Management Accounting Essay Example | Topics and Well Written Essays - 2500 words - 2

Management Accounting - Essay Example Generally, control systems guide the methods of coordination, resource allocation, motivation, performance measurement, and communication. The major purposes of a management control systems are: The informal management control system is the one where managers encounter a non-routine decision making problem or a problem that has not been encountered before and requires new information. In such a situation managers, may informally call subordinate and extract information in a relaxed manner. In the absence of a proper management control systems, employees will not be aware of the roles that they are supposed to do. There will be no information on the resources and time that is available for each activity. The employees will not be aware of the plans of the activities that are supposed to be done. A well-designed management system influences the behaviour of the employees in such as way that it is congruent with the goals and objectives of the organization. Often employees have individual goals that might be not synchronous with the organizational goals. A good management control system makes it sure that the actions taken by people to achieve their own goals also help in the achievement of organizational goals. This aspect which is called ‘goal congruence’ in accounting terms implies that the goals of the subordinates and the managers are coherent. A poor management control system will lead to confusion in the minds of employees as regards to the strategy a nd the goals of the organizations. Often messages from different sources may contradict each other. A good management control system will set out rules and minimise the possibility of such events. Management control systems and performance management are very closely linked with each other. Often the performance management systems are a part of the management control system for the organization. A poor performance management system has a lot of effects on the organization that are not