Management Accounting Practices in Large Irish Manufacturing Firms

Peter J. Claire* Introduction The purpose of this paper is to report the findings of a survey which collected information on management accounting practices used by Irish manufacturing companies. The results may be of interest to academics for three reasons. First, since we teach these techniques to our students, we should know something about the extent to which they are actually used in practice; second, the results, however tentative, should provide suggestions for continued research. The results can also be compared with previous surveys to identify trends in current management accounting practices, both in a national and international context. The results of this study should also be of relevance to a broader audience - specifically companies considering a change in their cost/ management accounting systems and practices. After all, awareness is the first step in effective change. This paper is divided into three sections. The first section details the research methodology used in this study. The second section presents the results which includes a brief comparison between the findings of this study and that of a prior survey carried out in December 1991 (Clarke, 1992). The concluding section of the paper provides a discussion of the findings and suggests areas for future research. Research Methodology Data on the management accounting systems used by Irish manufacturing firms were obtained in Summer 1995 by mailing a questionnaire to the leading manufacturing companies. The companies were chosen from the Business and Finance ( 1995) listing of Ireland's top 1,000 (manufacturing and non-manufacturing) companies. This listing ranks companies on the basis of annual turnover and both quoted and non-quoted companies are included in this study. It was decided not to target manufacturing companies outside this list since most, if not all, are likely to have annual turnover figures of less than 5 million. It is plausible to argue that larger companies are more likely to have more comprehensive management accounting systems than smaller companies because of their greater resources and management needs for such systems. Therefore, because of the sample selection process, it would not be appropriate to make generalisations about management accounting systems in manufacturing companies in Ireland. It was decided not to include financial, service, retail or exploration companies because manufacturing firms have different cost structures and face different cost management issues than nonmanufacturing companies. Through an arbitrary but logical classification process, the following three broad subject areas were investigated viz. (i) product costing systems, (ii) decision making techniques and (iii) standard costing systems. In addition, companies were requested to disclose some background data. The full questionnaire contained approximately forty questions on cost/management accounting practices and techniques. The postal questionnaire approach to the collection of data was chosen since mail surveys are relatively low in cost and can reach a widely dispersed sample simultaneously without the attendant problems of interviewer access (Kanuk and Berenson, 1975). Indeed, it is plausible to suggest that mail surveys tend to be more valid than interviews because they permit leisurely and thoughtful replies and subjects are less pressurised to respond than in face to face interviews. The questionnaire was addressed to the Chief Management Accountant in each company with an appropriate covering letter. Respondents were guaranteed complete confidentiality regarding the contents of their questionnaire and were offered a copy of the final paper and this was requested by over eighty percent the respondents. A followup letter was sent to the non-respondents of the initial mailing. A total of 221 responses were received, equivalent to a 43% percent response rate, but only 204 are included in the analysis here, as indicated in table 1. …