Evaluating the Appropriate Scope of Accounting Information by Using the Integrated Contingency Theory Framework

Abstract

Various new management accounting systems (MAS) have emerged during the past two decades. However, the traditional MAS continue to be used widely. It seems that it is not the use of certain systems that drives the better performance. Instead, the fit between the organizational, environmental and managerial contingencies and MAS seems to affect performance positively. Thus, it should be carefully evaluated what kind of accounting information would be most appropriate for the organization.

This research examines whether the integrated contingency framework can be used for evaluating the accounting information appropriateness and thus the need for MAS development. This research is conducted as a case study research. First, 6 managers in three organizational levels are interviewed in order to determine the current and appropriate scope level of accounting information. Second, the gap between these levels is analysed and suggestions are made about the need for development. Third, the results of the interviews are tested in the top management level using the performance measurement questionnaire (PMQ). The total amount of respondents is 7, the response rate being 50%. The PMQ results are tested statistically using the Spearman’s correlation coefficient and some additional methods of quantitative analysis.

As a result of the semi-structured theme interviews, the current and appropriate scope of accounting information is determined and a gap between them detected. These results are tested with the PMQ. No correlation is found between the appropriate scope and the importance of the accounting information. The results show, however, that the determination of the appropriate scope might not be beneficial alone. Instead, it should be examined what kind of a combination of accounting information would be the most appropriate. In this case, both narrow and broad scope information is considered to be important.