Chapter 20
Current Issues in Strategic
Managerial Accounting
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Objectives
After studying this topic you should be able to:
 Understand how management accounting has
changed over time;
 Appreciate the use of strategic managerial
accounting to managers in performing their roles
and responsibilities;
 Critically evaluate research into management
accounting, both generic and applied, from a
manager’s perspective; and
 Critique opportunities for further applied research
into management accounting within hospitality,
tourism and events sectors.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Management accounting
change over time
Management
Accounting
Strategic
Management
Accounting
Cost Accounting
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Management accounting
change over time
 Started as management accounting in the
1800s
 Developed into the broader management
accounting in the 1900s
 More recently a strategic management
accounting discipline has developed
 This textbook considered strategic managerial
accounting and its application to hospitality,
tourism and event sectors.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Use of management
accounting in hospitality,
tourism & events
Usefulness and validity of techniques has been discussed in
relation to these specific service sector environments.
Some techniques, such as total absorption costing and full
cost pricing, are sometimes inappropriate within specific
service industries, though they work in manufacturing
environments.
Figure 20.2 (next slide) identifies some of the management
accounting tools and techniques that are useful in
hospitality, tourism and events, all of which (amongst
others) have been explored within this textbook.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Use of management
accounting in hospitality,
tourism & events
Generic
Industry Specific
Traditional Management
Accounting tools
Strategic & Modern
Management Accounting
Tools
Management Accounting
Tools
Decision making techniques
Balanced Scorcard
Generic
(BSC)
Cost Elements
Cost Volume Profit Analysis
(CVP)
Industry Specific Ratio Analysis
Customer Profitability Analysis
(CPA)
Pricing methods
Critical Success Factors
Budgeting
(CSFs)
Performanace measurement
Activity Based Costing
Revenue Management
(Yield Management)
(ABC)
Benchmarking
Working Capital Management
Activity Based Management
(ABM)
Capital Investment Appraisal
(PBP, ARR, NPV, IRR)
Environmental Management
Accounting
Ratio Analysis
(EMA)
Uniform System of Accounts
for the Lodging Industry
(USALI)
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Use of management
accounting in hospitality,
tourism & events
This textbook has demonstrated these techniques and detailed their application within
these sectors. Generic coverage of these techniques and tools is often with
manufacturing examples, so makes it difficult to translate this knowledge into a service
sector environment.
Adoption and adaption are important phrases - some approaches can be utilised
unchanged, others can be adapted to meet specific industry needs, for example the use
industry specific ratios alongside generic ratios for financial analysis purposes.
There are techniques that have been developed within hospitality, tourism or events
i.e. do not originate from the generic management accounting literature. An example
would be the development of yield management that started within airlines. This has
spread more broadly to sophisticated revenue management systems within hospitality
and other closely linked environments. The Uniform System of Accounts for the Lodging
Industry (USALI) is also an example of a specific development. USALI does use the
principles of responsibility accounting which is generic, but to generate an industry
specific tool. This has also allowed the development of benchmarking beyond that
available in many other industries
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Use of management
accounting in hospitality,
tourism & events
Changes in the external environment such as: globalisation, increased competition, faster
pace of change, and environmental concerns have all had an impact.
In financial accounting this has led to the need for international financial reporting standards
(IFRS) that permeate over national boundaries. IFRS terminology is therefore becoming
more widely utilised within management accounting, to reflect the changes in financial
accounting.
Corporate social responsibility (CSR), where firms demonstrate their ‘corporate conscience’
has also led to the use of concepts, such as ‘triple bottom line’ reporting (profit, planet &
people). Within management accounting the key outcome has been the development of
environmental management accounting (EMA).
The focus beyond profits (or instead of profits), the ‘planet’ and ‘people’ elements is also
strong in the not-for-profit sector. The NFP sector utilises a number of management
accounting tools, but the focus, on a ‘good cause’ in such charity organisations impacts on
their management accounting practices.
This evidence further supports the case that management accounting has a vital role to play
across hospitality, tourism and events organisation.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Role of the management
accountant
Generic management accounting literature identifies management accountant has changed over time
(Burns, & Baldvinsdottir, 2005; Hopper, Otley, & Scapens, 2001). This is mirrored within hospitality
applied research (Burgess 2006).
Research shows that in the later part of the twentieth century the traditional role of a ‘bean counter’,
working in isolation from unit management was changing.
Financial controllers were taking a more active role at unit level hotel management, being viewed as
part of the management team and working alongside managers and working with them to aid their
decision making process.
Into the twenty first century, as many organisations considered cutting costs in a competitive
environment, centralising ‘support functions’, and outsourcing became more popular.
By 2006 Burgess was concerned if there was actually a future for financial controllers at the unit
(hotel) level. Evidence suggested a number of chain hotels were moving financial controllers into
regional or national ‘hubs’ to support a group of individual hotels. There has also been some
evidence of outsourcing the accounting function altogether.
In the events sector, a number of horseracing courses in the UK have moved away from venue based
management accountants to a more centralised base needing less staffing.
This raises is the need for ‘non-financial’ managers to have sufficient accounting skills at
unit level. This stresses the point that managers across hospitality, tourism and events
need to develop a sound working knowledge of management accounting in order to be
effective.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Contemporary applied research
- Changes in management
accounting practice research
1970s
1980s
1990s
2000s
• What managers should do
• What managers do do
• Why managers do what they do
• Working with managers to develop practice
Adapted from Scapens 2006
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Contemporary applied research
- Changes in management
accounting practice research
Scapens’ reflections in this paper are:
 In the 1970s academic researchers believed all the management accounting tools
needed for organisation to use existed; it was just a case of getting managers to
use them.
 By the 1980s researchers focused more on field research in organisation that
discovered what management accounting tools were being used (mainly surveys of
practice).
 In the 1990s research asked ‘why?’ this became critical when considering the
perceived ‘gap’ between theory and practice. Research in the 1990s focused on
understanding why academic theory was not being used in practice.
 Within the twenty first century Scapens (2006) see the role of researchers in
management accounting to be working alongside managers in industry to aid them
in developing practice.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Contemporary applied research
- Changes in management
accounting practice research
Applied research into a specific industry, such as hospitality, mirrors the
development pattern outlined in the generic area of management accounting
over this period.
academic management accounting research applied specifically to tourism is
limited in volume and almost non-existent within the events sector.
Within hospitality applied research the vast majority of management accounting
research is applied specifically to hotels (estimated over 90%), with only a few
studies applied to restaurants (Atkinson & Jones 2008, 2011).
Atkinson & Jones’ 2011 review of management accounting research across
hospitality and tourism found only a few studies related to accounting, with
single figures of papers majoring on a management accounting topic applied to
tourism. Their 2011 paper identified just over 100 hospitality and tourism
applied management accounting journal articles in a period covering 11 years,
averaging less than 10 papers a year, far less research than that into operations
or marketing for example.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Contemporary applied research
- Changes in management
accounting practice research
The ‘state of the art’ of hospitality applied research can be summarised as having a
history of over 40 years and has developed, both in subject areas and methodological
approaches during that period of time.
The volume of research is still lower than applied to other areas, such as operations
management, marketing or human resource management (HRM).
The current state of research into management accounting within tourism and events
can be described, at best, as minimal.
This provides many opportunities for new research in this field. The tourism and
events applied discussion of management accounting topics within this textbook
identifies some fantastic opportunities exist for research in these area.
Such research development can assist in improving the use of management
accounting by managers within tourism and events sectors, whilst also adding to
academic knowledge in the discipline.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Managerial accounting and the
textbook user
Students of management study many disciplines, many view accounting as difficult.
Yet accounting, and in particular managerial accounting, provides vital knowledge and tools for
managers to support their day to day decision making.
Managers are held accountable for the resources they use and the decisions they make managerial accounting has a fundamental role to play in information for decision making and
reporting on performance.
Some managers in industry and students alike view anything numerical as ‘something to leave
the accountant to do’ - management accounting information as an integral part of
management decision making, both at an operational and strategic level in the organisation
Some students and managers understand management accounting information is something,
with which they need to engage yet still view it as a ‘necessary evil’. It is hoped the industry
focused examples and the managerial focus takes the readers beyond this view to a deeper
understanding of the subject.
There is a need for the use of management accounting for decision making, planning and
control purposes across hospitality, tourism and events organisations.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers
Summary
 Management accounting has developed from
manufacturing cost accounting into strategic
management accounting over the last century;
 A vast variety of management accounting tools and
techniques exist that are valid and useful for
hospitality, tourism and events organisations;
 The management accounting function is changing,
making it critical that managers in organisations
have their own sound financial skills; and
 There is a history of applied management
accounting research in hospitality, with
opportunities for further research across hospitality,
tourism and events.
© 2012 Jones et al: Strategic Managerial Accounting: Hospitality, Tourism & Events Applications 6thedition, Goodfellow Publishers