Managerial Accounting in UAE Organizations (overview of Past Traditional for current Practice)

Managerial Accounting in UAE Organizations (overview of Past Traditional for current Practice)

management accounting for decision making

This is a snippet view of the whole research project

Questionnaires Results

The results from the questionnaires indicate that organization in the UAE region utilizes different methods of management accounting for decision making. Some firms in the UAE region are observed to utilize marginal costing managerial accounting technique. In marginal costing, fixed costs are written off against the contribution. Below is an illustration of a marginal cost curve.

Source: Macintosh & Quattrone, 2010.

Some firms have been observed to employ target costing concept of management accounting.  This involves predicting the expected cost of products or services and using the projected costs to estimate the prices as well as revenue. Fly Emirate has been observed to utilize this form of costing. The graph below shows how Fly Emirates Employs target costing technique.

Source: Mowen, 2012.

Standard costing and budgetary costing are less applied as they are considered to be traditional management accounting techniques. They are observed to yield low returns among firms in the UAE. TQM is another management accounting widely applied by firms in the UAE. Application of Activity Based Management is seen to have been surpassed by TQM. Below is graphical representation of TQM application by Fly Emirates.

Source: Mukherjee, 2010.

It has also been observed that most organizations in the UAE region consider the benefits of the best opportunity foregone in their decision making process. This is because most organizations aim at selecting an opportunity that will maximize their process and therefore analyzing the benefits of foregone opportunities is crucial to them. The forgone opportunity should be scrutinized and compared to the realized opportunity. However some organizations fail to put this into consideration and argue that since the opportunities are to be foregone there would be no necessary reason to evaluate them (Joshi, 2007).

Questionnaires statistics also indicate that the management of most firms in the UAE frequently requests their employees for management accounting information. Employees are required to submit the expenses of the company in their digressions. From these submissions, the management then works out the costs of the whole organization through various managerial accounting techniques. Below is a graphical representation of Williamson’s model utilized by various organizations in cost approximation.

Source: Schwarz and Shulman, 2007.

Most organizations in the UAE have also been observed to be conscious of the external environment. Most organizations realign their policies, organizational structure, as well as management accounting techniques in relation to the external environment. External environment for firms has been highly volatile due to globalization. Globalization has modified the technological and competition environment by a great margin forcing firms to adjust their internal environments. The event chain diagram below shows how external environment for firms in UAE affect their internal planning.

Source: Bennett, Bouma & Wolters, 2012.

According to the responses in the questionnaires, it has been observed that most organizations in the UAE apply the management accounting knowledge of their employees extensively. Respondents to the questionnaires claim that their organizations utilize their management accounting information in their work environment. Most organizations in the UAE involve their employees in decision making process. Since management accounting is the backbone of decision making process in an organization, it is necessary for the organization to apply the management accounting knowledge of the employees. Employees ought to have management accounting skills for them to participate in the decision making process in organizations (Bennett, Bouma, & Wolters, 2012).