The changes that will be necessary for management accounting to be useful in the 21^st century are different from the changes that have occurred in the field in the past. In the past, the focus has been on “how can we improve what we do?” The focus for the future should be “how can we make accounting information more useful for decision making?”

Accounting is not that different from the concepts that have been popular in the philosophical theories of the western world.  Accounting too is a relationship with cause and effects, and the whole being the sum of the independent parts. 

For some reason, accounting has not focused on compiling useful information from the processes within an organization.  Instead, accountants focused on turning accounting information into “managerially relevant” information.  In the 1950’s, the focus was disclosing financial information so managers could gain more useful information that would normally be found in the income statements and balance sheets presented to third parties. This led to the change in presenting budget information in a cost versus actual format. 

Two important developments occurred in the late 1970’s and early 1980’s, the development of cost information outside the framework of the financial accounting system, known as Activity Based Management; and the improvement of how overhead costs are traced to products and other cost objects, Activity Based Product Costing. During these developments the idea of using multiple cost drivers to cost a product became more popular. 

In the instances where management accountants see their job as working on a relationship with the system in which they operate, management seems to be providing more useful information. They focus on the processes within the organization that make up the relationships. In the most successful examples, management managed by pattern (a process) instead of by results. People’s attention was not focused on achieving targets, but on mastering disciplined and standardized process, achieving long-term positive results. 

Management can help achieve this within an organization by creating channels for people to inquire openly about the purpose and methods employed. The accounting language used in the past as the communication tool does not invite inquiry, it just gives the defined answer. Hopefully a language of communication will be developed in the 21^st century that invites inquiry and works on the relationships between the interdependent parts of the whole organization.   

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