Management Accounting and Control a Balanced Scorecard Approach to Management Control Essay

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Management Accounting and Control A balanced scorecard approach to management control For this topic, we consider what has been one of the most significant developments in the field of management accounting and control: the ‘balanced scorecard’. The balanced scorecard began life as a performance measurement tool, incorporating financial and non-financial measures (Kaplan and Norton, 1992; its role has been refined in later publications – see Kaplan and Norton, 1996). The basic notion underlying the balanced scorecard is that top management needs a wide-ranging view of organizational performance. This, it is argued, is achieved through the use of both financial and non-financial performance measures. The inclusion of non-financial measures sets the balanced scorecard apart from other innovations in management accounting (e.g. activity-based costing, strategic management accounting), which remain focused on financial aspects of performance. For this topic, we will examine the balanced scorecard in some detail and ask the question: ‘how good is the balanced scorecard as a mechanism for management control?’ A Balanced Scorecard approach to the problem of management control Points/issues raised in the lecture(s) to read up on: The balanced scorecard (BSC) has become ubiquitous. Its use by organizations is widespread. The BSC has a global reach. It is difficult to under-estimate how prevalent the BSC has become (at the latest count, approximately 57% of UK companies were operating with some form of BSC). But, what has motivated its development? What might explain its widespread uptake? There is not one cause for the instigation and development of the BSC idea. There cannot be. Life, including management accounting, is too complex for that. That said, a major contributing factor was the general and growing concern (among practitioners, managers and

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