Topics: Costs, Cost accounting, Management accounting Pages: 32 (7603 words) Published: April 23, 2014
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Costing in new enterprise
A challenge for managerial accounting
researchers and practitioners
Krishan M. Gupta and A. Gunasekaran

Costing in new
Revised April 2004

University of Massachusetts-Dartmouth, North Dartmouth, Massachusetts, USA Abstract
Purpose – Faced with new wealth creation paradigm, triggered by technology and relentless globalization of markets, increasing number of companies are becoming knowledge-based enterprises. This paper aims to discuss the change in enterprise environment; evolution of performance and cost measures; and the challenges for managerial accounting researchers and practitioners in developing value-based costing and performance measurement systems (PMS). Design/methodology/approach – A conceptual discussion and approach are taken. Findings – Internet and e-commerce have changed forever the way companies conduct their businesses. Virtual enterprise and efficient supply chain management systems will shape the future of these enterprises. Organizations are trying to become agile enterprises with the help of strategic alliances of firms and integration using information technologies. Traditional performance and cost measures are no longer suitable for developing and managing enterprises in the so-called new environment. In order to remain relevant and to add value, cost and performance measures must be designed and systematically evaluated to reduce the often-unnoticed mismatch between strategic goals and operational tactics.

Research limitations/implications – Suggestions are presented for future research directions in managerial accounting areas that would address the requirements of new economy enterprises. Originality/value – Alerts managerial accounting researchers and practitioners to develop new costing and PMS taking into account the new enterprise environment. Keywords Accounting, Business environment, Accounting research Paper type Research paper

1. Introduction
Accounting has become the most intellectually challenging area in the field of management, and the most turbulent one. All these new accounting theories aim at turning the accounting data into information for management decision-making.

Peter Drucker

Accounting has always been used for decision-making, resource allocation, and operational control (Johnson and Kaplan, 1987). From the times of the Egyptian Pharaohs, to the European sea voyages to the East Indies, and the rapid industrialization of the late 19th century, accounting information was the managerial tool of choice for A preliminary version of this paper was presented at the Tenth Annual Conference of the American Society of Business and Behavioral Sciences, Las Vegas, 20-24 February 2003. The authors wish to thank the conference participants for their constructive and valuable suggestions.

Managerial Auditing Journal
Vol. 20 No. 4, 2005
pp. 337-353
q Emerald Group Publishing Limited
DOI 10.1108/02686900510592034



operational control. However, the external financial reporting aspects of accounting information systems became dominant and overshadowed its managerial role in the early 20th century. The accounting profession blossomed in size, scope, and stature along with its role as the state sanctioned sole purveyors of attested (reliable) financial information so necessary for the smooth functioning of our capital markets. However, during the last 20 years, the value and profitability of this attest function declined due to the evolution of alternate sources of relevant information, globalization, technology, and competitive forces (Elliott, 1992). At the same time, driven by the pressing need to provide relevant and timely information for strategic and...

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