Financial Accounting and Management Control: The Tensions and Conflicts Between Uniformity and Uniqueness (Contributions to Management Science)

This book is about financial accounting and management control and how these two information systems are related as well as how their objectives conflict. At the most fundamental level, the objective of financial accounting is to provide owners and funders with comparable information on a company's value creation. The aim of management control, on the other hand, is to give the board, senior executives and employees unique information for strategy formulation and implementation. One often-mentioned negative effect is the risk of financial accounting affecting management control design and use, making it less relevant for decision-making at the company level. The book provides an analysis of the complex relationship between financial accounting and management control. The analysis is based on theoretical reasoning as well as several examples of how financial accounting standards affect not only the annual report but also the control system. An interesting, and perhaps unexpected conclusion is that management control seems to affect financial accounting almost as much as financial accounting affects management control. These complex relationships, which can influence the design and use of both financial accounting and management control, are discussed in detail in this book. (Publisher) Preface; Author Presentation; Contents; Chapter 1: The Objectives of Financial Accounting and Management Control; 1.1 Introduction; 1.2 A Stakeholder Perspective; 1.3 Stakeholders and Value Creation; 1.4 Management Control and the Demand for Uniqueness; 1.5 Financial Accounting and the Demand for Uniformity; 1.6 The Tensions and Conflicts Between Uniformity and Uniqueness; 1.7 Purpose of the Book and Intended Readership; 1.8 A Note on Methodological Considerations; 1.9 The Organization of the Book; Chapter 2: Theoretical Foundations; 2.1 Introduction; 2.2 The ``Relevance Lost Debate 2.3 Introducing a New Financial Accounting Regime in the EU2.4 Models and Frameworks for Analysing and Managing Relationships Between Accounting Systems; 2.4.1 The Performance Pyramid; 2.4.2 The Balanced Scorecard; 2.4.3 Activity-Based Costing; 2.4.4 The Corporate Responsibilities Continuum; 2.4.5 The Integrated Reporting Framework; 2.4.6 The Taipaleenmäki and Ikäheimo Framework; 2.5 Our Theoretical Framework; 2.5.1 Demands for Uniqueness; 2.5.2 Demands for Uniformity; 2.5.3 Possible Tensions and Conflicts Between Uniformity and Uniqueness; 2.6 Conclusions and Implications 4.4 Reporting and Analysis4.4.1 Segment Reporting and Effects on Reporting and Analysis; 4.4.2 Goodwill Accounting and Effects on Reporting and Analysis; 4.4.3 Business Combinations and Effects on Reporting and Analysis; 4.4.4 Financial Instruments and Effects on Reporting and Analysis; 4.5 Rewards and Compensation; 4.5.1 Segment Reporting and Effects on Rewards and Compensation; 4.5.2 Goodwill and Effects on Rewards and Compensation; 4.5.3 Business Combinations and Effects on Rewards and Compensation; 4.5.4 Financial Instruments and Effects on Rewards and Compensation Chapter 4: How Financial Accounting Affects Management Control4.1 Introduction; 4.2 Strategic Planning; 4.2.1 Segment Reporting and Effects on Strategic Planning; 4.2.2 Goodwill Accounting and Effects on Strategic Planning; 4.2.3 Business Combinations and Effects on Strategic Planning; 4.2.4 Financial Instruments and Effects on Strategic Planning; 4.3 Budgeting; 4.3.1 Segment Reporting and Effects on Budgeting; 4.3.2 Goodwill Accounting and Effects on Budgeting; 4.3.3 Business Combinations and Effects on Budgeting; 4.3.4 Financial Instruments and Effects on Budgeting Chapter 3: Financial Accounting Standards: Some Examples3.1 Introduction; 3.2 Segment Reporting; 3.2.1 Background; 3.2.2 Tensions and Conflicts Between Uniformity and Uniqueness; 3.3 Goodwill Accounting; 3.3.1 Background; 3.3.2 Tensions and Conflicts Between Uniformity and Uniqueness; 3.4 Business Combinations; 3.4.1 Background; 3.4.2 Tensions and Conflicts Between Uniformity and Uniqueness; 3.5 Financial Instruments: Classification and Measurement; 3.5.1 Background; 3.5.2 Tensions and Conflicts Between Uniformity and Uniqueness; 3.6 Conclusions and Implications Front Matter....Pages i-xi The Objectives of Financial Accounting and Management Control....Pages 1-16 Theoretical Foundations....Pages 17-50 Financial Accounting Standards: Some Examples....Pages 51-75 How Financial Accounting Affects Management Control....Pages 77-110 Concluding Reflections....Pages 111-127 Back Matter....Pages 129-138