The money giants

Management accounting has come a long way over the past 100 years. From being considered lowly clerical work, often using female labour, it has become highly professionalised and is now an integral part of corporate operations. The thriving and vibrant practice and discipline is no longer primarily about number-crunching but also interacts with business strategy, marketing, planning, resource allocation, performance management, new technologies, evaluation and a variety of tasks central to the operations of all-conquering capitalist enterprises.

Contemporary Issues in Management Accounting reflects the changed, changing and contingent nature of management accounting research, practice and potentialities. It consists of 18 interdisciplinary chapters, each written by leading international scholars in the field.

Each contributor brings well-honed positivist, critical, reflective and behavioural perspectives to the chapters. The chapters integrate material from a range of social science disciplines, including sociology, systems and philosophy, to provide insights into the well-established and also the emerging practices and paradigms.

The 18 chapters locate established topics, such as performance management, budgeting, costing systems design and management control systems, within the emerging architecture of organisations. These are supplemented by topics that focus on emerging organisational challenges, such as environmental management accounting, network relations, integrated management accounting, knowledge management and digitisation. One of the chapters also provides a brief history of management accounting research and contains some dire warnings about future scenarios, especially as PhD students from the UK are relatively scarce.

Some of the chapters contain useful case studies. Each is well structured and extensively referenced, enabling the reader to pursue further reading.

While the book covers a large range of topics and issues, it is also notable for omissions. For example, economic globalisation is the new social and political force.

It is often repeated that 51 of the 100 largest economies in the world are corporations, making them the new masters of the universe. The turnover of companies such as Ford, General Motors or Wal-Mart is bigger than the gross domestic product of Greece, Poland, Hong Kong or South Africa. The world's top 100 transnational corporations have operations in 40 foreign countries on average. These account for 17 per cent of all the foreign sales in the world. Ford, Vodafone and General Electric alone hold about $877 billion (£446 billion) in foreign assets, giving them enormous political power. Their clout is shaped by global management accounting systems, co-ordination, planning, strategic focus and colonisation of political policymaking. Yet globalisation attracts little specific attention in the book, although some aspects are sprinkled in various chapters. The case study on the motion picture industry is interesting, but it is primarily focused on the US.

About 60 per cent of world trade consists of transfers within multinational corporations, giving them enormous scope for controlling markets and prices, moving capital and tax avoidance. Clearly, the finger is pointed at "transfer-pricing" practices and a variety of corporate strategies to increase global profits, but these also impoverish communities, especially in developing countries.

How do management accounting systems facilitate such activities? Are they embedded within accounting, organisational structures, strategies or something else? Are there any organisational and ethical concerns, or concerns about the nature of accounting education? Such issues receive little attention in the book.

Various chapters point out that there is considerable interdependence between management accounting practices, which are internal to the com-pany, and external financial reporting practices. The two are clearly interlinked. After major scandals, such as Enron and WorldCom, considerable attention is focused on the role of external financial reporting in organised looting. However, management accounting attracts little attention and, by default, management accounting practices are exempt from public scrutiny. Overall, the role of management accounting in scandals attracts little attention in the book.

The above omissions may be due to the history and nature of management accounting research, its reward systems and general difficulty of getting access to organisations and key actors. They pose challenges to management accounting thought, practice and research. Nevertheless, this is an excellent book that deserves to be on the reading lists for students on final-year undergraduate degrees, as well as graduate, PhD and professional courses.

Prem Sikka is professor of accounting, Essex University.