Abstract

This study sought to establish the effect of management accounting techniques on the financial performance of CDC Tiko Banana Company. This study was carried out using financial statements of CDC Tiko Banana Company. Data was also collected through questionnaires.

The researcher administered 50 questionnaires to some workers in the company. Descriptive and inferential statistic like the mean, standard deviation, skewness, correlation matrix, with a linear regression analysis to draw the conclusion of the study were applied.

The financial performance of CDC Tiko Banana company is captured using ROA and management accounting technique captured with capital budgeting, inventory valuation.

The results show that management accounting techniques have a positive and significant effect on the financial performance of CDC Tiko Banana Company. As recommendation, CDC Tiko Banana Company should have clear and effective management accounting techniques and procedures and must be regularly reviewed.

The accounting supervisor should check with accountants daily to ensure that policies are followed and the supervisor must respond quickly to solve officers’ problems.

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

Hilton and Platt (2011) stated that management accounting is the process of identifying, measuring, analyzing, interpreting and communicating information in pursuit of organization’s goals. Management accounting is integral part of management process.

Hilton and Platt (2011) also stated that management accountants are important strategic partners in an organization’s domestic and international management teams.

Usually, the larger the organization is, the greater is management’s need for information. The term management accounting is consisting of two words ‘management’ and ‘accounting’. The word ‘management’ refers to all level managers in the organization.

The primary purpose of management accounting in the organization is to help management doing their function by collecting, processing, and communicating information. The word ‘accounting’ not only refer to a mere record of business transaction but also cover other field of study.

Mahfar and Omar (2004) stated that management accounting form an integral part of the management process in an organization, where it provides essential information to the business in its planning, evaluating, controlling and decision-making process.

It is through management accounting that the managers get the tools for doing their functions. However, traditional management accounting has been criticized because they merely focus on internal process rather than dealing with external problems such as managing the competition, generating customer value and creating competitive advantages.

The rapid changes of business environment recently into global, competitive and turbulence business environment give significant impact to any type of corporation, either manufacturing or non-manufacturing company, either big, medium or small company and either profit oriented or non-profit company.

According to the International Federation of Accountants (1998) in Kader and Luther (2004), there are four sequential stages that describe the evolution of management accounting orientation.

The first stage was cost determination and financial control (pre 1950).The focus of management accounting in that period was calculating product costs that supplemented by budgets and financial control of production process.

The second stages was information for management planning and control (pre1965).

At that time, management controls were oriented toward manufacturing and internal administrative rather than strategic consideration. The third stage was reduction of resource waste in business processes (by 1985).

Kader and Luther (2004) stated that at that period the challenge for management accounting, as the primary providers of information, was to ensure that appropriate information was available to support management at all levels.

The last stage was creating of value through effective resource use (by 1995) that was to be achieve by the use of technologies to examine the drivers of customer value, stakeholder value and organizational innovation.

Wiweru, Hoque and Uliana (2005) stated that there are several evidences on the changes of management accounting practices in developed countries. Libby and Waterhouse in Wiweru, Hoque and Uliana (2005) have reported that in Canada 31% management accounting system have changed in the last three years.

Burns et.al (1999) in Wiweru, Hoque and Uliana (2005) argued that there have been significant changes in management account practices in the UK during the last decade. How about in developing countries, such as Indonesia? There are several studies that try to reveal the management accounting practices in several developing countries, such as in Nigeria, Cameroon and Malaysia.

Every organisation is located within a particular configuration of contingencies. It is dependent on the market and technological environment, such as scale and diversity of operations, technology applied to its work, and type of personnel it employs.

An appropriate design for achieving congruence is one which best suits it’s contextual and operational contingencies.

According to Moores and Yuen (2001, p.352), “to be internally consistent, organisations must have tightly independent and mutually supportive parts in terms of strategies, structures and process.” One challenge in organisational management is reinforcing management accounting system (MAS), strategies, and structures to achieve competitive advantage and enhance performance.

Thus, research is necessary to help management make appropriate decisions and achieve this congruence. Globalisation has increased uncertainty, intensified industry competition, and advanced technology, thereby changing the environment in which organisations in developing countries operate.

According to Kassim, MdMansur, and Idris (2003), globalisation brings in new technology and exposes developing countries to great competition; these changes may affect an organisation’s choice of management accounting practice (MAP) and may also result in the firm’s reconsideration of existing organisational design and strategies to fit into the changing environment.

This argument is supported by Burns and Scapens (2000) and Shields (1997), who suggested that environmental changes cause organisational changes that, in turn, cause MAP changes.

As the firm strives to achieve an improved fit with its environment and become increasingly successful, sustaining and improving current performance become critical.

1.2 Statement Of The Problem

Manufacturing companies use management accounting techniques to assess their operations. These include budgeting, variance analysis and breakeven analysis.

These methods help organisations to plan, direct and control operating costs and to achieve financial performance as seen in the study of James, J.F (2013). It is recognised that management accounting practices are important to the success of the organization (Horngren et al., 2009).

In Barbados, some manufacturing companies have been facing challenging times with several companies experiencing bankruptcy, especially during the current global recession.

Thus, there is a need to strive for performance in the manufacturing industry in Tiko Municipality principally the Cameroon development Cooperation, Tiko Factory through the use of sound management accounting practices. The main objective of this paper is to examine the management accounting practices of Cameroon development Cooperation, Tiko Factory.



This research will seek to inform practitioners and academics about the management accounting practices within a small developing country and be able to determine the best practice suitable for companies within this region.

It therefore examines which management accounting practices in Cameroon development Cooperation, Tiko Factory are more widely used, which ones are preferred and why are they preferred over other practices.

It also focuses on several factors that influence decisions made by senior management in order to adopt appropriate techniques that provide the best results for external and internal reporting within this company.

The financial data in Cameroon development Cooperation, Tiko Factory usually were recorded in the accounting system department. At that period, management accountants feel that they have to educate their non-financial managers in using the accounting information. In the nineties, the financial data are available in all levels of business.

Management accountants worked together with other managers to find out the best for the company. Management accountants were no longer distinguishing themselves from the non-financial managers. They consider themselves as the member of management team.

In the naughtiest, the rapid changes in Information Technology made information are available throughout organization. Management accountants should be partners with other managers.

They should work together hand in hand in achieving corporate business strategies. Sometimes, it is rare to find an individual within organization with the title as “management accountant”, but there is always an individual who do the management accountant functions.

The rapid changing of business environment recently into global, competitive and turbulence business environment give significant impact to how people doing their business in any type of corporation, either manufacturing or non-manufacturing company, either big, medium or small company and either profit oriented or non-profit company.

In today’s rapid changes, every organization must continuously ensure its sustainability in global market. Companies must able to compete nationally and internationally in order to sustain in the market. Management accountings practices have to assure that information provided to managers are relevant and useful in doing their jobs.

In summary, this research is to address the management accounting practices today in medium and big-scale manufacturing companies, the management accountant role in the organization and the factors that drive the changing role of management accountant.

Literature foresees new management accounting techniques and changes in organizational and business environments having a huge impact on management accountants’ roles, yet empirical evidence on fundamental shifts in these roles remains relatively scarce (Burns & Baldvinsdottir, 2005 in Lambert and Sponen, 2009).

In summary, our objectives are to address the following research propositions: The main research question of this research is what is the effect of management accounting techniques on the financial performance of manufacturing companies in Tiko municipality. Case study: Cameroon Development Corporation Tiko Factory?

In line with the main question the specific research questions are going to be,

What is the effect of capital budgeting on the financial performance of manufacturing companies in Tiko municipality?

What is the effect of inventory valuation and product costing on the financial performance of manufacturing companies in Tiko municipality?

1.3 Aims And Objectives

The main research objective of this research is to examine the effect of management accounting techniques on the financial performance of manufacturing companies in Tiko municipality. Case study: Cameroon Development Corporation Tiko Factory.

In line with the main objectives the specific research objectives are going to be,

1. To investigate the effect of capital budgeting on the financial performance of manufacturing companies in Tiko municipality.
2. To examine the effect of inventory valuation and product costing on the financial performance of manufacturing companies in Tiko municipality.
3. To identify the management accounting techniques being carried out in Cameroon Development Corporation Tiko Factory.

1.4 Research Hypothesis

H0: Management accounting techniques has no significant effect on the financial performance of manufacturing companies in Tiko municipality. Case study: Cameroon Development Corporation Tiko Factory.

H1: Management accounting techniques has a significant effect on the financial performance of manufacturing companies in Tiko municipality. Case study: Cameroon Development Corporation Tiko Factory.

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