a post better paid in an activity which is not attributes to him; - Supplementary times (over times): past in the regulation of a dysfunction; - Over-consumption: quantities of products consumed in more to regulate dysfunction; - Non-productions: losses of production or activity engendered by the dysfunction; - The non-creations of potential: performances delayed because of the annual dysfunctions. - Risks: unemployment, liquidation, degradation of image, …
. The indicators of these dysfunctions are among five: - Absenteeism, - Occupational accidents, - Non-quality, - Underproduction, - The personnel turnover
Costs engendered by these dysfunctions are called "hidden" by opposition from visible costs (on invoices and states) which possess an accounting naming such as the loads of staff or the purchases of raw materials: - The classic methods of information which has the company (budgets, general accounting or analytics, financial dashboards). Do not allow to seize hidden costs. These costs are neither quantified so, nor watched. - They have nevertheless an incidence on the result of the company but, as they are hidden, they are not considered during the decision-taking management.
2-3-The implementation of the mechanisms of auto regulation
Numerous scientific schools agree on the characteristics of organizational systems in phase of maturity: - The psychoanalytical school with the concept of "Collective unconscious " (D. ANZIEU, on 1975) or of "Psychic device of the groups " (R. KAES,1980), - The school of the development of the intelligence with the concept of epistemology of human sciences (J. PIAGET, 1970) - The anthropological school with the concept of " basic personality " (DUFRENNE, 1966) - The school of the genetic social psychology with the concept of “social constructions” (DOISE, W, 1981); - The cybernetic school with the concept of «morphogenesis» (R.THOM, 1972);
The processes of auto control or auto regulation are processes homeostatic. Their implementation allows the company to pass of static’s of order in the dynamics of balance. This device allows passing of static’s of order of the organization chart in the dynamics of balance of the management by process. Maturity is the phase of “structures interactions". This means that the structure of the organizational system became such as automatisms of meadow - correction or anticipation are integrated into the functioning.
This way, change is a part of the functioning of the company. In this stage the "productions" of the company make only one with the internal alterations, without there is to distinguish forming and alterations; auto-regulation constitutes the reason of its balance.
The implementation of the processes of regulation creates a requirement of synthesis or integration of the previous experiences: - Establishment of safety standards and confidence inter-staff, inter and intra-groups for the initial period; - Development of the maximum consensus and the participation for the period of deepening.
Conflict remains the driving element of the change; this antagonism is structuring in the sense that during interactions (of the committee of piloting, factory committees or meetings of workshops), several speeches, several tendencies, divergent interests contradict themselves simultaneously, putting the problem of their coordination in systems of group of regulation: interactions which arouse stakes in common, result from regulations of dysfunctions.
Working as safety valves, if the processes of auto-regulation do not put the company completely shielded from the confusions of dysfunctions; they allow to regulate in the least cost absenteeism, occupational accidents, qualitative defects, distances from direct productivity, the distances from personnel turnover and from forming of the staff.
The processes of auto regulation generalize indeed the dynamics of resolution of problems in real time in the company. Everything becomes active. Auto regulation is bound to the capacity of the company to be estimated its own progress, to control its functioning, to adjust tensions between members, sub-systems and other structures of the environment. It is strictly speaking the era of the “governments of companies ".
The concept of government of company refers to the general notion of governance which consists in fixing rules and fair objectives for all the members of a human community. The government of company left fascinating of its resources and its patrimony.
The concept of financial security sends back to capacities aiming to increase and to protect resources; to put the company beyond shocks and financial disasters and to protect national patrimony.
In Quebec (Canada), the direction of the development of companies and business of Quebec (Canada) in his Guide of the procedures of July, 2003 defines so the objectives of the internal control:
The management of resources and operations is a complex task. The company has constantly to adjust its methods of performance to meet the needs of fast information, in the computerization and in the personnel turnover. In front of a more and more effective competition, the appearance of new diagnostic methods, as the reengineering of processes and the benchmarking, favours the questioning: how to make more and less dearly. In this end, internal control plays an original role: it contributes to improve efficiency and economy connected in certain decision-making and allows minimizing the risks of non-control and inaccuracy on financial data.
European objectives transposed into laws at the level of States members are summarized so in DRY (2003 59) final of the 17.1.2003 concerning " the Clarification of the responsibilities of the key actors of the internal audit and the internal control ":
In France French Finance Minister in the presentation of the law on the financial security of August 2, 2003 defines so his end:
- The objective of this important reform is to strengthen the credibility of the French financial places, to reassure the shareholders and the investors, to improve the environment of companies and to stimulate so the growth of the country in a marked international context these last months by financial scandals. This text has so vocation to be consolidated confidence in the actors and the mechanisms of market, while protecting even better than at present the savers, the insurants and the depositors.
- French law makes obligation for the highly-rated or unquoted corporations in stock exchange to set up and to develop control mechanisms intern integrating the concepts of " governance of company " and of " financial security”.
Besides, most of these financial responsible see in the requirements of the new law an opportunity to rationalize their systems and to optimize their processes of management in real time, going away even beyond the respect for a given rule.
Among the other conclusions of the inquiry: Near a third of the interrogated responsible recognize that they would have had to " proceed differently " to put itself in accordance with the law Sarbanes-Oxley, notably by taking itself there earlier, by testing experimental systems, by appointing an energetic project manager, by informing better their internal procedures, or still by focusing less on the delays and more on the analysis of the process. • financial directions estimate that the extension of delay of application of the article 404 (15/6/2004 instead of 15/9/2003) will have mainly for advantages to improve their capacity to be put itself in accordance with the law and to help them to optimize their processes. • The most pointed problems in stake in correspondence like the affectation of sufficient internal resources, the costs, as well as the documentation of the internal measures of control. • The responsible for company consider the management of archives, the computer infrastructure and the aspects accounting as challenges the most difficult to recover. • The improvement of the management of risks and correspondence to the legislation constitutes priority number one within the framework of the respect for Sarbanes-Oxley Act.
It is this model which allowed the production of flat forms of software packages of Performance Management Systems, BWA " (Business Workflow Analysis): system of control of the piloting of the chain of internal value activating ETL's engines (Extraction, Transformation and Loading) for the origin, the transformation and the data analysis of costs and accounting performances and quality of different bases, to normalize them then to integrate them into the good place of the decision-making base in strategic purposes, the management control and the control of the exploitation.
The BWA is a system of information at the same moment parallel and at the same time integrated into the general system of information. Parallel because it leans on specific, sharp technologies and extreme reactionary successful with the technologies of reporting, the engines OCBD, the specific normalizations … Integrated with technical interfaces then user developed in particular with the " intelligent gates " or the analytical " push " and of calculation, requests, creation of reports (connections), broadcasting (distribution) of reports (connections), Exploitation and administration , security, protects data, tractability). The BWA is the first patented system of integration of the internal control.
Before the BWA, it was impossible to proceed to an automation of the function of economy of costs. To fill the task of integration of the control interns data processing became today an indispensable tool and it is there that intervenes Oberon BWA.
An ERP includes an accounting tool, a system of management of production, software of pay. ERP applications (Enterprise Resource Planning) and CRM (CUSTOMER RELATIONSHIP MANAGEMENT) is mainly conceived to allow the companies to concentrate on their activities, by automating most of processes profession specific in missions, such as the seizure of commands, the economic planning of the chains of supply or the management of accounts.
But the ERP does not arrange functions of savings of costs, being these extra-countable processes. The various modules of the ERP serve all the departments of the company and constitute of this fact of bases where from Oberon BWA extracts specific data necessary for the diagnosis of the potential, for the analysis and for the quantification of indicators to be supplied in the operational for the piloting, extracts the data of evaluation of the performance, the accounting reporting and the management of the quality.