Management Accounting and Control BS3517

Management Accounting and Control BS3517

Coursework assignment: write a 2,500 word essay on the following topic:

“The budget has historically played center stage in most organizations’ systems of management control (Otley, 1994). However, recently it has been the subject of considerable criticism (Hansen et al., 2003). Budgeting has been deemed ‘broken’ (Jensen, 2001), ‘a thing of the past’ (Gurton, 1999), or an ‘unnecessary evil’ (Wallander, 1999)”
(Libby & Lindsay, 2010: 56).

Required:
Critically assess the arguments and the evidence for the claim that organizations no longer need budgets.
References
You should consult academic journal articles for your coursework. Forget about the internet, other than to seek academic references.
Deadline
The coursework must be submitted to P28 no later than 10.00am, Tuesday 19March 2013.
Cover sheet
Attach a cover sheet to your assignment. The cover sheet should contain the following: module code, module title, lecturer name, year of study, and a signed declaration that your submission does not contain plagiarised material.
Plagiarism
Plagiarism will be dealt with severely (see your Handbook for details, and see the University guidelines as to what constitutes plagiarism).
Referencing
Remember to reference your sources using an appropriate citation system, such as Harvard. Essays will lose marks for poor referencing style.
Style guides to referencing are available in the library and online:
http://www.cardiff.ac.uk/schoolsanddivisions/divisions/insrv/help/guides/citingreferences/tutorial/harvard.html
Grammar
You are strongly advised to proof read your essay in order to correct grammatical errors, incorrect spelling, and poor sentence structuring. Seek help if you are unsure. There are university resources to help students improve their grammatical skills. These resources are available to both home and overseas students. Essays will lose marks for poor grammatical style.

Do not use bullet points in your essay.
Unsubstantiated assertions
Do not make unsubstantiated assertions. Essays will lose marks if littered with unsubstantiated assertions. If you are unsure about what an unsubstantiated assertion is, do some research to find out about the issue, and, importantly, how to avoid making unsubstantiated assertions.
Criteria for assessment
See your Module Outline for details.

Please note the need to avoid being both prescriptive and descriptive in order to gain anything other than a third-class/2.2 mark (at best). See your Module Outline for details.

Satisfactory completion of the module is an overall pass mark of 40 percent. In addition, a minimum mark of 35 percent is required on each separate assessed item that has a weighting of 10 percent or more of the overall assessment for a module. This coursework is worth a total of 30 percent of the overall marks available for BS3517 Management Accounting and Control.

Useful references
Week 1
The types and role of budgets.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 8.*
Phyrr, Peter (1970) Zero Based Budgets, Harvard Business Review, November 1. *
Schick, Allen. 1966. “The Road to PPB: The Stages of Budget Reform.” Public Administration Review 26(4):243-5
Wildavsky, Aaron A Budget For All Seasons? Why The Traditional Budget Lasts Public Administration Review, Nov/Dec78, Vol. 38 Issue 6, p501.*
Wildavsky, Aaron Rescuing Policy Analysis From PPBS, Public Administration Review, Mar/Apr69, Vol. 29 Issue 2, p189, 14p;
Week 2
‘Humans and Budgets’: Budgeting and research: Economic, Psychological and Sociological research approaches. The problems of budgets.

Readings
Bart, C. K. (1988) `Budgeting Gamesmanship’, Academy of Management Executive, 2 (4) 285-294.
Covaleski, M.A. and M.W. Dirsmith “The Use of Budgetary Symbols in the
Political Arena”, Accounting, Organizations and Society (Vol 13, No 1,1988)
Hope, J, and Fraser, R. (2003) `Who Needs Budgets?’,Harvard Business Review 81 (2) 108-116.*
Jensen, M. C. (2001) `Corporate Budgeting Is Broken, Let’s Fix It’, Harvard Business Review, 79 (10) 94-101.*
Preston, A. (1995) “Budgeting, Creativity and Culture” in Ashton, D., Hopper, T. and Scapens, R.W. (eds), Issues in Management Accounting, 2nd edition, Prentice Hall.
Week 3
The History and the Logic of Divisionalization

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 7 pp.253-262.*
Ezzamel, M., Business Unit & Divisional Performance Measurement, Academic Press,.London, 1992, Chapters 1 & 2.*
Fligstein. N. “The Spread of the Multidivisional Form, 1919-79,” American Sociological Review, (50) 1985: 377-391.*
Mayer, Michael; Whittington, Richard.‘Economics, Politics and Nations: Resistance to the Multidivisional Form in France, Germany and the United Kingdom, 1983—1993’.Journal of Management Studies, Nov2004, Vol. 41 Issue 7, p1057-1082.
Simons, R. (1995)`Control in an Age of Empowerment’, Harvard Business Review 73 (2), 80-88.
Whittington, R, M Mayer and F Curtoc, ‘Chandlerism in post-war Europe: strategic and structural change in France, Germany and the UK’, 1950-1993 Industrial and Corporate Change, Volume 8, Number 3,1999 pp. 519-551.
Week 4
Responsibility centres- profit and investment centres. Organizational design and performance measurement. Accounting (financial) based measures- ROI and Residual income measures. Linking measures to incentives.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapters 10 &11.*
Dearden, J. (1969) `The Case Against ROI Control’, Harvard Business Review, 47 (3),124-135.*
Dearden, John (1964). The Case of the Disputing Divisions Harvard Business Review May-June.*
Fitzgerald, L. (2007), ‘Performance measurement’. Chapter 11, in Issues in Management Accounting, 3rd edition, eds. Hopper, T., Northcott, D. and Scapens, R.W., pp.223-241.
Stern, J. Stewart III, G. and Chew Jr., D. (1996)`EVA An Integrated Financial Management System’, European Financial Management, 2 (2), 223-246.
O’Hanlon, J. and Peasnell, K. (1998), ‘Wall Street’s contribution to management accounting: the Stern Stewart EVA financial management system’, Management Accounting Research, Vol. 9, No. 4, December, pp.421-444
Jensen, Michael C. Value Maximization, Stakeholder Theory, and the Corporate Objective Function in Unfolding Stakeholder Thinking, eds. J. Andriof, et al, (Greenleaf Publishing, 2002). Also published in JACF, V. 14, N. 3, 2001, European Financial Management Review, N. 7, 2001 and in Breaking the Code of Change, M. Beer and N. Norhia, eds, HBS Press, 2000.
Week 5
Transfer pricing. Motivating performance and firm design.Strategic and international issues.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 7 262-269.*
Borkowski S. C. (1990)`Environmental and Organizational Factors Affecting Transfer Pricing’, Journal of Management Accounting Research, 2 (Fall), 78-99.
Cools, Martine, Clive Emmanuel, Ann Jorissen, (2007) Management control in the transfer pricing tax compliant multinational enterprise Accounting, Organizations and Society
Dearden, John (1964). The Case of the Disputing Divisions Harvard Business Review May-June.
Eccles, R. (1983) `Control with Fairness in Transfer Pricing’, Harvard Business Review, 61 (6),149-161.
Kovac, E., and Troy, H. (1989)`Getting Transfer Prices Right: What Bellcore Did’, Harvard Business Review, 67 (5), 148-154.
Myers, J.K. and Collins, M.K. (2011) An Historical Review Of Transfer Pricing Theories: Addressing Goal Congruence within the Organization, Proceedings of ASBBS Volume 18 Number 1.*
Week 6
Variations in Management Accounting Practices.Environmental and cultural influences.

Readings
Chow, Chee W. Shields, Michael D. and Wu, Anne (1999) ‘The importance of national culture in the design of and preference for management controls for multi-national operations’, Accounting, Organizations and Society, Volume 24, Issues 5-6, July, Pages 441-461.*
Harrison and McKinnon (2007) in Hopper, T., Northcott, D. and Scapens, R.W. Issues in Management Accounting 3rd Edition.*
McSweeney, B. (2002) ‘Hofstede’s culture: triumph of faith, failure of analysis’ Human Relations.
Week 7
Capital budgeting: investment appraisal as an organizational process.

Readings
Arnold, G.A. &Hatzopolous, P.D The Theory Practice Gap in Capital Budgeting: evidence from the UK, Journal of Business Finance and Accounting, June/July 2000.*
Bower, J.L. & Gilbert, C.G. “How everyday managers’ decisions create or destroy your company’s strategy” Harvard Business Review (Feb 2007).
Bromwich, M. &Bhimani, A. (1991) (US publication) Strategic Investment Appraisal Management Accounting 1991 pp.45-48.
Dugdale, David, Jones, Colwyn. Finance, strategy and trust in investment decision-making Management Accounting. Apr 1994. Vol. 72, Iss. 4; p. 52
P.J. King “Is the Emphasis of Capital Budgeting Theory Misplaced?”,Journal of Business Finance and Accounting (Spring, 1975).*
Miller, Peter & O’Leary, Ted“Capital budgeting practices and complementarity relations in the transition to modern manufacture”, Journal of Accounting Research, 35 (2), 1997, pp. 257 – 271.*
D. NorthcottCapital Investment Decision Making Academic Press, 1992)
Northcott, D. &Alkaraan, F. StrategicInvestment Appraisal, Chapter 10 in Issues in Management Accounting, (2007) 3rd edition, eds. Hopper, T., Northcott, D. and Scapens, R.W., pp.223-241.
Week 8
Management Accounting: Theory and Practice

Readings
S. Burchell, C. Clubb A.G. Hopwood, J. Hughes and J. Nahapiet,“The Roles of Accounting in Organizations and Society”, Accounting, Organizations and Society(1980), pp5-27.*
T. Hopper, J. Storey and H. Willmott “ Accounting for Accounting: Towards the Development of a Dialectic View”, Accounting, Organizations and Society (1987).*
R.W.ScapensManagement Accounting: A Review of Recent Developments, Chapter 1 (Macmillan, 1991)
H.T. Johnson and R. Kaplan Relevance Lost (Harvard Business School Press, 1987) Chapter 1.*

 

 
Module content Semester 2

Readings marked with an asterisk (*) are essential, the others are recommended for further reading and are often articles referred to in the lectures.

Seminar material for the second Semester will be distributed at the beginning of Semester 2.

Week 1
The types and role of budgets.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 8.*
Phyrr, Peter (1970) Zero Based Budgets, Harvard Business Review, November 1. *
Schick, Allen. 1966. “The Road to PPB: The Stages of Budget Reform.” Public Administration Review 26(4):243-5
Wildavsky, Aaron A Budget For All Seasons? Why The Traditional Budget Lasts Public Administration Review, Nov/Dec78, Vol. 38 Issue 6, p501.*
Wildavsky, Aaron Rescuing Policy Analysis From PPBS, Public Administration Review, Mar/Apr69, Vol. 29 Issue 2, p189, 14p;
Week 2
‘Humans and Budgets’: Budgeting and research: Economic, Psychological and Sociological research approaches. The problems of budgets.

Readings
Bart, C. K. (1988) `Budgeting Gamesmanship’, Academy of Management Executive, 2 (4) 285-294.
Covaleski, M.A. and M.W. Dirsmith “The Use of Budgetary Symbols in the
Political Arena”, Accounting, Organizations and Society (Vol 13, No 1,1988)
Hope, J, and Fraser, R. (2003) `Who Needs Budgets?’,Harvard Business Review 81 (2) 108-116.*
Jensen, M. C. (2001) `Corporate Budgeting Is Broken, Let’s Fix It’, Harvard Business Review, 79 (10) 94-101.*
Preston, A. (1995) “Budgeting, Creativity and Culture” in Ashton, D., Hopper, T. and Scapens, R.W. (eds), Issues in Management Accounting, 2nd edition, Prentice Hall.
Week 3
The History and the Logic of Divisionalization

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 7 pp.253-262.*
Ezzamel, M., Business Unit & Divisional Performance Measurement, Academic Press,.London, 1992, Chapters 1 & 2.*
Fligstein. N. “The Spread of the Multidivisional Form, 1919-79,” American Sociological Review, (50) 1985: 377-391.*
Mayer, Michael; Whittington, Richard.‘Economics, Politics and Nations: Resistance to the Multidivisional Form in France, Germany and the United Kingdom, 1983—1993’.Journal of Management Studies, Nov2004, Vol. 41 Issue 7, p1057-1082.
Simons, R. (1995)`Control in an Age of Empowerment’, Harvard Business Review 73 (2), 80-88.
Whittington, R, M Mayer and F Curtoc, ‘Chandlerism in post-war Europe: strategic and structural change in France, Germany and the UK’, 1950-1993 Industrial and Corporate Change, Volume 8, Number 3,1999 pp. 519-551.
Week 4
Responsibility centres- profit and investment centres. Organizational design and performance measurement. Accounting (financial) based measures- ROI and Residual income measures. Linking measures to incentives.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapters 10 &11.*
Dearden, J. (1969) `The Case Against ROI Control’, Harvard Business Review, 47 (3),124-135.*
Dearden, John (1964). The Case of the Disputing Divisions Harvard Business Review May-June.*
Fitzgerald, L. (2007), ‘Performance measurement’. Chapter 11, in Issues in Management Accounting, 3rd edition, eds. Hopper, T., Northcott, D. and Scapens, R.W., pp.223-241.
Stern, J. Stewart III, G. and Chew Jr., D. (1996)`EVA An Integrated Financial Management System’, European Financial Management, 2 (2), 223-246.
O’Hanlon, J. and Peasnell, K. (1998), ‘Wall Street’s contribution to management accounting: the Stern Stewart EVA financial management system’, Management Accounting Research, Vol. 9, No. 4, December, pp.421-444
Jensen, Michael C. Value Maximization, Stakeholder Theory, and the Corporate Objective Function in Unfolding Stakeholder Thinking, eds. J. Andriof, et al, (Greenleaf Publishing, 2002). Also published in JACF, V. 14, N. 3, 2001, European Financial Management Review, N. 7, 2001 and in Breaking the Code of Change, M. Beer and N. Norhia, eds, HBS Press, 2000.
Week 5
Transfer pricing. Motivating performance and firm design.Strategic and international issues.

Readings
Merchant, K. & Van der Stede, W. Management Control Systems, Chapter 7 262-269.*
Borkowski S. C. (1990)`Environmental and Organizational Factors Affecting Transfer Pricing’, Journal of Management Accounting Research, 2 (Fall), 78-99.
Cools, Martine, Clive Emmanuel, Ann Jorissen, (2007) Management control in the transfer pricing tax compliant multinational enterprise Accounting, Organizations and Society
Dearden, John (1964). The Case of the Disputing Divisions Harvard Business Review May-June.
Eccles, R. (1983) `Control with Fairness in Transfer Pricing’, Harvard Business Review, 61 (6),149-161.
Kovac, E., and Troy, H. (1989)`Getting Transfer Prices Right: What Bellcore Did’, Harvard Business Review, 67 (5), 148-154.
Myers, J.K. and Collins, M.K. (2011) An Historical Review Of Transfer Pricing Theories: Addressing Goal Congruence within the Organization, Proceedings of ASBBS Volume 18 Number 1.*
Week 6
Variations in Management Accounting Practices.Environmental and cultural influences.

Readings
Chow, Chee W. Shields, Michael D. and Wu, Anne (1999) ‘The importance of national culture in the design of and preference for management controls for multi-national operations’, Accounting, Organizations and Society, Volume 24, Issues 5-6, July, Pages 441-461.*
Harrison and McKinnon (2007) in Hopper, T., Northcott, D. and Scapens, R.W. Issues in Management Accounting 3rd Edition.*
McSweeney, B. (2002) ‘Hofstede’s culture: triumph of faith, failure of analysis’ Human Relations.
Week 7
Capital budgeting: investment appraisal as an organizational process.

Readings
Arnold, G.A. &Hatzopolous, P.D The Theory Practice Gap in Capital Budgeting: evidence from the UK, Journal of Business Finance and Accounting, June/July 2000.*
Bower, J.L. & Gilbert, C.G. “How everyday managers’ decisions create or destroy your company’s strategy” Harvard Business Review (Feb 2007).
Bromwich, M. &Bhimani, A. (1991) (US publication) Strategic Investment Appraisal Management Accounting 1991 pp.45-48.
Dugdale, David, Jones, Colwyn. Finance, strategy and trust in investment decision-making Management Accounting. Apr 1994. Vol. 72, Iss. 4; p. 52
P.J. King “Is the Emphasis of Capital Budgeting Theory Misplaced?”,Journal of Business Finance and Accounting (Spring, 1975).*
Miller, Peter & O’Leary, Ted“Capital budgeting practices and complementarity relations in the transition to modern manufacture”, Journal of Accounting Research, 35 (2), 1997, pp. 257 – 271.*
D. NorthcottCapital Investment Decision Making Academic Press, 1992)
Northcott, D. &Alkaraan, F. StrategicInvestment Appraisal, Chapter 10 in Issues in Management Accounting, (2007) 3rd edition, eds. Hopper, T., Northcott, D. and Scapens, R.W., pp.223-241.
Week 8
Management Accounting: Theory and Practice

Readings
S. Burchell, C. Clubb A.G. Hopwood, J. Hughes and J. Nahapiet,“The Roles of Accounting in Organizations and Society”, Accounting, Organizations and Society(1980), pp5-27.*
T. Hopper, J. Storey and H. Willmott “ Accounting for Accounting: Towards the Development of a Dialectic View”, Accounting, Organizations and Society (1987).*
R.W.ScapensManagement Accounting: A Review of Recent Developments, Chapter 1 (Macmillan, 1991)
H.T. Johnson and R. Kaplan Relevance Lost (Harvard Business School Press, 1987) Chapter 1.*

 
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