Burns and Scapens Framework in Management Accounting

 Introduction

When it comes to management and accounting features in any given organization, management accounting is very important. The main reason is because it deals with auditing systems that analyze the performance of corporations in terms of how they have been able to meet the set corporate goals, factors that helped them achieve such goals, and ways they can enhance their performance in the future. As such, this paper aims to understand and analyze these factors in terms of personal experience and view within Burns and Scapens' framework.

Burns and Scapens Framework: Achievements in Studying Management Accounting Change

The main focus of the framework is to understand the rules and guidelines that are used to shape the actions undertaken by people in any given organization. As time passes in the organization, their actions are streamlined to follow these rules and regulations, but they also have the potential of actually changing previously existing rules and guidelines in order to ensure that such rules and guidelines are aligned with specific actions in the organization. Basically, the main achievement of the framework is presenting an understanding that when new management and accounting practices are introduced within an organization, there can be some level of resistance to their adoption. Also, it is very difficult for the prevailing institution to shape the potential character and context of the change process that exist within a given system, and this forces the organization to undertake certain actions, as demonstrated in the case of the booster rockets used for the Space Shuttle.

In that regard, Burns and Scapens' framework is highly successful in that it paved the way for further research into the levels of stability and change that occur in management accounting.This can be further illustrated by the fact that the frameworks highlight that there are both internal and external players in terms of ensuring stability within an organization’s accounting and non-accounting systems.

Limitations of the framework

Linking external and internal institutions, as Nor-Aziah Abu noted in the study of public utility in Malaysia, when organizations are under high pressure from the government, they can be forced to commercialize, corporatize, and finally privatize (see Nor-Aziah, 2004a, b). Companies are forced to hire new employees during the commercialization process to fill vacant accounting positions that the original staff provided little relevance to.However, these new staffs are fresh graduates and are considered needless meddlers in the system, which results in a lack of linkage between the internal and external institutions and limits the level of adoption of the framework in the process.

Issue of trust: this was clearly demonstrated in GM’s acquisition of NP. Following the acquisition, NP began to face problems that included charges against its chairmen (Busco et al., 2003; see also Busco et al., 2006), forcing GM into revolutionizing the company and making it fully part of its own system. As such, it can be clearly seen that a lack of trust does limit the application of the framework.

Issue of Power: The case of the Portuguese firm, in which power-specific individuals make decisions, does show that power can have an influence on the change process in a company. Ribeiro, 2003; Ribeiro and Scapens, 2004), and damaging institutionalized practices in the process. As a result, the level of success that can be achieved is highly dependent on decision-makers' power.

Agency issues: as demonstrated in the cases of GM and NP, where the public demanded change, agencies can have a strong influence on the anticipated change in a company. This can limit the overall applicability of the framework in the process.

In order to reduce and potentially eliminate these limitations, it is necessary to adopt an extended form of management accounting that is based on the diversity of accounting systems. The effect is that it will address all the individual and independent facets and create a common and beneficial unit that will address all the potential limitations.

How evolution and revolution are changing management accounting practices

While the change process might seem difficult based on the above discussions, it is important to note that this doesn’t make revolutionary change impossible. Consider the case of Nuovo Pignone (NP), an Italian firm acquired by the US-based General Electronics (GM) in 1994 (Busco, 2003; also see Busco et al., 2002, 2006).NP was very bureaucratic because it was partly owned by the Italian government, and it had different policies from those of GM, which are based on a financial orientation and a member-driven approach to management with a high emphasis on integrity and financial performance. In the first three years of its acquisition, GM successfully integrated NP as part of its global network of companies, demonstrating the possibility of revolutionary management accounting as the way of the future.

Possible future challenges to management accounting

Due to the increase in calls for diversity, the management of stability during the corporate change process has become difficult with respect to management accounting. The main reason is that diversity creates the right room for different functions to be performed at the same time, which also empowers things that were considered irrelevant. For instance, a company that operates in both the US and Italy can create the right room for diversity in accounting practices for these two countries. The implication is that different approaches to management accounting will be adopted in these two countries. As such, it is very difficult to solve problems existing in the two accounting systems within a common solution as they are different in terms of their accounting practices.

Conclusive summary

As a conclusion, it can be inferred from the above discussions that management accounting practices have been undergoing some amazing metamorphoses, and such change does result in the need to quash irrelevances that exist in the system in order to create a more efficient and effective unit. In any case, such practices also need to be occasionally monitored because diversity in the accounting system has a way of negatively influencing stability in the same system. Thus, while Burns and Scapens' framework is an effective management accounting practice framework, their applicability is limited as a result of the diversity of their applications across nations, corporations, and systems.

References

C. Busco, 2003.The role of performance measurement systems within processes of (un)learning and change, unpublished PhD thesis, University of Manchester.

Busco, C., Riccaboni, A., and Scapens, R.W., 2002. When culture matters: processes of organizational learning and transformation Reflections: The SOL Journal 4 (1), 43–52

Busco, C.; Riccaboni, A.; Scapens, R.W., 2006. Trust is for accounting, and accounting is for trust. Management Accounting Research, 17(1), forthcoming, doi:10.1016/j.mar.2005.08.001.

Nor–Aziah, A.K., 2004a. Corporatization, loose coupling, and stability: accounting change in a Malaysian public utility Unpublished PhD thesis, University of Manchester.

Nor–Aziah, A.K., 2004b. Corporatization, loose coupling, and stability: the role of accounting and accountants in a Malaysian public utility Paper presented at the Fourth Conference on New Directions in Management Accounting, EIASM: Brussels

Ribeiro, J.A., 2003. Institutionalism, power, and resistance to management accounting: a case study Unpublished PhD thesis, University of Manchester.

Ribeiro, J.A., and Scapens, R.W., 2004. Power, institutionalism, ERP systems, and resistance to management accounting: a case study, Presentation at the Annual Congress of the European Accounting Association Czech Republic, Prague