Management Accounting & Internal Control Strategies for Business Success

Management Accounting & Internal Control Strategies for Business Success

Sandra Avery | 2022

Abstract

Many factors can impact the success or failure of starting and sustaining a small business; however, the inability to properly manage internal resources and processes is a significant factor for survival. According to Williams (1984), “One primary cause of the high failure rate for small businesses is a lack of knowledge on the part of owners and managers about accounting, particularly management accounting and internal controls” (p. 73). The need to provide tools that will empower business owners, who, in many cases, do not have an accounting background, is the basis for this business training program. The targeted audience includes non-accounting business owners, entrepreneurs, managers, and other business professionals who need to understand and effectively apply accounting and business managements concepts without having to possess an expert level in these areas.

Having knowledge surrounding accounting and internal controls is insufficient in managing daily business operations; owners must apply the related concepts when creating and interpreting internal reports and when using that information to make informed decisions. Sibanda & Manda (2016) reported: “The assessment of the problems the SMEs [Small and Mid-size Enterprises] encounter and development of the training programs to address these problems should go a long way to assist theses SMEs to equipped with the necessary accounting practices, financial and managerial skills to survive” (p. 194). As such, the objective of these modules is to equip individuals with information and skills to overcome the business obstacles they encounter. One feature of the sessions includes opportunities for participants to apply these principles in relevant case scenarios that include internal and external factors to consider in determining a course of action. The use of real-life situations, which have controllable and non-controllable elements, helps create the environment that owners encounter in managing their day-to-day operations.

Topics included in the workshop series are designed to help participants realize the crucial roles that managerial accounting and internal controls play in business success, understand key accounting terminology and concepts, and recognize the critical linked between accounting and strategy. With this foundation, participants will continue throughout the series with learning how to assess the information needed to monitor goal progress and attainment, establish internal processes to ensure relevant and timely information is accurately prepared, and using that information along with external data to make informed decisions. Therefore, if leaders understand how to efficiently maximize the use of the controllable areas, such as managerial accounting and internal controls, they could improve their chances of success.

Keywords: small businesses, owners, business development, management accounting, internal control, strategies

References

Sibanda, J. J., & Manda, D. C. (2016). Symptoms of accounting practices that contribute to small business failures. Problems and Perspectives in Management, 14(4), 194-202.

Williams, K. (1984, 01). Small business: Why small businesses fail: Testimony proposes solutions. Management Accounting, 65, 73.