Andrew M. McCosh

The influence of organisational and personal factors on the use of accounting information: An empirical study

Abstract The study empirically investigates the relationship between styles of using accounting information and selected job related traits and organisational factors. Three styles of using accounting information for operational control and subordinate evaluation are defined, measured and compared with a previous operational measure. Evidence on the relationship between the styles and functional background, goal, time and structural orientations, management style and traits, and hierarchical position is presented and discussed.

The Nature of Management Control Systems

A management control system is a set of administrative procedures through which one group of people in an organisation intentionally influence or affect the behaviour of another group. If it is effective, it will ensure that the top management policy decisions are put into practice at the level of operations. The design of such a system is a complicated affair— much more so than the systems of operational control which we have already examined. This is because a management control system seeks to control the behaviour of people, and these people are in turn attempting to control the behaviour of others. The word ‘control’ should not be taken to imply a negative kind of control, an oppressive kind. In many cases, the goal of the control system is to help a manager do his own planning and thinking more effectively, so that he becomes able to do things he could not previously do at all, which is not only useful to the organisation but a source of great satisfaction to the man or woman involved.

Measuring System Performance

It is ironic that whilst many MIS exist to provide intelligence and feedback for planning and control, monitoring and measurement of the MIS themselves is frequently inadequate. System performance should be measured for three reasons: (1) to ascertain whether the MIS has met its stated objectives; (2) to ensure that the ongoing MIS operates reliably and efficiently; and (3) to ensure that the MIS adapts to change. Just as in the performance, tracking and diagnosis activities of the management control system model described in Chapter 9, three feedback loops are involved: (1) system corrections and modifications to meet stated objectives; (2) modification and extension of system objectives themselves to meet changed needs; and (3) the decision to replace or kill the system when it no longer can meet current needs, or no longer is required.

Burmah Oil Company

In the closing months of 1975, it was by no means clear whether the chairman, Mr Alastair Down, would succeed in preventing the liquidation of the company. Mr Down was named chairman in the early part of the year after an acute liquidity crisis had brought about the departure of several top executives. The Bank of England had guaranteed certain loans to the company, but only until the end of 1975.

The Nature of Strategy

There is a great deal of confusion of terminology on the subject of strategy. It does not matter too much if one person uses the word policy where another uses strategy and yet another uses the term procedure, as long as each knows what the other means. But this knowledge is often absent, so it seems sensible at the start of this part of the book to define some of the terms we will be using.

Design of Operational Control Information Systems

The process of operational control is highly dependent upon formal MIS. Efficient and effective information processing is essential since controls are typically numerous, data is voluminous, monitoring is constant and response is frequently real-time. Consequently operational control information systems are often computer-based. However, they may lie anywhere along the man-machine systems continuum, and may well incorporate a range of man-machine interfaces. Many MIS address such structured problems that they are full decision-taking systems. Most at least are mechanised in their data-collection and database functions, because operational control MIS are essentially routine, transaction-intensive, file processing systems.

Characteristics of Operational Control Systems

In this present part of the book, Part II, we are concerned with operational control systems. These systems are devoted to the job of ensuring that specific organisational tasks are carried out effectively and efficiently. In this chapter we shall be examining the overall characteristics of such systems. We shall then move, in later chapters, to a more detailed discussion of how they can be made effective, efficient, cost-effective and technically advantageous.

Behavioural Principles of Systems Design

If a management information system is designed with social and behavioural design principles in mind, it is more likely to be effective and to be adaptable than if only technical principles are considered. This chapter seeks to acquaint systems designers and users with some of these social and behavioural principles.

Prendergarth Shipping Co

This is a marvellous case to use as a grand finale on relevant costs. In the past it was used as a two-day case, with the complexity of the problem causing students not to get very far in their first evening of preparation. The questions on the attached assignment sheet, developed by Professor Charles J. Christenson, suggest to the student how the problem must be looked at in small pieces, and then the pieces put together. These questions make the case teachable in only one day. However, I recommend calling on a strong student to answer questions 1–4 to help ensure getting through the discussion in 80 minutes. Similarly, experience has shown that tolerance of lengthy discussions on relatively minor points (e.g. will the Warrior make 69 round trips in East Africa, or a smaller number? Will the large vessels indeed save 72 miles steaming distance?) will preclude getting to the more interesting issues of the case.

Product Profitability at Merrydale Limited

This case explores the use of accounting information in decision-making. As the title implies, the case addresses the product-range decision: how to decide which products to drop from a product-line when the company (Merrydale) is making losses. Primarily it is an exercise in relevant costs and the contribution approach to decision-making. However other issues are also raised, for example the need for costing systems and questions of strategy.