THE SIGNIFICANT ROLE OF MANAGEMENT ACCOUNTING WITHIN THE

DEVELOPMENT OF ENVIRONMENTAL MANAGEMENT ORGANIZATION

Submitted in Partial Fulfillment

of the
Master’s Requirements in the Subject
Managerial Accounting

Kim Patrick Victoria

August 2020
 INTRODUCTION

Research Background

Managerial accounting is the use of provisions of the accounting information, in

order to reconsider a significant decision before one decides for the matters within an
organization. Management accounting aids the management and performance of the
control functions inside companies (Professional Accountants in Business Committee,
2009). The management accounting function has been seen to provide relevant and
financial and non-financial information in order to support the managerial decision-
making (Loft, 1991). While the influence of management accounting varies, the
information that it bring is a powerful voice within the organization. It has been observed
to be an influence not just in decision-making, but as well as to strategic, culture,
management, group perceptions, and other functional structure within the organization
(Hopwood, 1987; Dent, 1990). Furthermore, the title role and influence of management
accounting is not limited at the borderline of an organization. Management accounting
can be entwined with the discussion and complications apparent within the extensive
societies and the operation of its structure can serve to valid corporate decisions to
external societal groups that control the access to various resources.

Among the powerful aspect of managerial accounting is its potential and aptness
to render the outcome of organizational occurrence, transactions, or actions that is
either visible or invisible within both the organizations and wider societies (Ansari &
Euske, 1987; Hopwood, 1987; Hines, 1988). The invisible sections in managerial
accounting are often viewed as unimportant, and the visible is often focused on the
decision-making. The visible sections in the management accounting can just be
understood through examining the precise and accurate organizational processes,
context, and culture that are often used to interpret and make sense of it. Furthermore,
it is found impossible to assess that if the visibilities has been created in the
organization’s management structure is appropriate without reference to the specific
context, or contexts, in which a structure have emerged and operated (Ansari & Euske,
1987). That being said, the role and function of management accounting can be for
organization specific, in which identical structures of management accounting operates
in different firms.

The ultimate role of organization’s management accounting structure originates

from its technical abilities, as well as through the organizational structure and processes
that surrounds it (Hopwood, 1987). Through understanding these two aspects along
with the method on how it can influence social context, a researcher can have an
adequate role in management accounting within the growth of corporate environmental
management. That being said, the researcher must be able to gain contextual insight in
understanding how management accounting structures operate, the current problems,
the organizational meanings that are attached to accounting information structures, and
most important, on how accounting measures are being linked to organizational actions
and decision-making.

In that manner, this research includes the investigation of the significant role that
managerial accounting and accounting take part in the growth of environmental
management. This section serves the outline in the main elements of the thesis, and
emphasizes the disapproving issues in the work. It will introduce the background of the
research and the significance of managerial accounting and the environment in a fertile
and interesting area for Master’s degree.
 METHODOLOGY

Methodological Procedure

This research used a descriptive research design. The descriptive research

design involves the description of the research, recording, assessment, and
interpretation of the obtained information. This will focus on prevailing conditions,
trends, and cause-and-effect relationships that will be used in making an adequate and
accurate interpretation about the research, with or without the use of statistical methods
(Calderon, 2012).

The related literature and studies are obtained by searching the keywords:
“managerial accounting”, “accounting”, “research”, “managerial accounting topics”, and
“management accounting research”. In order to validate the obtained data, a reference
guideline was used. References that are not relevant to the research has been filtered
out and removed from the research. Meanwhile, relevant references are compiled and
arranged for the purpose of this research. The literatures are obtained from the reliable
sources in the internet, including Google Scholar, Scopus, and Academia. The
proponent of the obtained literatures and studies are cited, bought in the references and
through in-text citations.

This research used a middle-range thinking research paradigm and critical views
from the diverse range of theoretical and empirical literature in order to construct a
number of theoretical models that could describe how organizational change can arise
from specific interactions within social and organizational contexts. Management
accounting structures that are specific for this research are provided in describing the
use of environmental information within organizational firms.
 RESULTS AND DISCUSSION

Results

According to the empirical evidence of Dent (1991) and Bartunek (1984), it is

important to locate environmentalism and accounting within the organization that is
being discussed before doing its application. Traditional management accounting and
new environment-related forms of accounting are part of the organization’s design. For
most organizations, accounting can be considered as one of the most influential
structure, and its presence can contribute a lot in an organization, esp. in shaping the
organization’s decision-making within the firm (Goold & Campbell, 1987a ).

The empirical findings of Dent (1991) suggest that the process of managerial
accounting in an organization can influence the greening of present corporate
interpretative schemes. Organizations are now under pressure from different social
actors in other to manage the environmental impact of accounting. That being said, the
result of the pressure among the top organizations in different countries has authorized
the development of EMS and the formation of the environmental functions. This
environmental function requires the expertise of outside consultants, otherwise the
environmental experts, and people who serves to introduce new views and visibilities
within the organization.

The development of EMS evolves overtime and it became more than just a
coupled structure for demonstrating organizational commitment to environmental
issues. The implementation of EMS redefines the relationship between functional units,
and it introduces new rules in governing the work environment. The nature of the
working structure along with its vast potential implications in altering the existing modes
of behavior with its level of specification is known to be limited. In intercepting with the
firm, it is often seen impossible for EMS to prescribe specific appropriate behavior.

The lack of experience in managing the environmental issues, and the need and
urge to balance environmental dimension with established production dimensions, EMS
is required to have considerable amounts of exploration behavior. Interactions overtime
can shape the nature and the extent of prescribed frameworks and behaviors in dealing
with organizational and environmental accounting issues.

The conceptualization of the organizations in compromising an interpretative

scheme suggests the use of management structures that matters, and not just the
simple presence within the organization. In that manner, the mere presence of
described EMS or environmental-related management structures within the organization
does not indicate a definite green values which is being represented within the
organization. It underlies definite meaning that is attached to structures, and the
procedures and methods that reveals the dominant organizational attitude in an
environment. The interpretative scheme represents the elements within an organization
that allows it to function in an efficient and effective manner. The interactions of the
elements form the overall interaction of the organization.

Meanwhile, traditional management accounting structures are the main element

in the organizational communication and information procedures, and it makes certain
abstract concepts objective and makes visible certain dimensions in an organization
(Hopwood, 1987). The accountabilities that reflect the values and beliefs within the
interpretative schemes of the organization can operate to force the organization to work
within and reflect those interpretative schemes. Management accounting structures
serves to construct a particular view of the organization and its environment, thus
allowing and helping to shape perceptions and behavior in line with the interpretative
schemes of the organization (Hopwood, 1990).

Accounting structure reflects the values and beliefs of the dominant interpretative
schemes of the organization, accounting can sometimes and often change to be a
substance for subsequent questioning and shift within the established interpretative
schemes within the organization (Dent, 1986).

Discussion

With the number of general literatures and reviews that are used in this research,
the empirical data that are obtained have been given with meaning. The case studies of
manufacturing operations showed that management accountants and accounting are
not involved in the generation of environmental information, envisage no compelling
need to use environment-related accounting, and are glad to allow environmental
managers to control the EMS. Meanwhile, managements accountant seem to appear to
be knowledgeable about the environmental impacts of the organization, including
having awareness on how environmental costs and impacts can affect efficient business
operations.

REFERENCES

Ansari, S. & Euske, K. (1987) ‘Rational, Rationalizing and Reifying uses of Accounting
Data in Organizations, Accounting, Organizations and Society, Vol. 12, No. 6, pp. 549-
570.
Bartunek, J. (1984) ‘Changing interpretative schemes and organizational restructuring:
the example of a religious order’, Administrative Science Quarterly, Vol. 29, pp. 355-
372.
Dent, J. (1986) ‘Organizational Research in Accounting: perspectives, issues and a
commentary’, in Hopwood, A. & Bromwich, M. (Eds), Research and Current Issues in
Accounting, London, Pitman, pp. 86-120.
Dent, J. (1990) ‘Strategy, organization and control: some possibilities for accounting
research’, Accounting, Organizations and Society, Vol. 15, No. ½, pp. 2-26
Dent, J. (1991) ‘Accounting and organizational Cultures: A Field Study of the
emergence of a new organizational reality’, Accounting, Organizations and Society, Vol.
16, No. 8, pp. 705-732.
Goold, M. and Campbell, A. (1987a), Strategies and Styles, London, Blackwell.
Hines, R. (1988) ‘Financial Accounting in communicating reality, we construct reality’,
Accounting, Organizations and Society, Vol. 13, No. 3, pp. 251-261.
Hopwood, A. (1987) ‘The Archaeology of Accounting Systems’, Accounting,
Organizations and Society, Vol., No., pp. 207-234
Hopwood, A. (1990) ‘Accounting and Organisation Change’, Accounting, Auditing and
Accountability Journal, Vol. 3, No 1, pp. 7-17.

Loft, A. (1991) ‘The History of Management Accounting: Relevance Found’, in Ashton

D, Hopper T. & Scapens R. (Eds), Issues in Management Accounting, London: Prentice
Hall, pp. 21-43