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Management Accounting Development and Practices in Bangladesh

Mohammad Zakir Hossain Sharkar
Department of Management and Business BRAC University, 66 Mohakhali Dhaka – 1212, Bangladesh

Md. Abdus Sobhan
Department of Accounting & Information Systems University of Dhaka Dhaka-1000, Bangladesh

Shahida Sultana
School of Business Studies Southeast University Dhaka, Bangladesh

Abstract/ Executive Summary:

The more the development of the market economy, the more the significance of management accounting. To keep pace with this increasing market economy, it becomes imperative for the organizations to adopt new management accounting tools and techniques. It is also important for the Bangladeshi organizations. This paper seeks to obtain an overview of the management accounting practices in the listed manufacturing companies of Bangladesh. Data has been gathered by a questionnaire survey from eight manufacturing sectors. The analysis has revealed that though there is difference in extent of practices among the sectors, all sectors fail to practice some newly developed techniques. If this trend continues, Bangladeshi organizations will lag behind in the race of global competitiveness and comparative advantages. It is therefore, some policy recommendation has been made to improve and fasten the management accounting practices.

Keywords: Management accounting, Manufacturing company, Bangladesh

Location: In Bangladesh

Start Date:

End Date:

Program Area: Knowledge Management

Non-commodity: Analysis and interpretations

Objectives:

The specific objectives of this study are: 1. To obtain a broad overview of the management accounting practices in Bangladeshi listed manufacturing companies. 2. To make policy recommendations on how to improve the practices of management accounting in manufacturing sector in Bangladesh.

Methodology:

Data was gathered principally through administration of questionnaire to finance and management staffs of listed companies. Sample size is selected based on different manufacturing sectors. There are 8 listed companies in cement, 4 in ceramics, 37 in Food & Allied, 4 in Jute, 8 in Paper and Printing, 26 in Pharmaceuticals and Chemicals, 8 in Tannery and 42 firms in textile. A random selection was made consisting of 50 companies, 5 from cement, 4 from ceramics, 8 from Food & Allied, 4 from Jute, 5 from Paper and Printing, 10 from Pharmaceuticals and Chemicals, 4 from Tannery and 10 from textile. As most of the surveys only sampled from few firms of each sector, our analysis are limited to description. It is admitted that this exploratory study has certain limitations. First, the surveys only sampled from few firms of each sector, our analysis are limited to description. Secondly, it is recognized that the comparatively low number of responses to our questionnaire survey may have caused a bias. Thirdly, several important aspects of management accounting systems were excluded from the questionnaire in order to get a comparative results among the sectors.

Source of Information: BRAC University Journal, vol. III, no.2, 2006, pp. 113-124

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Globalization and the increasing complexity of business, together with high-powered computing technology, have contributed to the development of new management accounting techniques all over the world. The present study shows that though privatization and authoritative pronouncement has contributed a lot in the development of management accounting in Bangladesh, the survey result of the present practices of management accounting in the listed manufacturing sector reveals that state of use of sophisticated techniques (like target costing, throughput costing, life cycle costing and probabilistic CVP) is not satisfactory. To keep pace with the world-changing management accounting environment, Bangladeshi firms should use the newly developed techniques. A well-balanced practice of those techniques irrespective of the sectors may be enhanced through compulsory enactment of cost and management accounting audit in Bangladesh.

Knowledge Management: Journal