ISSN 0798 1015

Vol. 38 (Nº 24) Año 2017. Pág. 21

On the standards of management accounting: comparison of Russian and Kazakh current state

Sobre los estándares de la contabilidad de gestión: comparación del estado actual de Rusia y Kazajstán

Marina KUZMINA 1; Bibigul AKIMOVA 2; Gulnara AMANOVA 3; Saule SAPARBAYEVA 4; Abdulla ERZHANOV 5; Altynsara SADIYEVA 6; Assem KAZHMUКHAMETOVA 7

Recibido: 06/03/17 • Aprobado: 20/04/2017

Content

1. Introduction

2. Methodology

3. Results

4. Discussion

5. Conclusion

Bibliographic references

1. Introduction

In the western practice, management accounting regulation is similar to the regulation of financial accounting and financial reporting. So, appreciating the role of management accounting, in developed economies it is seen as part of the corporate standards, regulated in relation to the characteristics of the particular organization. Institute of Management Accounting of The United States of America developed management accounting standards similar to standards of financial accounting and reporting. Around 60 recommendations for management accounting are developed till present, integrated into five categories, which in contrast to IFRS are recommendations, not requirements, i.e. their use is not mandatory, but desirable, as the development of the leading specialists in management accounting can significantly improve the efficiency of business management (Table 1).

Table 1. Provision to Management Accountanting

Developed by authors

The structure of the management standards, presented in Table 1, indicating, perhaps, their practical rather than the theoretical orientation. Most of the standards (49 of 56) are devoted to the practical recommendations on the use of innovations in the theory and methods of management. So, there are some standards 4T "The introduction of a process-based cost management (ABC costing)", 4V "Effective Bench-marking", 4Z "Tools and methods of environmental accounting for business decisions," etc. Attempts to create an analogue of such provisions are made in Russia since 2002. Advisory Board of the management accounting with the Russian Ministry of Economic Development developed "Guidelines for the organization and conduction of management accounting, which contain the most common approaches, rather than specific recommendations, so the problem remains unsolved (Advisory Board under the Russian Ministry of Economic Development, 2002).

2. Methodology

In present Kazakhstan in the scale of the republic, there are no the official documents developed on the organization of management accounting, while in practice large and medium-sized businesses, in accounting services, management accounting elements are used actively. In the country, management accounting mostly presented by consulting services. Consulting - kind of business in which the corporate client seeks advice or help from independent experts (advisors, consultants) to address one or more pressing tasks. In practice, the consultants are ready to assist in the administrative, economic, financial and investment activities of the organization, strategic planning, optimization of company's overall functioning (Kapustin, 2000).

Management consulting is intellectually capacious business that has a very important impact, both on corporate governance and on national development (Akhtamberdiyeva, 2012). However, in Kazakhstan, consulting as a sphere of professional service has lack of development due to some problems with the specifics of the Kazakh market and the mentality of its members.

There are the following problems in the field of management accounting in Kazakhstan:

1. Lack of organizations willing to create a management accounting services, that is supported, on the one hand, by the fact that enterprises with higher incomes do not consider a problem of increasing its business reputation, and on the other - the fact that it is not justified, as the need in restructuring and business process automation on a scientific basis. In general, the mentality of the Kazakh business community is not so developed to the level of management accounting being in demand as the financial accounting. The solution to this problem, in authors’ opinion, is the realization of value of management accounting by company leaders, the creation of management accounting standards by professional community.
2. Lack of understanding of the average information management accounting consumer the effectiveness of the use of a scientific approach to the development of the organization. No one likes "theorists", everyone needs "specifics". Current management accounting consultants have to adjust to these general moods of customers and lay everything down to the smallest details. No wonder that in this case the customer feels that he already knew everything, and all consultant has done is asked questions and simply wrote answers in a report. This problem of recognition of the scientific approach in the management is related to the overall low scientific-educational process and without promotional scale of the whole society it cannot be resolved, despite the fact that educational institutions in almost all levels of the educational future of accounting specialists study management accounting.
3. Lack of understanding of the prevailing values and importance of management accounting in society leads to the fact that this type of accounting becomes important. In fact, companies, with the fear of additional costs for maintenance of management accounting and the inability to effectively assess the results of its operations, refer to the uselessness of special management accounting, and prefer, if necessary, to approach the consulting firm. The way out from this attitude is the problem for the company, and the task of the business community is to understand their connecting function between science and business. Business people need to understand that they can solve their immediate problems, and sometimes get ahead and prevent them through the management accounting.

Increased competition in the domestic and global market requires constant updates and balanced organizational structures, business processes, systems and management practices. At the same time a very high risk of a wrong decision of not changing anything with consequences of delays in the adoption of the necessary changes is very flawed, and often - fatal for the development of the organization in the face of constant change, conflict and self-determination. Not just the assets, rights and brands of the organization, as a social group, creates financial flows. The old administrative approaches do not work, which resulted in a "crisis management" universally recognized by the west. In the new information conditions of business and policy, it is vital to have professional accountant-analyst, specifically studying the experience of the best companies and owning a modern means and methods of budgeting, forecasting, organizational design, and methodology to create new, creative values ​​in cost management (Nurov, 2011).

Colin Drury (2012) notes that over the past decade, many organizations of industrial and service sectors collided to the heavy condition changes, where their business operates. Many business people have to work in a global market with a very intense competition, which led to the decline of the state regulation in parallel with the growing competition from foreign companies. The emergence of new technological innovations, the expansion of consumer demands contributed to a significant reduction in the life cycles of many types of products. Form this the company put customer satisfaction in first place in the list of priorities of its operation, which is carried out corresponding to adaptation of new management approaches, changing production systems and to actively financing new technology. Such changes have a significant impact on all management accounting system (Hongren, 2007).

Thus, all abovementioned once again confirms that the development of regulations on management accounting will greatly facilitate procedures for the development of management accounting methodology and techniques of its performances for practical implementation in the business activity of Russian and Kazakh companies.

Learning standards have revealed that in western practice in order to reflect the essence of management accounting, its objectives and tasks wide approaches are used that requires the accountant analyst to prepare financial reports for non-management groups of external users of information, such as shareholders, creditors, regulatory agencies and tax authorities (Hongren, 2007).

Thus, the SMA 1B «Objectives of Management Accounting» regulation refers to the process of identification, measurement, accumulation, analysis, preparation, interpretation and presentation of financial information used by planning, evaluation and organization management to ensure the optimal use of resources of the enterprise and the completeness of their account (Averchev, 2011).

Analysis of target systems of management accounting, allocated by the SMA 1B regulation and methodological recommendations (Methodical recommendations of the Ministry of Economic Development, 2002) shows (Table 2) that despite the first glance of having lots in common, a careful study demonstrates that there are significant differences.

One of the fundamental differences is that in the methodological guidelines unlike regulations on management accounting name only internal users as an information consumer and describes by types of information provided to managers at three levels: for management seniors; for structural management leaders; for specialists of structural units.

Table 2. A comparison of targets management accounting

Developed by authors

SMA 1B regulation does not excrete internal users categories, but only states that the management needs information for planning, evaluation and management of the organization to ensure optimal use of enterprise resources and completeness of their accounting and external users - information that is formed in the form of financial statements. Then the full text of the provisions and instructions of this distinction is highlighted.

3. Results

Authors believe that the expansion of the functional authority of experts on management accounting in the Russian Federation and in the Republic of Kazakhstan shall be carried out in this direction. Accountants-analysts should be involved in the process of developing the principles and methods of accounting on the basis of which external reporting is formed. Moreover, one of the main responsibilities of Management Accountants must be the preparation of external reporting in accordance to the generally accepted accounting practices, or other appropriate means for a group of users who do not participate in the management, such as shareholders, creditors.

The basis of the activities of Management Accountants should be the implementation of preparatory activities related to the formation of statements in order to meet both internal and external needs of information on past and future events and circumstances. Accountants need to provide reports to managers on time, including information and forecasts necessary for the adoption of solutions that meet enterprise goals. These reports can include information on financial, physical and human resources, as well as the markets and the regulatory environment in which businesses operate. In addition to the internal reporting, accountants should ensure the provision of appropriate information in the form of external management reporting to shareholders.

Of course, from the total of the activities and responsibilities of management accountant external users should be given no maximum attention in aspects of the preparation of information for non-management groups, but the presence of this type of work as a separate component of the activity should be the principle setting.

In order to regulate the professional activities of Management Accountants and in the absence of standards of management accounting in the Russian Federation and in the Republic of Kazakhstan, the development of so-called internal standards for management accounting is recommended. Especially in recent years as the holding structures use such standards extensively for the control of financial and economic activity of the enterprises of the holding.

It is well known that in this case, the accounting policies and other standards of management accounting should have corporate status and should establish the procedure and principles of accounting for all segments and types of activities of the holding, taking into account their specificity, to be approved by the leadership of the holding company and to be mandatory for all enterprises, belonging to the holding structure. Only through such approach a system of management accounting standards can be build, providing the necessary and adequate management information to holding management and directors of the enterprises of the holding.

Managerial accounting policy will include such aspects as organizational, technical and methodological. The organizational part will reflect the ways of organizing the process of functioning the accounting-analytical services, in the methodological part - ways of generating information in order to draw up management balance sheet and the management report on profits and losses, as well as the preparation of information for groups of administrative decisions, whereas technical part will give answer to the question which technical means necessary for the functioning of the management accounting system. On some issues, managerial accounting policy will coincide with the accounting policies in the field of financial accounting, according to some - vary, but the accountant analyst task is the task of minimizing the differences in the approaches to the optimal integration of accounting systems.

Thus, the current management accounting system should include:

- The reasonable structure of the in-house control on the centers of financial reporting, business processes, business segments;

- The estimates and budgets for the entire management structure with the instructions executing on their formulation and implementation;

- The chart of accounts of management accounting, adapted to the structure of the in-house management;

- The methodological guidelines for the conduction of managerial accounting in accordance with the harmonized chart of accounts;

- The forms of internal statements and guidelines for their preparation, reporting and analysis;

- The methods of valuation costs, accounting and analysis of deviations from the norms of the performers with the necessary instructions;

- The methods of calculation based on direct and total costs to the distribution of expenditures by function, executing instructions;

- The methods of transfer pricing, executing instructions, flow of documentation.

In other words, all of the abovementioned elements should be reflected in management accounting policy. In authors’ opinion, the organizational accounting policy section should include:

- The financial structure of the organization and its projection on the organizational structure, power and structure of the service, which will be engaged in management accounting and control, standards of flows of documentation;

- The technical section – the ways of use of accounting automation (single automated system for financial and management accounting, but with a different chart of accounts or different software products);

- The methodologically – the ways of use of chart of accounts (standalone or integrated system), methods of evaluation of assets and liabilities, the method of calculation of production costs and pricing, formats, budgets and internal (management) reporting system of accounting and analytical indicators for strategic, tactical and operational management procedures of management control (Akimova, 2015).

In Table 3, authors consider the set of elements of management accounting policy specifying the procedural documents, in which the carried procedures and the results will be described.

Table 3. Elements of managerial accounting policies

Developed by authors

4. Discussion

The main regulatory documents defining management accounting standards for the organization may have different names. For example, by analogy with the financial accounting, it will be called the "Regulations on Management Accounting Policies", which will structurally include the following topics:

1. General Provisions. It contains the order of development and changes in the Regulations, indicating the responsible persons.

2. Basic principles and concepts. Reflect theoretical approaches to the organization of in-house accounting - its essence, purpose, basic functions, principles and procedures for making changes in accounting policies.

3. The organizational foundations. It contains a description of the organizational principles of management accounting.

4. Methodological aspects. It contains instructions and a brief description of management accounting methods for each of the accounting items.

5. Technical aspects. It contains a description of the basic rules of management accounting in the enterprise.

In practical activities of Russian companies and holdings, there are various options for terminology: management accounting regulations, the rules of management accounting and budgeting, management accounting standards, internal standards, corporate standards, etc.

Regardless of the form, standards of management accounting by the content is the final stage of formulation of management accounting system and directly determined by the parameters and accounting procedures, as well as its ultimate goal - reporting to the user with the presentation of indicators in the right angles and formats for making management decisions.

The scope and content of internal standards depend primarily on the problems that are to be solved with the use of management accounting system. All standards and regulations can be divided into several groups (Table 4).

Table 4. Classification of internal standards of management accounting

The development of standards and regulations of management accounting is based on the following stages: preparation of unified classifications and reference (manual) books; development of a management chart of accounts; creation of management reporting system.

Practical development of the authors, embedded in a number of enterprises, comprise the following stages of forming internal standards of management accounting:

1) Development of common classifications and manual books

Classifications of management accounting are required for systemizing and characterising different objects of accounting for the purpose of their unique interpretation of all participants in the planning, organization, promotion and control of the enterprise. The mains are: fixed assets classifier, classifier of materials, the manuals of range (goods/ works/ services), manuals of income/ revenue, responsibility centers directory, a directory of contractors, reference prices, etc.

In developing the manuals of the budget of income and expenses (income, expenses) and cash flow budget (receipts, payments), it should not be only competently structured, but also a comparison should be presented: the income and expenses that accrued and used to generate the profit and loss statement must comply with the receipts and payments, used to form the cash flow statement.

To assess the effectiveness of the structural units of the organization the reference centers of financial responsibilities (CFR) should be developed. Every educated responsibility center will be the primary element of the financial system of the organization management, so the allocation of responsibility center should be carried out using the methodology of allocation responsibility centers and the specifics of their operation.

For each manual there should be the set of uniformed rules of registration of its elements and attributes and should be defined by their categories. All internal and external documentation should clearly be classified in accordance with the established directories before accounting.

2) Development of management chart of accounts (MCA)

Management Chart of Accounts performs the function of coordination of budgetary and accounting procedures, so in the majority of enterprises during the development of management accounting standards, the most attention is given to the structure and format of the chart of accounts. Development of management chart of accounts makes it possible to make maximum use of information resources of management accounting in order to prepare additional information, that disclose the main indicators of reports on specific needs of external users.

3) Creation of management reporting system

The composition, form and content of management reports in each case affect not only the organizational domain, but also questions of managers. In addition to the top-level reports (management balance, management report of profit and loss account and cash flow statement), management accounts package of company can include multiple reports, classified by destination, addressee, frequency form, and so on. Reports can be either regulated or not regulated, i.e. formed to the specific user query. Management reports summarize all operations and cover all major economic activities.

For a well-functioning system of management accounting in the formation of accounting policies it is necessary to provide relationship between charts of management accounting and reports of indicators of accounts, so that the consumer of information - the head of any hierarchy level - in real-time had the opportunity to create any report that includes indicators for which he is responsible. The problem at this stage is the reconciliation of performance of chart of accounts and generated reports, formed for example for company owners. Unlike the managers, this category of users do not have access to the data of the administrative account, but they are in need of information, that would in-depth characterize obtained results. In authors’ opinion, the solution to provide information to shareholders and certain other categories of users (investors or lenders) will identify their needs for a variety of business situations and the development of the internal reporting format simulation methods.

5. Conclusion

In conclusion, it should be noted that the standards of management accounting developed for a specific business entity, should be as close as possible to the specific needs of the enterprise and are aimed to improve the efficiency of the management accounting system. As a further research direction it is planned to closely study the impact of industrial and organizational specifics on the size and structure of the management accounting standards.

Bibliographic references

Advisory Board under the Russian Ministry of Economic Development (2002). Guidelines on the organization and conduction of management accounting questions approved by Advisory Board under the Russian Ministry of Economic Development. Protocol of the meeting of 22 April 2002, № 4.

Ahtamberdieva, G. (2012). What is SMS-Certification. Business. Life - Magazine for owners and corporate executives, 3, 4-5.

Akimova, B.Zh., Kuzmina, M.S. (2015). Management Company (organization) costs: a tutorial Moscow: KNORUS.

Averchev, I. (2011). IV Management accounting and reporting. Saint Petersburg: Rid Group.

Drury, C. (2012). Management and Cost Accounting. Moscow: UNITY-DANA.

Hongren, C. (2007). Managerial Accounting. Saint Petersburg: "Business Class" Series.

Kapustin, P.A. (2000). Management consulting for executives. Saint Petersburg: The publishing house "Business press ".

Nurov, K. (2011). Management consulting services in the Republic of Kazakhstan: problems and prospects. Securities market of Kazakhstan, 6, 18-19.

1. Plekhanov Russian University of Economics, Voronezh Branch. E-mail: Kuzminamarina09@mail.ru

2. JSC “Financial Academy”

3. JSC “Financial Academy”

4. Eurasian National University named after L.N. Gumilyov

5. JSC “Financial Academy”

6. JSC “Financial Academy”

7. Kazakh University of Economics, Finance and International Trade