Write an essay on the following: Challenges faced by Financial Managers in a Changing Economic EnvironmentYour essay should critically asses the challenges faced by financial managers due to changes i

The paper is structured in a complex manner, starting from a short introduction, in which we state the main reasons why we chose this particular subject for our research, continues with a consistent literature review on the topic of management accounting, focusing on the latest scientific works, furthermore stresses aspects connected to management accounting regarded as a social science, and after that emphasizes what are the differences that exists between an accounting researcher, an economist, a sociologist or a philosopher. Our conclusion is that there is a constant need for academic researchers to focus on aspects that implicate the management accounting in the economic environment and due to this fact we state that there is always place for more work and new methods to be tested and implemented.

Key Words Management accounting, economic environment, global perspective, economic and social development 1. Introduction What is the field that the paper covers?

The paper covers the topic of management accounting and the double relationship that can be found in this matter, focusing both on the theoretical and on the practical approach, in an economic environment dominated by profound and sometimes abrupt changes. Nowadays, management accounting can be regarded as a social science and also as a social technical discipline. The research paper focuses on the international position of this field and on the practical elements that can be brought in Romania. What is the importance of the subject chosen and what are its main objectives? The challenges brought by management accounting to science at the theoretical and practical levels are continuously growing. The objectives of the paper are as follows: a) to create a general theoretical framework and a general image of the subject of management accounting, taking into account the place of management accounting at an international level; b) to emphasize the practical aspects of management accounting worldwide and the influence that it has on the economic environment; c) to stress the opinions concerning specialists views on the matter of management accounting, due to the fact that some of them believe that it is a social science and others a social technical discipline; d) to show the on growing potential of management accounting in Romania and at the international level.

What are the methods and means that we are going to use in order to conduct our study?

In terms of methods and means, for the first part of our research paper we have used a theoretical approach, mainly focusing on the already existing studies in this field, and for the second part of our research paper we have gathered our own data for the research analysis process, making a case study on Romania. The case study was aimed to provide pertinent answers to the following question: “How does management accounting fit into firms’ political strategy?” and in this matter we have used both questioners and interviews on a number of 60 adult individuals working in five Romanian firms, during the year 2011. Which is the state of research in the field and in terms of literature review?

It can be clearly seen that over the past few decades, there has been registered an on growing interest in management accounting research (Luft and Shields, 2002; Zimmerman, 2001; Chapman et al., 2007; Malmi and Granlund, 2009).

Of course, the growth does not simply refer to volume growth, it has also involved a significant extension of scope both in terms of the research topic and in the theoretical bases employed by researchers. However, despite this growth, there has been only a slight interest shown in research by those involved in the practice of management accounting. Though the general situation in terms of practice does not look at all satisfactory, there is also one exception to this, respectively the work that has emerged 103 from Harvard by academics such as R. Kaplan and R.

Cooper on topics such as activity based costing and the balanced scorecard. 2. Literature Review Management accounting, also known as managerial accounting, is concerned with the provisions and use of accounting information to managers in the organizations, in order to provide them with the bases to make informed business decisions.

According to the online Business Dictionary (http://www.businessdictionary.com/definition/management- accounting.html) management accounting represents the process of “preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions” (http://www.businessdictionary.com/definition/management- accounting.html). Management accounting should be regarded as a different notion from financial accounting, due to the fact that management accounting “generates monthly or weekly reports for an organization's internal audiences such as department managers and the chief executive officer; these reports typically show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and accounts receivable, outstanding debts, raw material and inventory, and may also include trend charts, variance analysis, and other statistics” (http://www.businessdictionary.com/definition/management- accounting.html).

Specialists’ vision threw time, in respect to the accounting field and, moreover, to management accounting, focused on putting in balance the ideas concerning accounting and management accounting seen as social science or as social technical discipline.

Starting from the 1960s accounting has become firmly established as a social science (Ryan et al., 2002), due to the keen interest of researchers on empiricism. However, due to the dominance of positivism in the USA (Zimmerman, 1979; Watts and Zimmerman, 1979, 1986) and the growth in interpretive case study based and survey based research in management accounting throughout Europe (Panozzo, 1997; Drury and Tayles, 1994, 2005) the academic progression of accounting could be seen. At the very beginning management accounting had strong links to economics, but in time, the links expanded to include such social sciences as sociology, psychology and organizational studies. Moreover, further development has shown the use of disciplines such as mathematical analysis and even philosophy in relation to management accounting.

Specialists, who stated that management accounting should be more correctly regarded as a social technical discipline, have started their enquiry from the simple question: “What can the accounting researcher contribute to accounting research that cannot be achieved by the sociologist, economist or philosopher?” The answer to this question can be found precisely in the socio - technical nature of management accounting. 3. Management Accounting – social science or social technical science Management accounting has been regarded firstly as a social science, due to the interdisciplinary developments that have underpinned the attainment of accounting’s academic credibility. However, the interdisciplinary influence that could be seen had also the disadvantage to create gaps between accounting researchers and practitioners. In this matter, studying the interdisciplinary developments that influenced management accounting, we have discovered that accounting research, as a social science has the primary aim to explain and understand the behavior of accountants.

The perspective of seeing management accounting a social science, made researchers confront themselves with a decline in the logical and normative analyses of practice (Baxter and Oxenfeldt, 1961; Thomas, 1974; Solomons, 1965; and Anthony, 1975), which dominated the research agenda before the late 1970s. Moreover, in depth analysis of new methods for practice has become relatively rare today, although some exceptions do exist (De Haas and Kleingeld, 1999; Norreklit, 2000). However, surprisingly, the focus on empirical studies meant to generate new ideas did not seem to have explained or illuminated practice in practical ways able to provide value for the objects of the research. Moreover, in most cases, the subjects chosen for empirical research are derived primarily from the existing research literature as opposed to having an origin in problems of practical relevance. Management accounting has been regarded secondly as a social technical science, due to the fact that accounting behavior involves the interaction of people and accounting techniques. In most cases, the inadequate use of these accounting techniques by the researchers in their research activity conduct to deficient and potentially misleading results. Of course, the technical aspects of the discipline give accounting researchers a comparative advantage over social science researchers and enables them to produce explanations of behavior which they are more specifically capable of producing. But there are also cases in which due to lack of attention, the technical core research might lose the idea of “accounting”. Moreover, neglecting the “accounting” specificities in the process of research, could even lead the classification of the research in one of the social sciences or other disciplines. In order to gain credibility, academic accounting researchers may even neglect the technical core of their subject, sometimes putting the reader in the difficult possession to fully interpret the significance of the results and the ways in which research on accounting and practice interrelate.

The main idea, and one in which we strongly believe, is that accounting research should be founded on the discipline’s technical core.

104 4. Management Accounting – a case study on the Romanian society In terms of methods and means we have gathered our own data for the research analysis process, making a case study on Romania. The case study was aimed to provide pertinent answers to the following question: “How does management accounting fit into firms’ political strategy?” and in this matter we have used both questioners and interviews on a number of 60 adult individuals working in five Romanian firms, during the year 2011. The results were gathered in December 2012, and were interpreted until the end of January 2012. Our case study aimed to identify whether accounting plays a role in a firm’s political strategy in Romania. The idea of our case study came from a similar case study that we have read before starting our enquiry, and was done by Derek Johnston and Denise A. Jones, being published in the paper “How does accounting fit into a firm’s political strategy?” (Derek Johnston, Denise A. Jones, 2006). In their paper Derek Johnston and Denise A. Jones investigated as well whether accounting plays a role in a firm’s political strategy, but they specifically wanted to know whether there is a relation between lobbying expenditures and incentives to lobby to influence accounting standard setting.

However, we were interested in our paper to find out the opinion of people working in the interior of a firm in order to see their perception about the role and importance of management accounting and if there can be found a connection between management accounting and a firms’ political strategy. In order to gather valid and useful information we have used both questioners and interviews, and our subjects were a number of 60 adult individuals working in five firms mainly focused on accounting activities. The questioner had three parts: the first part of the questioner referred to the role and importance of management accounting in their firm; the second part of the question emphasized the coherence of accounting laws in Romania; the third part took into account the place of management accounting into the firm’s political strategy. The questioner stared with a theoretical part, in which, in order to start from the same ground, we have provided our subjects with a basic image of what they should understand by accounting, management accounting, policy, and other important terms related to the accounting field. From the total of the respondents questioned and interviewed, 65% were men and 35% were women.

Moreover, more than 70% of them were already in the accounting field for over fifteen years, 20% of them for less than ten years and only 10% of them for less than five years. In terms of educational background, 80% of them had an economic background, and from this 80% around 20% had, in addition, a law background as well. In terms of results, due to the fact that we were interested in doing a research analysis on three pillars, we have discovered the following: • Role and importance of management accounting in their firm: More than 80% of the respondents believe that the key element in a firm is a correct and appropriate management accounting. Management accounting should be forward looking and not historically looking; should support decisions based on a model, rather than on a case research; it is mostly addressed to the managers, rather than to shareholders, creditors and public regulators; it is in most cases confidential, not being opened to public; it involves an informatics systems approach as well.

• Coherence of accounting laws in Romania:

Romanian accounting laws have the source in the accounting law framework of the European Union. From the total of respondents, 75% of them believe that accounting laws are incoherent and due to their rapid change in some moments are not easy to follow or assimilate. • Place of management accounting into the firm’s political strategy: According to our study, 75% of the respondents believe that management accounting has a top position in a firm’s political strategy.

Moreover, we considered very useful to state some aspects regarding the accounting reform evolution in Romania.

The Romanian accounting reforms generated considerable debate in the national and international literatures.

According to Ionaşcu et al. (2007) the process of accounting regulation was from the beginning a public one, deriving from a legislative process where the Ministry of Finance is the main actor (Ionaşcu et al., 2007).

The Romanian accounting system confronted itself with two main stages, the first one based on the French code law accounting and the second stage based on the Anglo Saxon one, focused on IFRS. Both stages have attracted both critics and adepts (see Roberts, 2000; Bunea, 2006; Ionaşcu et al., 2007; Matiş, D., Mustaţă, R. and Fekete, S., 2006; Feleagă, N., 1992; Farcane, N. and Megan, O., 2006; Delesalle, F.E. and Delesalle, E., 2000). 5. Conclusions All in all, our study focuses on the advantages, limitations, and possible applications of management accounting in Romania. The study aimed to show the existing connections between the Romanian accounting evolution and the accounting evolution worldwide. The main ideas are as follows: the Romanian accounting environment is still governed by insecurity and inconsistency, but it takes these figures from the general European Union economic environment; management accounting in Romania is seen as one of the major elements in the accounting system of a form, due its privileged position both to guide and to influence decisions taken at the management level; according to the national and international literature, the general tendencies of researchers to gain credibility threw empirical studies generated far more discussions and contradictions in terms of the real role of accounting and if this discipline should be 105 seen more as a social science or better as a technical science. The aspects concerning the Romanian accounting system have been a subject of debate for several decades, and also the theme concerning management accounting has been preferred by several researchers. However, we strongly believe that in terms of research far more analysis could be done, especially in the field of management accounting and its role in a firm. The case of Romania, the one that we have discussed in our research paper, could be furthermore analyzed and developed, due to the fact that our country is still in the process of adapting itself to the major accounting changes that take place nowadays. References [1] Anthony, R.N., 1975. Accounting for the Cost of Interest.

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