- Email: [email protected]
The Bromwich and Bhimani report—a Layperson's reaction
146
Reviews
21. Cooper, R. The rise of activity-based costing-Part 2: When do I need an activity-based cost system?Journal of Cost Management, 41-48, Fall, 1988. 22. Cooper, R. The rise of activity-based costing-Part 3: How many cost drivers do you need, and how do you select them?Journal of Cost Management, 34-46, Winter, 1989. 23. Cooper, R. The rise of activity-based costing-Part 4: What do activity-based cost systems look like?Journal of Cost Management, 38-49, Spring, 1989. 24. Cooper, R. and Turney, P. Internally Focussed Activity-Based Cost Systems. In Turney, P. (Ed) Pdomuznce Excellence in Manufacturing and Service Organizations, Florida, Sarasota, American Accounting Association, 1990. 25. Cooper, R. and Kaplan, R. S. How cost accounting systematically distorts product costs. In Bruns, W. J. and Kaplan, R. S. (Eds) Accounting and Management: Field Study Perspectives, Boston, Harvard Business School Press, 1987. 26. Cooper, R. and Kaplan, R. S. Measure costs right: make the right decisions. Harvard Business Reviao, 96-103, SeptemberIOctober, 1988. 27. Cushing, B. E. (ed.) Accounting and Culture, Florida, Sarasota, American Accounting Association, 1987. 28. Coates, J. B. and Longden, S. G. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study No. 1, London, CIMA, 1989. 29. Littler, D. A. and Sweeting, R. C. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study No. 3, London, CIMA, 1989. 30. Innes, J. and Mitchell, F. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study, No. 2, London, CIMA, 1989.
THE BROMWICH AND BHIMANI REPORT-A REACTION Peter Armstrong*
LAYPERSON'S
In 1968, the Royal Commission on Trade Unions and Employers' Associations (Donovan Commission), advised by personnel practitioners and industrial relations academics, recommended a reform of British industrial relations which stressed the need for companies to formulate explicit industrial relations policies. During the 1970s this became the manifesto of the personnel profession, in a campaign to assert the strategic centrality of industrial relations and, with it, the need to appoint personnellindustrial relations specialists to directorships. In 1978 the Committee of Inquiry into the Engineering Profession, under the chairmanship of Sir Monty Finniston, a prominent engineer, argued for greater representation of the engineering profession at senior levels in British management on the grounds that all major business decisions, in the manufacturing sector at least, have, or should have, an 'engineering dimension'. In 1987, the report of the Handy commission, chaired by the then principal of the London Business School, argued that the MBA should become the normal qualification for senior management positions. Thus the report by Bromwich and Bhimani, two management accounting academics, on the possible need for reforms to enable management accounting 'to play its proper and principal role in financial management in the twenty-first century' (p. 101) continues a well-established tradition. Such reports should not be regarded as private business. Insofar as our welfare depends upon the capabilities and decision-making predilictions of Britain's top management, there is a legitimate public interest in the reforms advocated by these various professions. In particular, they need to be viewed in the light of the partial views of the total management process of which they are a product and in the light of the interests which they represent.
* School of Information Systems, University of East Anglia,
U.K.
Reviews
147
In one important respect the Bromwich and Bhimani report departs from the pattern of advocacy established by the Donovan, Finniston and Handy reports. Where these sought to identify various forms of British managerial malaise on which to base their programmes for reform, Bromwich and Bhimani are sanguine about the performance of the British manufacturing sector. Indeed, the first sentence of the body of their report reads: 'Britain's manufacturing output has steadily expanded over the past thirty years with a particularly dramatic increase in growth since 1980'. Presumably this is not a misprint, since the assertion is repeated on p. 97. What really happened is that manufacturing output in the U.K. suffered an absolute decline during the mid-1970s and early 1980s, such that total output in 1985 was still about 10 percent below the peak level of 1973 [I]. Meanwhile, as the author's own Table 1.1 shows, the productivity of labour showed a steady increase. Even this cannot unequivocally be claimed as a success for British management, since there is current debate on the extent to which this increase in average productivity has been a statistical by-product of the selective closure of less efficient plant. Whilst a single unfortunate error does not disqualify the report from serious consideration, the underlying view of the performance of British manufacturing may well account for its generally emollient tone, and also explain the authors' willingness to allow the managerial market place for ideas to be the judge of the need for management accounting reform-f which more in a moment. The brief from CIMA was to 'identify the criticisms being made [of management accounting practice], the way in which management accounting techniques already exist to meet them and the findings of research in this field and any gaps which might initiate further research'. To an outsider, the authors' interpretation of this brief looks narrow. What they have actually considered is the case for the reform of management accounting in the context of the adoption of advanced manufacturing technologies and in the light of Japanese maufacturing and accounting practice. Thus the report explicitly excludes consideration of the wholesale adoption of management accounting methods in the financial sector. It also tacitly excludes a whole range of current issues and developments which might be thought to have implications for the future practice of management accounting. For example, there is no discussion of its problematic relationship with human resource management. There is no consideration of the current and future roles of management accounting in acquisition, divestment and plant-closure. Nor are the implications explored of the multiple-sourcing of components and the internationalization of production. Within its interpretation of the brief, the report's discussion is complex and fairly bristles with the acronyms of management-speak (fortunately a glossary is provided). Broadly speaking, however, the issues considered fall into two main groups, both arising in the context of capital-intensive advanced manufacturing technologies and the adoption of Japanese forms of manufacturing organization. The first concerns the case for adopting a fairly well-defined cluster of techniques originating with American academics (notably Kaplan), which are intended to improve cost allocation and managerial decision-making. The second group of issues consists of a set of linked problems and opportunities which are relatively well-recognized but for which no firm proposals exist. In relation to both sets of issues, the report counsels against immediate change in management accounting practice, but the reasoning differs. Bromwich and Bhimani muster four main arguments against the adoption of the reforms proposed by the Kaplan group. For brevity in discussion, the technique of activity-based costing will be taken to stand for the whole package.
148
Reviews
It is first argued that activity-based costing presently exists only as a theory, that there exists no firm evidence that its adoption would actually increase profits. On this point the standard of evidence insisted upon by the report is high indeed. The technique must be adopted in practice by real-life companies and it must be demonstrated that it is the change in costing method and not some other factor which causes any increase in profitablity. This is the counsel of perfection. Since there is ample evidence, both in the report and elsewhere, that British management accounting practice is highly resistant to change, it also amounts to a Catch 22: there is no case for the adoption of activity-based costing because the evidence of benefit is lacking and there is no evidence of benefit because activity-based costing has not been tried in practice. It is true that the report advocates the encouragement of experiment in the corporate sector (p. 101), but it is difficult to believe that this will take place without a more positive lead from the Institute. The report also argues against the adoption of activity-based costing on the grounds that information on the pattern of adoption of advanced manufacturing technology in Britain is presently laclung (p. 100). It is not clear what difference such information would make. Enough is known to be sure that some firms have made the change, and to argue that these should soldier on with current management accounting methods until we are sure how many more have done so, seems an odd position for a learned institution to take. Lurking behind this second line of argument, there appears to be a tacit premise that diversity in management accounting practice is not to be contemplated. Surely enforceable management accounting standards have never been on the agenda, and the adoption of activity-based costing, where appropriate, need not imply an abandonment of traditional methods of cost allocation elsewhere. Again, if it is a reform of accounting education which the authors have in mind, it is not at all clear why new methods cannot be taught alongside the old. The report's third argument against activity-based costing is that any improvement in the determination of costs for pricing purposes will be irrelevant where prices are determined by markets (p. 95). Whilst true as far as it goes, this argument implies the irrelevance of cost accounting as such, and may be an injudicious line to pursue for a profession which still largely earns it crust by the practice. In practice, market prices may not be all that relevant to the British high-technology sector, much of which is engaged in defence work. Moreover, even where prices are market-driven, cost information may still be relevant to make-or-buy decisions and decisions on which markets to compete in. The fourth argument against activity-based costing-that there is little evidence of a demand for change from British industry-is really an argument against management accounting reform of any kind. Whilst the premise is undoubtedly true, such as passive view of the market for ideas is extraordinary coming from representatives of an Institute whose charter stresses its responsibility for promoting and developing the science of management accounting. Perhaps it is related to the optimistic view of the achievements of British industry with which the report begins. It only makes sense to hand over judgement of the need for a reform of management accounting to the collective wisdom of practising managers, on the assumption there is nothing fundamentally wrong with the way in which British manufacturing companies are managed. Taken in sum, the arguments used by Bromwich and Bhimani to reject the costing
Reviews
149
reforms proposed by the Kaplan group are negative in character, and none of them hold much water. The report makes no attempt to make a positive case that the reforms, or the abandonment of traditional cost allocation procedure would be harmful. To this reviewer, the core proposal of the Kaplan group, that management accountants should search for more relevant 'cost-drivers' than direct labour in capital intensive production environments, appears to be no more than an invitation to think about what they are doing. There is no suggestion that this need entail an abandonment of traditional methods of cost allocation where these remain appropriate. It is true that this would result in a diversity of practice and expand the scope for judgement in the practice of management accounting. In case this strikes the accounting mind as unacceptable, it should be pointed out that socio-historical studies of other professions indicate that these have prospered as much on the basis of experience-based judgement as on the practice of relatively programmable technique [2]. In favour of their reforms, the Kaplan group have made a powerful case that the traditional practice of allocating indirect costs on the basis of direct labour costs may be encouraging American (and, presumably, British) managers to divert resources away from relatively labour intensive processes and long production runs and so abandon the task of competing in world mass markets. There is a definite public interest in this argument, and if CIMA is going to ignore the reforms it is going to need a clearer answer to the case behind them than is made by Bromwich and Bhimani. Besides the Kaplan group reforms, Bromwich and Bhimani also consider a second series of questions connected by the themes of advanced manufacturing technology and Japanese methods of organization. Some of these are Does the short-term periodicity of financial reporting influence management accounting practice so that the information it produces is biased against the long-term benefits of investment in advanced production technology? What methods of appraisal are appropriate for investments in advanced manufacturing technology? How can management accounting information and the qualitative aspects of appraisal be integrated into a strategic decision-making process? More generally, how can management accounting data be integrated into the dense informal flows of non-financial and qualitative information which have been found to be characteristic of successful companies both in Japan and the West? What role will there be for management accounting in assessing the ability of material and component subcontractors to fulfill the obligations imposed by just-in-time production scheduling and material resource planning? If competition in world markets entails a switch from product costing to value-engineering down to market-driven target costs, what will be the role therein of management accounting? Whilst raising these issues, the report again counsels against any precipitate change in practice. In the particular case of the supposed baleful influence of financial reporting deadlines, the report offers the not-particularly-helpful observation that it is bad management which is to blame, not bad accounting (p. 47). Regrettably common in accounting texts, this tendency to dump the defects of accounting information into a
150
Reviews
bin marked 'managerial judgement' reads to an outsider like an evasion of professional responsibility. It is also pertinent to point out that divestments of judgement of this type, whilst making for an easy life in the short run, may not be in the long-run interests of the profession as a whole. As has been pointed out a moment ago, successful professions appear to be those which have retained control of those aspects of their task which call for professional experience and judgement. Concerning the rest of the second group of issues, the report does little more than establish their importance, and this is surely reasonable since there appear to be no firm proposals to deal with any of them, let alone the makings of a consensus. Overall the report counsels against a present change in management accounting practice. Given the situation of the management accounting profession, this is understandable. Membership of the Chartered Institute has expanded steadily throughout the years of industrial decline and recovery. Employers lurk on the doorsteps of the accounting departments of universities and polytechnics, eager to snap up any student who shows signs of incipient qualification. Meanwhile British companies seem for the most part content with costing systems pioneered over half a century ago. In the larger sense, however, the report's identification of a number of very real problems, for which it can propose no solution, ought to be worrying. Underlying many of the issues is a sense that the preservation of management accounting, as a profession concerned exclusively with flows of financial information, is itself at odds with contemporary developments in manufacturing technology and organization. For the profession, the concern must be that a failure to adapt may ultimately lead to its marginalization. For the public, the worry is that the entrenched position of management accountancy within British companies may inhibit the developments needed to compete in world markets. Perhaps if research were to start from the premise that most of British manufacturing industry is really doing very badly indeed (having last year achieved its first ever sectoral trade deficit with the rest of the world), and if enquiry were directed at investigating the extent to which current management accounting practice is implicated (for example, in the failure of British industry to match competitors' levels of non-defence R & D expenditure [I]), the next report on the future of the profession might have some answers to discuss.
References 1. Midland Bank Review, Autumn, 8-16, 1986. 2. Larson, M. S. The Rise of Professiionalism.Berkeley, University of California Press, 1977.
ACCOUNTING AND MANUFACTURING T. J. Sheridan* Traditional management accounting and costing concepts have been under attack for some time now as being out of date and unfitted for today's new manufacturing and business environment. At engineering and production conferences the dead hand of accounting is regularly attacked to great applause. The intellectual attack has been led by consultants and academics, notably Professor R. S. Kaplan who co-authored the *PA Consulting Group, London, U.K.
Reviews
21. Cooper, R. The rise of activity-based costing-Part 2: When do I need an activity-based cost system?Journal of Cost Management, 41-48, Fall, 1988. 22. Cooper, R. The rise of activity-based costing-Part 3: How many cost drivers do you need, and how do you select them?Journal of Cost Management, 34-46, Winter, 1989. 23. Cooper, R. The rise of activity-based costing-Part 4: What do activity-based cost systems look like?Journal of Cost Management, 38-49, Spring, 1989. 24. Cooper, R. and Turney, P. Internally Focussed Activity-Based Cost Systems. In Turney, P. (Ed) Pdomuznce Excellence in Manufacturing and Service Organizations, Florida, Sarasota, American Accounting Association, 1990. 25. Cooper, R. and Kaplan, R. S. How cost accounting systematically distorts product costs. In Bruns, W. J. and Kaplan, R. S. (Eds) Accounting and Management: Field Study Perspectives, Boston, Harvard Business School Press, 1987. 26. Cooper, R. and Kaplan, R. S. Measure costs right: make the right decisions. Harvard Business Reviao, 96-103, SeptemberIOctober, 1988. 27. Cushing, B. E. (ed.) Accounting and Culture, Florida, Sarasota, American Accounting Association, 1987. 28. Coates, J. B. and Longden, S. G. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study No. 1, London, CIMA, 1989. 29. Littler, D. A. and Sweeting, R. C. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study No. 3, London, CIMA, 1989. 30. Innes, J. and Mitchell, F. Management Accounting: The Challenge of Technological Innovation, CIMA Research Study, No. 2, London, CIMA, 1989.
THE BROMWICH AND BHIMANI REPORT-A REACTION Peter Armstrong*
LAYPERSON'S
In 1968, the Royal Commission on Trade Unions and Employers' Associations (Donovan Commission), advised by personnel practitioners and industrial relations academics, recommended a reform of British industrial relations which stressed the need for companies to formulate explicit industrial relations policies. During the 1970s this became the manifesto of the personnel profession, in a campaign to assert the strategic centrality of industrial relations and, with it, the need to appoint personnellindustrial relations specialists to directorships. In 1978 the Committee of Inquiry into the Engineering Profession, under the chairmanship of Sir Monty Finniston, a prominent engineer, argued for greater representation of the engineering profession at senior levels in British management on the grounds that all major business decisions, in the manufacturing sector at least, have, or should have, an 'engineering dimension'. In 1987, the report of the Handy commission, chaired by the then principal of the London Business School, argued that the MBA should become the normal qualification for senior management positions. Thus the report by Bromwich and Bhimani, two management accounting academics, on the possible need for reforms to enable management accounting 'to play its proper and principal role in financial management in the twenty-first century' (p. 101) continues a well-established tradition. Such reports should not be regarded as private business. Insofar as our welfare depends upon the capabilities and decision-making predilictions of Britain's top management, there is a legitimate public interest in the reforms advocated by these various professions. In particular, they need to be viewed in the light of the partial views of the total management process of which they are a product and in the light of the interests which they represent.
* School of Information Systems, University of East Anglia,
U.K.
Reviews
147
In one important respect the Bromwich and Bhimani report departs from the pattern of advocacy established by the Donovan, Finniston and Handy reports. Where these sought to identify various forms of British managerial malaise on which to base their programmes for reform, Bromwich and Bhimani are sanguine about the performance of the British manufacturing sector. Indeed, the first sentence of the body of their report reads: 'Britain's manufacturing output has steadily expanded over the past thirty years with a particularly dramatic increase in growth since 1980'. Presumably this is not a misprint, since the assertion is repeated on p. 97. What really happened is that manufacturing output in the U.K. suffered an absolute decline during the mid-1970s and early 1980s, such that total output in 1985 was still about 10 percent below the peak level of 1973 [I]. Meanwhile, as the author's own Table 1.1 shows, the productivity of labour showed a steady increase. Even this cannot unequivocally be claimed as a success for British management, since there is current debate on the extent to which this increase in average productivity has been a statistical by-product of the selective closure of less efficient plant. Whilst a single unfortunate error does not disqualify the report from serious consideration, the underlying view of the performance of British manufacturing may well account for its generally emollient tone, and also explain the authors' willingness to allow the managerial market place for ideas to be the judge of the need for management accounting reform-f which more in a moment. The brief from CIMA was to 'identify the criticisms being made [of management accounting practice], the way in which management accounting techniques already exist to meet them and the findings of research in this field and any gaps which might initiate further research'. To an outsider, the authors' interpretation of this brief looks narrow. What they have actually considered is the case for the reform of management accounting in the context of the adoption of advanced manufacturing technologies and in the light of Japanese maufacturing and accounting practice. Thus the report explicitly excludes consideration of the wholesale adoption of management accounting methods in the financial sector. It also tacitly excludes a whole range of current issues and developments which might be thought to have implications for the future practice of management accounting. For example, there is no discussion of its problematic relationship with human resource management. There is no consideration of the current and future roles of management accounting in acquisition, divestment and plant-closure. Nor are the implications explored of the multiple-sourcing of components and the internationalization of production. Within its interpretation of the brief, the report's discussion is complex and fairly bristles with the acronyms of management-speak (fortunately a glossary is provided). Broadly speaking, however, the issues considered fall into two main groups, both arising in the context of capital-intensive advanced manufacturing technologies and the adoption of Japanese forms of manufacturing organization. The first concerns the case for adopting a fairly well-defined cluster of techniques originating with American academics (notably Kaplan), which are intended to improve cost allocation and managerial decision-making. The second group of issues consists of a set of linked problems and opportunities which are relatively well-recognized but for which no firm proposals exist. In relation to both sets of issues, the report counsels against immediate change in management accounting practice, but the reasoning differs. Bromwich and Bhimani muster four main arguments against the adoption of the reforms proposed by the Kaplan group. For brevity in discussion, the technique of activity-based costing will be taken to stand for the whole package.
148
Reviews
It is first argued that activity-based costing presently exists only as a theory, that there exists no firm evidence that its adoption would actually increase profits. On this point the standard of evidence insisted upon by the report is high indeed. The technique must be adopted in practice by real-life companies and it must be demonstrated that it is the change in costing method and not some other factor which causes any increase in profitablity. This is the counsel of perfection. Since there is ample evidence, both in the report and elsewhere, that British management accounting practice is highly resistant to change, it also amounts to a Catch 22: there is no case for the adoption of activity-based costing because the evidence of benefit is lacking and there is no evidence of benefit because activity-based costing has not been tried in practice. It is true that the report advocates the encouragement of experiment in the corporate sector (p. 101), but it is difficult to believe that this will take place without a more positive lead from the Institute. The report also argues against the adoption of activity-based costing on the grounds that information on the pattern of adoption of advanced manufacturing technology in Britain is presently laclung (p. 100). It is not clear what difference such information would make. Enough is known to be sure that some firms have made the change, and to argue that these should soldier on with current management accounting methods until we are sure how many more have done so, seems an odd position for a learned institution to take. Lurking behind this second line of argument, there appears to be a tacit premise that diversity in management accounting practice is not to be contemplated. Surely enforceable management accounting standards have never been on the agenda, and the adoption of activity-based costing, where appropriate, need not imply an abandonment of traditional methods of cost allocation elsewhere. Again, if it is a reform of accounting education which the authors have in mind, it is not at all clear why new methods cannot be taught alongside the old. The report's third argument against activity-based costing is that any improvement in the determination of costs for pricing purposes will be irrelevant where prices are determined by markets (p. 95). Whilst true as far as it goes, this argument implies the irrelevance of cost accounting as such, and may be an injudicious line to pursue for a profession which still largely earns it crust by the practice. In practice, market prices may not be all that relevant to the British high-technology sector, much of which is engaged in defence work. Moreover, even where prices are market-driven, cost information may still be relevant to make-or-buy decisions and decisions on which markets to compete in. The fourth argument against activity-based costing-that there is little evidence of a demand for change from British industry-is really an argument against management accounting reform of any kind. Whilst the premise is undoubtedly true, such as passive view of the market for ideas is extraordinary coming from representatives of an Institute whose charter stresses its responsibility for promoting and developing the science of management accounting. Perhaps it is related to the optimistic view of the achievements of British industry with which the report begins. It only makes sense to hand over judgement of the need for a reform of management accounting to the collective wisdom of practising managers, on the assumption there is nothing fundamentally wrong with the way in which British manufacturing companies are managed. Taken in sum, the arguments used by Bromwich and Bhimani to reject the costing
Reviews
149
reforms proposed by the Kaplan group are negative in character, and none of them hold much water. The report makes no attempt to make a positive case that the reforms, or the abandonment of traditional cost allocation procedure would be harmful. To this reviewer, the core proposal of the Kaplan group, that management accountants should search for more relevant 'cost-drivers' than direct labour in capital intensive production environments, appears to be no more than an invitation to think about what they are doing. There is no suggestion that this need entail an abandonment of traditional methods of cost allocation where these remain appropriate. It is true that this would result in a diversity of practice and expand the scope for judgement in the practice of management accounting. In case this strikes the accounting mind as unacceptable, it should be pointed out that socio-historical studies of other professions indicate that these have prospered as much on the basis of experience-based judgement as on the practice of relatively programmable technique [2]. In favour of their reforms, the Kaplan group have made a powerful case that the traditional practice of allocating indirect costs on the basis of direct labour costs may be encouraging American (and, presumably, British) managers to divert resources away from relatively labour intensive processes and long production runs and so abandon the task of competing in world mass markets. There is a definite public interest in this argument, and if CIMA is going to ignore the reforms it is going to need a clearer answer to the case behind them than is made by Bromwich and Bhimani. Besides the Kaplan group reforms, Bromwich and Bhimani also consider a second series of questions connected by the themes of advanced manufacturing technology and Japanese methods of organization. Some of these are Does the short-term periodicity of financial reporting influence management accounting practice so that the information it produces is biased against the long-term benefits of investment in advanced production technology? What methods of appraisal are appropriate for investments in advanced manufacturing technology? How can management accounting information and the qualitative aspects of appraisal be integrated into a strategic decision-making process? More generally, how can management accounting data be integrated into the dense informal flows of non-financial and qualitative information which have been found to be characteristic of successful companies both in Japan and the West? What role will there be for management accounting in assessing the ability of material and component subcontractors to fulfill the obligations imposed by just-in-time production scheduling and material resource planning? If competition in world markets entails a switch from product costing to value-engineering down to market-driven target costs, what will be the role therein of management accounting? Whilst raising these issues, the report again counsels against any precipitate change in practice. In the particular case of the supposed baleful influence of financial reporting deadlines, the report offers the not-particularly-helpful observation that it is bad management which is to blame, not bad accounting (p. 47). Regrettably common in accounting texts, this tendency to dump the defects of accounting information into a
150
Reviews
bin marked 'managerial judgement' reads to an outsider like an evasion of professional responsibility. It is also pertinent to point out that divestments of judgement of this type, whilst making for an easy life in the short run, may not be in the long-run interests of the profession as a whole. As has been pointed out a moment ago, successful professions appear to be those which have retained control of those aspects of their task which call for professional experience and judgement. Concerning the rest of the second group of issues, the report does little more than establish their importance, and this is surely reasonable since there appear to be no firm proposals to deal with any of them, let alone the makings of a consensus. Overall the report counsels against a present change in management accounting practice. Given the situation of the management accounting profession, this is understandable. Membership of the Chartered Institute has expanded steadily throughout the years of industrial decline and recovery. Employers lurk on the doorsteps of the accounting departments of universities and polytechnics, eager to snap up any student who shows signs of incipient qualification. Meanwhile British companies seem for the most part content with costing systems pioneered over half a century ago. In the larger sense, however, the report's identification of a number of very real problems, for which it can propose no solution, ought to be worrying. Underlying many of the issues is a sense that the preservation of management accounting, as a profession concerned exclusively with flows of financial information, is itself at odds with contemporary developments in manufacturing technology and organization. For the profession, the concern must be that a failure to adapt may ultimately lead to its marginalization. For the public, the worry is that the entrenched position of management accountancy within British companies may inhibit the developments needed to compete in world markets. Perhaps if research were to start from the premise that most of British manufacturing industry is really doing very badly indeed (having last year achieved its first ever sectoral trade deficit with the rest of the world), and if enquiry were directed at investigating the extent to which current management accounting practice is implicated (for example, in the failure of British industry to match competitors' levels of non-defence R & D expenditure [I]), the next report on the future of the profession might have some answers to discuss.
References 1. Midland Bank Review, Autumn, 8-16, 1986. 2. Larson, M. S. The Rise of Professiionalism.Berkeley, University of California Press, 1977.
ACCOUNTING AND MANUFACTURING T. J. Sheridan* Traditional management accounting and costing concepts have been under attack for some time now as being out of date and unfitted for today's new manufacturing and business environment. At engineering and production conferences the dead hand of accounting is regularly attacked to great applause. The intellectual attack has been led by consultants and academics, notably Professor R. S. Kaplan who co-authored the *PA Consulting Group, London, U.K.