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The Objectives of Financial Accounting and Management Control

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Financial Accounting and Management Control

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

This chapter presents what the book is about, namely financial accounting and management control and how these two information systems are related as well as how their objectives conflict. The objective of financial accounting is to give owners and funders uniform and comparable information of the company’s value creation. Therefore there is a demand for uniformity in financial reporting. The management control system is used in the process of creating a competitive position for the company by providing information for strategic, tactical and operational decisions. This creates a demand for a unique design and use of the control system. The two information systems are thus designed and used for decision-making by different stakeholders with different information needs. The chapter provides an introduction to this fundamental conflict.

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Notes

  1. 1.

    For a general discussion about the role of accounting in the financial crisis starting in 2007–2008, see for example Magnan and Markarian (2011) and Kothari and Lester (2012). For a detailed discussion about the role of banks in financial crisis and especially the role of regulations, see for example Knutsen and Lie (2002) and O’Connor (2010).

  2. 2.

    According to Kam (ibid) the definition below can be found in “Accounting Terminology Bulletin No. 1, ‘Review and Resume,’ 1953, paragraph 9”.

  3. 3.

    Mintzberg (2000) provide an overview of the most influential strategy schools. Three of them—the design school (strategy as a process of conception), the planning school (strategy as a formal process) and the positioning school (strategy as an analytical process)—subscribe to the view that formal structures and processes are important in strategy work.

  4. 4.

    Most of the studies reviewed use the term “Management accounting” instead of “Management control”. We will discuss the implications of this in more detail in Chap. 2.

  5. 5.

    We believe that banks are especially interesting to study since there are few, if any, industries that are as highly regulated as the financial sector. Hence the tension, and possible conflict, between the demands for uniformity and the demands for uniqueness is ubiquitous in this context. Banks are also very much affected by the introduction of IFRS and new IT solutions. As mentioned, both of these trends have the potential to affect integration efforts (see for example Ewert and Wagenhofer 2007; Taipaleenmäki and Ikäheimo 2013).

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Authors and Affiliations

  1. Department of Business Studies, Uppsala University, Uppsala, Sweden

    Fredrik Nilsson & Anna-Karin Stockenstrand

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  1. Fredrik Nilsson
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  2. Anna-Karin Stockenstrand
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Nilsson, F., Stockenstrand, AK. (2015). The Objectives of Financial Accounting and Management Control. In: Financial Accounting and Management Control. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-13782-7_1

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