ADVANCED MANAGEMENT ACCOUNTING TECHNIQUES
INTRODUCTION
In the past two decades, the business environment has changed dramatically. Trade liberalization and advancements in manufacturing and information technologies have significantly intensified competition, both in the domestic and the international markets (Atkinson et al., 1997). In order to remain competitive and survive, organizations need to be agile and responsive to market changes, which requires them to constantly review and revise their strategies (Yakou and Dorweiler, 1995; Mia and Clarke, 1999). The changes in the manufacturing strategies and processes often necessitate appropriate changes in their management accounting practices to take into account of the changing production cost structure. Organizations undertake structural changes which include information and communication networks such as Management Accounting and Control Systems (MACSs) to achieve targeted business performance (Williams and Seaman, 2002). MACS is defined as multidimensional composite of planning and controlling subsystems which aims to provide information for managerial decision making and to enhance an organization’s performance (Birnberg and Snodgrass, 1988).
For decades, scholars and practitioners have shown a considerable amount of interest in issues related to appropriate management accounting practices for manufacturing firms in the advanced manufacturing environment. Numerous debates have been held questioning the capability of the traditional management accounting techniques (TMATs) in providing adequate, relevant, timely and accurate information to management for planning, control and decision-making purposes in the new manufacturing environment (Kaplan, 1984; Johnson and Kaplan, 1987; Cooper and Kaplan, 1988, Drury and Tayles, 1995, Bjørnenak and Olson, 1999).
The remainder of this paper is organised in the following manner. Section 2 provides development of the theoretical framework that depicts the relationships under investigation. Section 3 presents the methodology and description of sample. The descriptive statistics and results of the empirical findings follow in Section 4. Finally, discussion and conclusions are presented in Section 5.
THEORETICAL FRAMEWORK
Market competition has become more global-based as a result of trade liberalisation under World Trade Organization (WTO) through multilateral trading system. Adoption of advanced manufacturing technologies (AMTs) has revolutionized manufacturing processes. This in turn leads to permanent changes in the production cost structure which include significant increase in overhead costs and decrease in labor costs. Advances in Information and Communications Technology (ICT) have changed the manner in which data and information are being collected, measured, analyzed and disseminated within and between organizations (Atkinson et al., 1997). In order to cope with the turbulence and uncertainty in the marketplace, it has been argued that organizations need to equip themselves with appropriate responses to the threats and opportunities, and ensure that they design and use appropriate control systems for this purpose (Khandwalla, 1972; Khandwalla, 1977; Burchell et al. 1980).
MACSs play a vital role in monitoring the strategic progress of a firm through a feedback information system. Hence it is imperative that organizations implement relevant changes in the system to ensure the system continues to provide relevant and timely information to managers. The growing concern among accounting professionals and academics on the adequacy of the TMATs in meeting the current information needs of the firms, has led to a number of “new or claimed to be new” or advanced management accounting techniques (AMATs), such as new product costing techniques, strategic cost analysis, quality management and others (Libby and Warehouse, 1996). These new costing approaches are argued to result in more accurate tracing of costs to products and thus should result in improved decisions. The traditional volume-based approach of allocation of production overhead costs to products and services is criticized as over simplistic and does not reflect the complexity of products (Kaplan, 1984).
The TMATs such as full costing, standard costing, job order costing, and process costing are still commonly used by companies (Waldron and Everett, 2004). Today, advanced management techniques such as activity based costing, activity based management, target costing, kaizen costing, value added accounting, backflush costing and life cycle costing, which are part of MACS change, are gaining increased attention. These techniques have benefits and advantages but different techniques might be suitable for certain circumstances (Waldron and Everett, 2004). However, empirical research has shown that the traditional management accounting practices are still widely used in firms, possibly due to the lack of knowledge of the other alternatives and the high financial costs of changing the existing costing systems (Johnson and Kaplan, 1987; Drury and Tayles, 1995; Chenhall and Langfield-Smith, 1998). Companies surveyed in United Kingdom (UK) and United States of America (USA) (for example Drury et al., 1993 and Cohen and Paquette, 1991) used standard costing systems with an adoption rate of more than 80%. In more recent studies carried out in Australia New Zealand
Changes in the Manufacturing Environment
New manufacturing strategy often involves the adoption of new technologies, and changes in the organisational structures and management practices, such as Just-in-Time (JIT) and Total Quality Management (TQM) that may result in radical changes in the way business is conducted. AMT applications include applications such as computer integrated manufacturing (CIM), computer-aided design (CAD), computer-aided engineering (CAE), flexible manufacturing systems (FMS), material requirements planning (MRP I), manufacturing resource planning (MRP II), and Enterprise Resource Planning (ERP). Drury and Tyles (1995), reveal few factors that influence the sophistication of the costing system employed, which are the degree of competition faced, the diversity of products manufactured, the number of products produced and the proportion of overhead costs that cannot be directly assigned to products. As diversity increases, the level of distortion reported by conventional system that relies on simplistic product costing systems will also increase. Similarly, Zimmerman (2003) argues that organizational innovations (TQM, JIT, Activity-based Costing & Balance Scorecard, etc) have led to advanced cost system. For example, JIT philosophies, which are increasingly adopted in the manufacturing sector, incorporate flexible manufacturing systems and greater automation, increasing emphasis on quality and direct labor is becoming smaller as a proportion of total cost (Dugdale, 1990).
As firms production become more automated, direct labor is increasingly engaged in setup and supervisory functions (rather than performing the work on the product) and no longer represents a reasonable surrogate for resource demands by products. Labor frequently works on several different products at the same time which makes it difficult to assign labor hours intelligently to products (Coopers and Kaplan, 1988). As indirect costs becoming more important and increasingly larger, they need to be traced more accurately to products if strategic decisions are to be based on the ‘best’ information. For this purpose, activity costing could be one of the best solutions as it aims to achieve better product costing by cutting across conventional, functional boundaries.
Computer-integrated manufacturing (CIM) system automates manufacturing through integrating the manufacturing processes by using ICT to allow information flows between people and equipment. Activities including product design, development, engineering, manufacturing, inventory control, marketing, sales, field support, and service can be fully integrated and automated. CIM can significantly improve quality, reliability and manufacturing flexibility (Kaplan, 1986; Schroder and Sohal, 1999). Kaplan (1986) argues that the manufacturing flexibility attribute allowed for in CIM enables such IT investment a longer useful life than traditional manufacturing process investments. Furthermore, investments in AMT offer other benefits, tangible and intangible, such as reduced inventory levels, savings in floor space, lower throughput and lead times, and acceleration of the learning phase.
Implications on Management Accounting Practices
Generally, the fundamental objectives of management accounting in an advanced manufacturing environment remain the same as in the traditional manufacturing setting which are to cost products, value inventory, measure performance, and make investment decisions (Jeans and Morrow, 1989). However, while the TMATs may be still useful under certain circumstances, the new manufacturing environment has posed new challenges to these systems. The drastic changes in today’s competitive business environment and advancements in manufacturing technology have a number of implications for accounting. Clarke (1995) identifies five implications for accounting: changes in cost patterns and cost behavior, reduced inventory and reduced emphasis on inventory accounting, declining relevance of standard costing systems, changing nature of capital investments, and the increasing importance of non-financial performance indicators. These implications point toward the need for new management accounting practices to meet the challenges of the new manufacturing environment.
In this intensely competitive environment, accurate information about product costs and a performance measurement system that allows effective monitoring of a firm’s strategy are critical for survival and sustained profitability. Automating the manufacturing processes requires large-scale capital investments and as a consequence, drastic changes in the firm’s production cost structure; costs are shifting from being mostly variable to mostly fixed, and the amount of direct labor shrinks significantly, while costs for indirect and highly skilled labor increase significantly. The growing amount of fixed costs requires the management to have a better understanding of the cause-effect relationship between resource consumption and level of activity. Thus, the idea of using multiple overhead application rates, such as those used in an Activity-Based costing (ABC) system is gaining popularity (Cooper and Kaplan, 1988).
AMT adoption leads to changing manufacturing operations and information needs, and changes to the traditional MACS are required to meet those needs (Johnson and Kaplan, 1987). MACS play an important role in providing the information needed for companies to formulate strategies to meet the rapid changes in the business environment. New management accounting practices, such as ABC and non-financial performance measurement indicators, can enhance the quality and relevance of information needed by management. When environment changes and the level of AMT adopted increase, managers are expected to make a greater and more frequent use of management accounting information for decision-making. It is conjectured that a higher level of AMT adoption is associated with a more extensive use of new costing systems, such as ABC, and non-financial performance measure indicators.
Based on the foregoing discussion, the following are the objectives of this paper:
1. To examine the level of advanced management accounting practices in manufacturing companies operating in Malaysia
2. To examine the relationships between product variety, complexity of production process, and overhead expenses and usage of advanced management accounting practices.
3. To examine the relationship between level of competition and usage of advanced management accounting practices.
4. To examine the relationship between company size and usage of advanced management accounting practices.
RESEARCH METHODOLOGY AND DESCRIPTION OF SAMPLE
Questionnaires were mailed out to 500 manufacturing firms randomly selected from the 2004/2005 Federation of Malaysian Manufacturers (FMM) Directory. A total of 75 usable responses were received, that represents a response rate of 15%. The respondents comprised the senior level managers, including Chief Executive Officers, General Managers and Management Accountants. To check for non-response bias, two procedures, similar to those utilized by Williams and Seaman (2001), were used. First, the final sample was dichotomized according to size based on sales turnover. Response bias did not appear to be problematic since the cross-correlation for all variables in the two groups were not significantly different. Second, the final sample was divided into two groups: early and late responses. Similar to the first procedure, no significant differences were found.
The respondents’ background is summarized in Table 1. Thirty percent of the respondents were financial controllers, 28.8% were accountants and 41% of them were other managers. A majority of the respondents were male (65.8%) and have a working experience of more than 3 years (61.1%). Fifty two percent of them had completed a Bachelor’s degree, with 15% holding a Master’s degree and 41% having a professional qualification.
Table 1: Background of Respondents
| | Frequency | % |
| Position: | | |
| Financial Controller | 22 | 30.1 |
| Management Accountant | 3 | 4.1 |
| Accountant | 18 | 24.7 |
| Others | 30 | 41.1 |
| Gender: | | |
| Male | 48 | 65.8 |
| Female | 25 | 34.2 |
| Period in Position: | | |
| Less than 1 year | 12 | 16.7 |
| 1 – 3 years | 16 | 22.2 |
| More than 3 years | 44 | 61.1 |
| Qualification*: | | |
| Bachelor | 38 | 52.1 |
| Master | 11 | 15.1 |
| Professional | 30 | 41.1 |
| Others | 12 | 16.4 |
*respondents may have more than one qualifications
The instrument for measuring intensity in competition was a modified version of the composite scale for measuring competitive pressure in Khandwalla (1977), as well as in Libby and Waterhouse (1996) and Mia and Clarke (1999). This measure consisted of eight items for rating the intensity of competition in price, product range, quality, new product introduction, advertising and promotion, technological change, marketing distribution and changes in government regulation or policy on a scale ranging from 1 (very low) to 7 (very high). In this study, the measures for TMAT and AMAT were adopted from Waldron and Everett (2004). The TMATs were represented by four techniques: full costing, standard costing, job order costing and process costing. The AMATs comprised thirteen techniques: Activity-Based Costing (ABC), Activity-Based Management (ABM), Target Costing (TC), Kaizen Costing (KC), Value Added Accounting (VAA), Cost of Quality (COQ), Economic Value Added (EVA), Life Cycle Costing (LCC), Target Cost Planning (TCP), Cost Modeling (CM), Strategic Management Accounting (SMA), Throughput Accounting (TA) and Backflush Costing (BC)
RESULTS AND DISCUSSION
Profile of Firms
Table 2 shows the profile of the sample firms. A bigger proportion of the sample firms were in the electrical and electronics (14.7%), chemical (17.3%), rubber and plastics (20%) and metal industries (13.3%). Forty percent of the firms had an annual sales turnover of more than RM100 million, 22.7% with an annual sales of more than RM50 million and less than RM100 million, while the rest of the firms recorded sales turnover of less than RM25 million. In terms of firm ownership, a majority (68%) of the firms was locally owned, 30.7% were owned by foreigners and only one firm was a joint venture. More than half of these firms (62.5%) stated an owner’s equity of less than RM50 million.
Table 2: Profile of Companies
| | Freq | % |
| Industry: | | |
| Electrical and electronics | 11 | 14.7 |
| Chemical | 13 | 17.3 |
| Rubber and plastic products | 15 | 20.0 |
| Metal | 10 | 13.3 |
| Food and beverage | 3 | 4.0 |
| Textiles and clothing | 2 | 2.7 |
| Wood products | 1 | 1.3 |
| Others | 20 | 26.7 |
| Annual Sales: | | |
| < RM5 million | 13 | 17.3 |
| RM5 million – RM24 million | 15 | 20.0 |
| RM 25 million – RM 100 million | 17 | 22.7 |
| > RM 100 million | 30 | 40.0 |
| Ownership Structure: | | |
| Local (> 50% local) | 51 | 68.0 |
| Foreign (> 50% foreign) | 23 | 30.7 |
| Joint venture | 1 | 1.3 |
| Shareholder’s Fund: | | |
| < RM 2.5 million | 12 | 16.7 |
| RM 2.5 million – RM 50 million | 33 | 45.8 |
| RM 51 million – RM 100 million | 10 | 13.9 |
| > RM 100 million | 17 | 23.6 |
Management Accounting Practices
In this section, management accounting practices and their relations with certain contextual factors will be discussed. Descriptive analysis and the Spearman correlation were used to examine frequencies and the relationships between the contextual factors and management accounting practices.
Present and Past Usage of Management Accounting Techniques
Table 3 presents the results related to the present usage of management accounting techniques and the usage of the techniques during the past three years. With regards to the TMATs, the table indicates that standard costing was the most commonly used technique during the present period (68.3%) as well in the past (36%), which means that there was an increase of 33.3% in its usage rate. The full costing comes second with the present usage of 38.7% and the past usage of 22.7%, an increase of 16%. Both the process costing and the job order costing techniques were moderately used during the present and the past periods.
Among the AMATs, ABC showed the highest change in the usage rate (21.3%) with a past usage and present rates of 6.7% and 28%, respectively. All other AMATs also showed increases in the present rate of usage compare to those in the past. Among those that showed notable increase in their present usage rates compared to the past rates are VAA (10.7%), TG (9.4%), COQ (9.4%), and EVA (9.3%). These results suggest that there have been an increasing level of awareness among the manufacturing firms about these AMATs. The results also indicate that while there has been an increasing application of certain AMATs, the emphasis on the TMATs remains equally important.
Product Variety and AMATs
Table 4 shows the frequency distribution for product varieties. Only 29 respondents provided the data related to product varieties. Out of the 29 responses received for this question, 16% of them had 1 to 50 types of products while 22.7% of them had more than 50 types of products.
To investigate all the relationships, a cross tabulation was conducted and the Spearman correlation results are shown in Table 5. The purpose of research objective 2 is to examine whether there is a relationship between product variety and usage of AMATs. The results indicate that product variety was not statistically related to the usage of AMATs. It is interesting to note that the results indicate that product variety was not related to TMATs either.
Table 3: Past and Present Usage of Management Accounting Techniques
| Management Accounting Techniques | Past Usage | Present Usage | Diff. | ||
| Freq | % | Freq | % | % | |
| Traditional | | | | | |
| Full Costing (FC) | 17 | 22.7 | 29 | 38.7 | 16 |
| Standard Costing (SC) | 27 | 36.0 | 52 | 69.3 | 33.3 |
| Job Order Costing (JOC) | 5 | 6.7 | 16 | 21.3 | 14.6 |
| Process Costing (PC) | 6 | 8.0 | 19 | 25.3 | 17.3 |
| Advanced | | | | | |
| Activity-Based Costing (ABC) | 5 | 6.7 | 21 | 28.0 | 21.3 |
| Activity-Based Management (ABM) | - | - | 6 | 8.0 | 8.0 |
| Target Costing (TG) | 1 | 1.3 | 8 | 10.7 | 9.4 |
| Kaizen Costing (KZ) | - | - | 3 | 4.0 | 4.0 |
| Value Added Accounting (VAA) | 1 | 1.3 | 9 | 12.0 | 10.7 |
| Cost of Quality (COQ) | 1 | 1.3 | 8 | 10.7 | 9.4 |
| Economic Value Added (EVA) | - | - | 7 | 9.3 | 9.3 |
| Life Cycle Costing (LCC) | 2 | 2.7 | 3 | 4.0 | 1.3 |
| Target Cost Planning (TCP) | 1 | 1.3 | 3 | 4.0 | 2.7 |
| Cost Modeling (CM) | 3 | 4.0 | 9 | 12.0 | 8.0 |
| Strategic Mgmt. Accounting (SMA) | 1 | 1.3 | 6 | 8.0 | 6.7 |
| Throughput Accounting (TA) | - | - | 5 | 6.7 | 6.7 |
| Backflush Costing (BC) | - | - | 3 | 4.0 | 4.0 |
Note:
1. The following definitions were used: “Past = 3 -5 years ago, Present = in use this year”.
2. Respondents could use more than one accounting techniques. The total counts for each period could exceed the total number of responding companies, and percentages total over 100.
3. The difference represents the change between the past and the present percentages.
Table 4: Frequency for All Product Varieties
| Number of Products | Frequency | Percent (%) |
| 1 – 50 | 12 | 16 |
| 51 – 250 | 6 | 8.0 |
| 251 – 500 | 3 | 4.0 |
| 501 – 1000 | 6 | 8.0 |
| > 1000 | 2 | 2.7 |
| Total | 29 | 38.7 |
Table 5: Spearman Correlations
| Factors Influencing Usage of AMATs | Advanced Management Accounting Techniques | Traditional Management Accounting Techniques |
| Product variety | -0.359 | -0.115 |
| Overhead as a portion of overhead expenses | -0.169 | -0.051 |
| Complexity of the production process: | | |
| Continuous | 0.100 | -0.040 |
| Line | 0.389*** | 0.140 |
| Batch | 0.147 | 0.162 |
| Job shop order | -0.086 | 0.245** |
| Perceived competition: | | |
| Product price | 0.000 | -0.128 |
| Product range | -0.298** | -0.084 |
| Product quality | 0.010 | 0.080 |
| New product introduction | -0.276** | -0.027 |
| Technological change | -0.080 | -0.080 |
| Changes in government regulation | -0.258** | -0.219* |
| Advertising and promotion | -0.222* | -0.053 |
| After sales service | 0.052 | 0.130 |
| Total sales turnover | -0.030 | -0.010 |
Significance: *** ≤ 0.01, ** ≤ 0.05, * ≤ 0.10
Overhead Portion AMATs
Table 6 shows the frequency distribution of overhead costs portion from the total manufacturing costs. The table indicates almost half (49.3%) of the firms had an overhead portion of less than 25% of the total manufacturing costs, 35.6% of them had between 25% to 50% of overhead portion and 15.1% had more than 50% of overhead portion. The Spearman correlation between overhead portion and AMATs shown in Table 5 shows no significant relationship between these variables.
Table 6: Portion of Overhead Costs from Total Manufacturing Costs
| Overhead Portion | Frequency | Percentage (%) |
| Less than 25% | 36 | 49.3 |
| Between 25% - 50% | 29 | 35.6 |
| Between 50% - 75% | 9 | 12.3 |
| More than 75% | 2 | 2.8 |
Complexity of Production Process and AMATs
Another factor that might affect management accounting practices is complexity of manufacturing of production process. Complexity of production process was defined on a scale from the least complex production system, continuous production process, followed by line, batch and to the most complex, job shop production process. It is argued that as complexity of production processes increases, the more advanced the management accounting techniques used. Table 7 shows that 32% of the firms used continuous, 32% used line, 54.7% used batch and 46.7% used job shop production processes.
Table 7: Frequency for Production Types
| Production Type | In Use | Not In Use | ||
| N | % | N | % | |
| Continuous | 24 | 32.0 | 51 | 68.0 |
| Line | 24 | 32.0 | 51 | 68.0 |
| Batch | 41 | 54.7 | 34 | 45.3 |
| Job Shop | 35 | 46.7 | 40 | 53.3 |
Table 5 indicates significant positive relationships between line production process and AMATs and also between job shop order production process and TMATs. These results however contradict the prediction that usage of AMATs is related to the more complex production processes.
Competition and AMATs
Table 8 displays the descriptive statistics for perceived market competition. It shows that the overall level of perceived competition was moderate with a mean of 3.91. Perceived competition due to product price was perceived as the most intense with a mean of 5.43, followed by product quality with a mean of 4.77. The least intense was perceived competition due to changes in government regulation with a mean of 2.68.
Table 8: Descriptive Statistics for Perceived Market Competition
| Perceived Competition: | Mean | Min | Max | SD |
| Overall | 3.91 | 1 | 7 | 1.14 |
| Product price | 5.43 | 1 | 7 | 1.67 |
| Product range | 4.31. | 1 | 7 | 1.20 |
| Product quality | 4.77 | 1 | 7 | 1.73 |
| New product introduction | 3.60 | 1 | 7 | 2.02 |
| Technological change | 3.33 | 1 | 7 | 1.69 |
| Changes in government regulation | 2.68 | 1 | 7 | 1.41 |
| Advertising and promotion | 2.70 | 1 | 7 | 1.94 |
| After sales service | 3.30 | 1 | 7 | 1.86 |
Table 5 shows AMATs are significantly and negatively related to perceived competition due to product range, new product introduction, changes in government regulation and advertising and promotion. TMATs were negatively significantly related to only one factor, changes in government regulation. These results imply that usage of AMATs does not necessarily correlate with higher level of perceived intensity in market competition related product range, change in government regulation and, advertising and promotion. In fact, the negative coefficients suggest that as perceived competition as a result of those factors increases, usage of AMAT might be lower.
Size and AMATs
Table 8 shows that the distribution of the firms according to sales turnover. Thirty seven percent of the firms recorded annual sales turnover of less than RM25 million, 22.7% with annual sales turnover between RM25 million to RM100 million, and 40% with annual sales of more than RM100 million.
Table 8: Frequency for Firm Size (Sales Turnover)
| Sales Turnover | N | % |
| < RM5 million | 13 | 17.4 |
| RM5 – RM25 million | 15 | 20.0 |
| RM25 – RM100 million | 17 | 22.7 |
| RM100 – RM250 million | 14 | 18.7 |
| > RM250 million | 16 | 21.3 |
Research objective 6 seeks to explore whether firm size is related to the use of AMATs. Larger firms with bigger capital and other resources are more likely to use AMATs as these advanced techniques are usually expensive and require large capital outlay. The Spearman correlations show an insignificant correlation between both variables, which suggest that size and AMATs’ usage were not related.
DISCUSSION AND CONCLUSIONS
The objectives of the study are to investigate change in usage of AMATs and to explore whether AMATs usage is related to product variety, complexity in production processes, overhead portion, perceived competition and firm size. The findings of this study indicate that the present usage rates of the AMATs among Malaysian manufacturers were higher compare to those of the past three years. However, the changes are relatively small despite the increasingly competitive business environment. The results indicate Activity-Based Costing had the highest rate of change, followed by Value Added Accounting, Target Costing and Economic Value Added. These results suggest that there have been an increasing level of awareness among the manufacturing firms about these AMATs. It is interesting to note that the rate of TMATs usage has also increased during the present period compared to those in the past The results also indicate that while there has been an increasing application of certain AMATs, the emphasis on the TMATs remains equally important.
To examine whether contextual factors such as product variety, complexity in production processes, overhead portion, perceived competition and firm size are related to the use of AMATs, Spearman correlations were used. The Spearman correlations indicate product variety, overhead portion and firm size were not significantly related to AMATs usage. Significant positive relationships were found between line production (less complex) process and AMATs and also between job shop order production (more complex) process and TMATs. These results however contradict the prediction that usage of AMATs should be related to the more complex production processes. These findings suggest that usage of AMATs were not directly related to the contextual factors examined. However, as suggested by the literature, these factors may play important roles in influencing the decisions to use AMATs but their effects may not be as direct as predicted.
AMATs usage was found to be negatively and significantly related to three indicators of perceived market competition: competition due to product range, new product introduction, changes in government regulation, and advertising and promotion. TMATs were negatively and significantly related to only one factor, changes in government regulation. These results imply that usage of AMATs might not necessarily relate to higher level of perceived intensity in market competition. In addition, the negative coefficients suggest that as perceived competition as a result of those factors increases, usage of AMAT might be lower.
This negative relationship between perceived market competition and AMATs change, however, is consistent with the findings of previous studies. For example Williams and Seaman (2002) and Isa and Foong (2005), whose studies were conducted in Singapore and Malaysia, respectively, found negative relationships between perceived market competition and change in management accounting systems. An earlier study in Canada Malaysia Singapore
This study is subject to the usual limitations associated with survey research but there are at least several limitations to the study that need to be addressed. Firstly, this study covers only manufacturing firms. It is possible that the contextual factors and their effects on management accounting practices may be different for other types of industries such as service industries. Secondly, a majority of the respondents in the survey were middle-level managers and were not the senior or top level managers as initially targeted. Thus there may be differences in the perceptions of these groups of managers. Thirdly, the types of AMATs and the measurements used in this study may be limited and not exhaustive enough, thus limiting the findings of the study. Finally, there may be other important predicting variables that could be added to theoretical framework to improve its explanatory power.
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