EVOLUTION OF ESSENCE OF MANAGEMENT ACCOUNTING

Abstract

Although the term management accounting has been used around the world since the second half of the 20th century, and in Georgia, the scientists have been arguing about the essence of this phenomenon since about the 80s. Is it an independent science? Is it part of science that does not have an independent subject? This is pseudoscience, e.g., such a phenomenon does not exist at all and so on. The dispute is largely due to the reality of accounting science and practice in the specific countries. It would be a mistake to think of the management accounting as a novelty for the domestic economy. In the 1920s and early 1930s, the functions of accounting services were much broader than in the later years of Soviet rule. The accountant of that time was engaged both as in accounting and as in planning and analytical work. Along with development of the socialist economic system in the country and the strengthening of central planning, there was the gradual separation from the Accounting Service of the Planning and Financial Departments, with the transfer of part of the accounting authority to them. As a result, the activities of the accountant were actually reduced to the accounting of the facts of the economic life of the enterprise. As a result, the activities of the accountant were actually reduced to the accounting of the facts of the economic life of the enterprise. Historically, the development of management accounting in theory and practice has been accompanied by controversy. One of the issues to be discussed is the concept of management accounting: Or it is a field of economic work in the enterprise, which includes methods of reporting operations, analysis, planning, staff motivation, etc.; Or this activity may be limited to the functions of collecting and summarizing financial and non-financial information required by management; e.g., independent from economic analysis, planning, management, sociology, psychology, and etc. Examining the various sources of educational, methodological and scientific literature, you can find many definitions of management accounting, which indicates the lack of a unified methodological approach to the essence of management accounting. This is due to the uniqueness of the organizational basis for establishment of the management accounting system in each economic entity, which is largely determined by the characteristics of its activities and the requirements imposed on management by management information. With the development of technology and organization of production, with diversification of the products, improvement of organizational management structures, increased competition, the need for constant reduction of costs per unit of production, the organization’s management requires the new types of information generated through the management accounting subsystem. There have been used the several methods of obtaining the relevant literature, in particular the literature review is concept-oriented, or paradigm-oriented and not author-oriented: using a review of structured literature as a research method, this article addresses the following three research questions: How is the research on management accounting developing? What are the differences between modern accounting and accounting? What is the future of governance accounting, both in practice and in science? We identified the type of research and conducted the comprehensive literature search. The aim of the article is to explore and determine the evolution of the essence of management accounting, the key aspects of development. In the article is discussed the evolution of the development of management accounting, the distinguishing features between the accounting and management accounting, and understanding of the essence of management accounting is evaluated. Based on the bibliographic research and analysis of empirical materials, based on the opinions of experts, elaborated theoretical and materials, it was revealed that managerial accounting has its purpose, subject, objects, tasks and principles, which distinguishes it from accounting. In recent years, the term “management accounting” has become very popular, although there is still an ambiguous attitude in understanding its essence. The management accounting differs from the accounting primarily in that its data is intended not for external users (states, banks, business partners) but for internal “use”. The ultimate goal of management accounting is to help the manager make the right decisions. Therefore, if a simple (financial) accountant must strictly follow the reporting forms and instructions, then the management accounting specialist is free to choose the forms, methods and techniques of analysis, the main thing for him is to properly understand the essence of economic processes in the enterprise and give timely advice to the leader. Management accounting is nothing more than the management information support system. During the decades of its existence, the innate techniques and methods of management accounting have been developed and continue to develop, therefore, it has its own methodology. It can be described as the combination of two main subject areas: as a science; as a practical field of activity.