Management Accounting is a science but not an exact science. Many of the conclusions drawn on the basis of Management Accounting depend on a greater extent upon the intelligent interpretation of data and this may guide only under some particular situations. The common practices, which have been adopted by the Management Accountants to deal with a particular problem from time to time, have taken the form of conventions or concepts. Though the significant role, which Management Accounting is expected to play in the management of business concerns, cannot be disputed at all and its use may under a number of benefits to modern management.
This system likes other sciences and techniques suffering from certain situations and reservations. The various limitations may be highlighted in brief as followed: 1. Most of the information used in Management Accounting is derived from Financial Accounting Record or Cost Accounting Record or other records. Therefore, the fairness and accuracy of decision makings deduced by Management Accounting which depends on a greater extent upon fairness and accuracy of those original records. 2. Conclusions or decision makings derived from Management Accountant are insignificant, unless these are properly executed at all levels of business operations.
Thus, there is need for continuous and coordinated efforts of each Management level to execute these decisions. 3. Management Accounting is a mere tool for management. It should never be considered as an alternate or substitute for management. But, ultimate decision makings, corrective steps or measures are being taken by management, not by management accountant. 4. A comprehensive knowledge and understanding of all related disciplines such as statistics, management science, economics, econometrics, engineering only may ensure full advantage of management accounting. 5.
There is always bias involved in all of the information furnished by the system of management accounting. The personal feeling and attitude of those persons whose services are availed in the process from collection to interpretation of information, having a subjective bearing on the information collected or interpreted. 6. Management accounting is still being in evolutionary stage, there is a wide scope for further improvement in its techniques and analytical tools. It is significant to note that various tools and techniques used as present are not having equi-origin of life and are not equally significant.
As a matter of fact that with gradual development of the subject, a number of new tools and techniques have been developed either replacing the old ones or addition to them. Furthermore, deregulation, intensive competition and an expanding product range created the need for service organizations to focus on cost management and develop management accounting information systems. Those enable them to understand their cost base and determine the sources of profitability for their products, customers and markets. According to Cooper (1981), "Organizations without formal accounting systems are vulnerable to claims that they are negligent".
Thus, managers can find value from management accounting systems for symbolic purposes even when the information has little or no relation to decision making. As such, there is no point of surprise that for solving a particular managerial problem, the alternative tools are available. These alternative tools represent the efforts on the part of management accountants and management scientists to remove the drawbacks of the existing tools by evolving new tools of superior quality and more scientific in nature and in use.
The various tools used at present to provide adequate information for effective strategic planning can be classified into various groups as follow: In conclusion, in order to achieve the objective of maximize profit, minimum cost, social good and positive cooperation in national development, it is essential that each managerial function should be performed on some scientific …… at the right time. To achieve this purpose, management needs the facts and information which are adequate and correct compatible understandable in nature, possible to be communicated quickly and related to managerial problems and objectives.