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Accounting for Managers: Interpreting Accounting Information for Decision Making


Author: Paul M. Collier

Publisher: Wiley;


Publish Date: April 22, 2003

ISBN-10: 470845023

Pages: 494

File Type: PDF

Language: English

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Book Preface

This book was motivated by the author’s experience in teaching accounting atpostgraduate level (MBA and MSc) at Aston Business School and in-house training provided for non-financial managers in many organizations to introduce them to the use of financial tools and techniques.

My own education as an accountant was aimed at achieving professional recognition and emphasized an uncritical acceptance of the tools and techniques that I was taught. It was only after moving from financial to a general management position in industry that I began to see the limitations and questionable assumptions that underlay these tools and techniques. When I returned to study later in my career, I was exposed for the first time to alternative paradigms from which to view accounting. This book is therefore as much a result of my practical experience as a producer and user of accounting information as it is a result of my teaching and training experience.

As accounting increasingly becomes decentred from the accounting department in organizations, line managers in all functional areas of business are expected to be able to prepare budgets, develop business cases for capital investment, and exercise cost control to ensure that profit targets are achieved. Managers are also expected to be able to analyse and interpret accounting information so that marketing, operations and human resource decisions are made in the light of an understanding of the financial implications of those decisions.

I was disappointed by the books available to support teaching and training because most books on accounting have a similar format that is accounting-centric: chapters typically cover accounting techniques rather than the types of decisions made by non-financial managers. The emphasis in those books, many of which are designed for people whose career aspirations are to become accountants, is on doing accounting rather than using accounting. This book has been written for the vast majority of postgraduate students and practising managers who do not want to become professional accountants. The book therefore has a practitioner-manager orientation.

The title of the book, Accounting for Managers: Interpreting Financial Information for Decision-Making, emphasizes the focus on accounting to meet the needs of managers. The material contained in the book stresses the interpretation (rather than the construction) of accounting information as well as a critical (rather than unthinking) acceptance of the underlying assumptions behind accounting. It is suitable for postgraduate and undergraduate students who are undertaking courses in accounting that do not lead to professional accreditation, and to practising non-financial managers who need a better understanding of the role of accounting in their organizations.

There is a focus in most accounting books on manufacturing organizations, perhaps because many of those books have been issued as revised editions for many years and have not adequately reflected the changing nature of the economies in the developed world. The growth of service businesses and the knowledge economy is not sufficiently explored in most accounting texts. This book uses examples, case studies and questions that are more equally balanced between the needs of organizations in manufacturing, retail and services. In most accounting books there is also insufficient attention to theory, particularly for postgraduate students who should have a wider theoretical underpinning of accounting as it is used in organizations. Theory should encourage the reader to enquire more deeply into the alternative theoretical positions underlying accounting as well as its social and behavioural consequences, both within their own organizations and in the wider society. This book therefore introduces the reader to some of the journal literature that is either fundamental to the role of accounting or is ‘path breaking’. The book is not intended to be deeply theoretical, but rather provides, through the ample references in each chapter, an accessible route for those who want to reach into the wider literature.

Accounting books are often inaccessible to those from non-English-speaking backgrounds, because of the complexity of the language used. Many of the examples and questions in typical accounting books rely on a strong knowledge of the nuances of the English language to interpret what the question is asking, before students can make any attempt to answer them. This book adopts a more plain English style that addresses the needs of European and Asian students.

Finally, the examples in most accounting books focus on the calculations that accountants perform to construct accounting reports, rather than on the interpretive needs of managers who use those reports. While some calculation questions are needed to ensure that readers understand how information is produced, the emphasis for the non-financial manager should be on critical understanding and questioning of the accounting numbers and of the underlying assumptions behind those numbers, and on the need to supplement accounting reports with non-financial performance measures and broader perspectives than satisfying shareholder wealth alone.

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