A survey of management accounting practices by publicly quoted companies in Kenya

Abstract

The study reported here examined the management accounting practices, and management accounting techniques used by publicly quoted companies in Kenya and the type of management accounting reports produced and the frequency of their production. The study also explored the management accounting techniques used by these companies and the extent of their utilization. The basic premises of the study was that the success of any business in a competitive environment depend to a large extent, on the availability of timely and quality information for decision making. The study was a census study of all the publicly quoted companies in Kenya. Data was collected using a semi-structured questionnaire and analysed using tables, proportions, averages and percentages. The chi-square and normal distribution tests were used to conduct pertinent statistical tests. The findings from these analysis led to the following conclusions: (a) The most extensively used management accounting practice is budgeting. This was rated as the most important management accounting practice. The findings however revealed that there was no significant relationship between type and process of budgeting and the ownership and sector of the company. (b) The most important purpose of management accounting reports were planning and control. Most of the management accounting reports are produced monthly. (c) There does not exist a significant gap between management accounting theory and management accounting practice. However, there is limited application of quantitative management accounting techniques in Kenya. (d) There is preference of simple management accounting techniques to the complex techniques. This is probably due to the cost involved and the complexity of these elaborate techniques which may outweigh their benefits. On the basis of these findings, the following managerial recommendations appear appropriate: (a) Companies in Kenya should. move towards strategic management accounting. In this regard, management accounting information require to be sourced from both within and outside the organisation. (b) All staff in the organisation should be involved in management accounting. (c) Less preference should be given to variance analysis (investigation). In this respect a feed forward control approach is suggested. (d) Since management accounting has been seen to be deeply rooted in this country, there is need for a regulatory framework. In this regard the establishment of an Institute of Certified Management Accountants of Kenya body is suggested.