Paradigm Shift in the Management Accounting Practices in India

Abstract

Management accounting is an accounting branch which provides and presents commercial, economic, accounting and operational details to the management, managers and accountants to make important decisions thereby becoming an integral part of an organization. During the past decades, in India, the competition among businesses has increased and with rapid changing working environment of businesses, there has been criticism and reviews have cautioned about the usefulness, performance, efficacy and value of traditional and usual management accounting practices for not supporting managers for decision-making. India is a developing mixed-economy and is among the fast growing economies in the Asia and World. In 1991, Indian economy was liberalized and has changed the information requirements of the Indian companies. Indian economy is currently experiencing transformation due to GST, demonetization, digital banking, global competition, e-commerce, technology advancement, etc. The earlier practices adopted in management accounting was related to costing, budgeting and variance analysis which has changed to advisory, focuses on decision-making, strategic planning, long term growth and to optimize business operations. The present paper tries to study the opportunities, challenges and vicissitude in the Indian economy which has compelled to shift principles and practices of management accounting from conventional model to the model of value creation. This paper attempts to show various developments which are followed and implemented in India in management accounting field which are beneficial for India.