Helping Managers Manage

Do conventional management accounts help managers manage? This paper argues that the answer to this question is ‘No’, primarily because conventionally prepared budgets are not accepted by managers as valid measures of performance as a result of either forecasting errors in the data used in the original budget or weaknesses in the simulation algorithms inherent in the budget. The paper then suggests that management accounts can be made more meaningful by incorporating within the management accounting system a ‘resource management system’, the basis of which is a powerful simulation model.