Winter 2008


Table of Contents



Carbonomics: Strategic Management Accounting Issues

By  Janek Ratnatunga

The possibility of costly disruption from rapid climate change either globally or locally, calls for greater attention to carbon management in the decision making process. Business entities need to consider issues such as trading in carbon allowances (or permits), investment in low- CO2 emission technologies, counting the costs of carbon regularity compliance and passing on the increased cost of carbon regulation to consumers through higher prices. Consumers need to consider if, given a choice, they are willing to pay a higher price for CO2 neutral products and services so as to play their part in reducing CO2 emissions. Such considerations require information for informed decision making, thus the need for strategic management accounting techniques and measures is evident.  This paper reports on a research study that was conducted to study the impact of the Kyoto protocol on issues relating to the managerial accounting profession.

This study discusses how strategic management accounting information would facilitate decisions on business policy, HRM, marketing, new product development (NPD), promotional, pricing, international business, supply chain management strategies and the resultant evaluation of performance.


Risk Management and Ethical Environment: Effects on Internal Audit and Accounting Control Procedures

By Kirsten Rae,  Nava Subramaniam and John Sands

This study examines the impact of the scope of risk management and ethical environment on internal audit activities and the quality of accounting control procedures (ACPQ). The conceptual framework for the study is guided by COSO’s frameworks on internal controls and enterprise risk management and data from a questionnaire survey of 64 Australian firms are analysed using a structural equation model. The results of the study support that (1) internal audit activities have a significant intervening effect on the relationship between the scope of risk management and ACPQ, and (2) a direct and positive relationship exists between ethical environment and ACPQ. Our findings suggest that widening the scope of risk management activities do not directly improve ACPQ, but that it leads to more extensive internal audit activities and in turn such activities promote better ACPQ. Further, the results indicate that fostering a more ethical environment directly leads to higher ACPQ. These results have implications for the design of internal controls, namely with respect to the role of internal audit activities and ethical environment in enhancing ACPQ.

Interaction Effects of Management Accounting Systems and Process Quality Management on Product Quality Performance

By Adam S. Maiga

This study uses self-reported survey data from 91 U.S. manufacturing business units and examines the interaction effects of process quality management and management accounting systems on product quality performance. One measure of process quality management and three measures of management accounting systems (goals, feedback and incentives) were used. Internal quality and external quality were the two product quality performance measures. Results indicate significant positive interaction effects of process quality management and all three management accounting systems measures on internal quality management.  The results also indicate that, except for incentives, external quality is a function of the interaction between quality management and management accounting systems variables. The implications, limitations, and directions for future research are also discussed.

Determinants of Responsibility Centre Choices – An Empirical Study at the Managerial Level

By  Martijn Schoute

This paper provides empirical evidence on the determinants of firms’ responsibility centre choices at the management level directly below headquarters, focusing in particular on their usage of profit and/or investment centres at this level. Survey and archival data are used to investigate the relationship between usage of profit and/or investment centres (i.e., delegation of investment responsibility) and four firm characteristics: firms’ investment opportunity set, size, diversification and capital intensity. The results show that usage of investment centres (as opposed to profit centres) is positively associated with the size and capital intensity of the studied firms, and negatively with their market-to-book ratio, i.e., their growth opportunities. These results differ somewhat between manufacturing and non-manufacturing firms, however.

Perceptions of E-Commerce as an Academic Discipline in Australian Universities

By Michael S.C. Tse

This paper presents findings from a study on perceptions of e-commerce as an academic discipline in Australian universities. The study examined Australian universities’ perceptions on whether e-commerce should be regarded as a business-oriented discipline or a technology-oriented discipline and further whether e-commerce should be considered as a distinctive discipline. Data was collected from official websites of all Australian universities and was categorized in accordance to award titles, host faculty and program structures. Findings showed that most Australian universities perceived e-commerce as a business-oriented discipline. However, there was no consensus on whether e-commerce should be considered as a distinctive discipline.


Management Accounting and the Stakeholder Value Model

The landscape of business management is fast changing as businesses seek long term prosperity rather than short term profitability, in a world which is demanding more accountability from its business leaders. It remains unclear exactly what changes will be required as the new business environment continues to develop. We argue that contemporary managers should adopt a stakeholder view of their role in society, in order to maximise their company’s overall returns to stakeholders, and thereby help maintain their company’s long term sustainability. If managers do this, the nature of their decision-making and control environment will change. Thus the role of management accountants must change, to serve management decision making in the new environment.  This paper explores the emerging business environment and the role of management accounting within it.

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