Accounting is facilitating managerial control

The fundamental function of management accounting is facilitating managerial control. Various devices are used by the management in performing this important function. Responsibility accounting is one of the most recent developments in this field. It has assumed great significance and rightly described as modern approach to managerial control and reporting. The growth of responsibility accounting is attributed to the realization that the results of operations  must be regarded as human responsibilities and not as abstract concepts. While the other control techniques, available under the conventional accounting, are directed towards determining the total and unit product cost for the organization as a whole, responsibility accounting lays emphasis on performance of individuals where responsibilities are fixed for the persons and division accountable for the same. The concept of responsibility accounting is closely related to the systems of budgetary control and standard costing. According to Schaltke, R.W and Johnson, H.G “ The management accounting system that ties budgeting and performance reporting to a decentralised organization is called responsibility accounting”

The systems of costing like standard costing and budgetary control are useful to management for controlling costs. In those systems the emphasis is on the devices of control and not on those who use such devices. Responsibility Accounting is a system of control where responsibility is assigned for the control of cost. The persons are made responsible for the control of cost. Proper authority is given to the person so that they are able to keep up their performance. In case performance is not according to the predetermined standards then the person who are assigned this duty will be personally responsible for it. In responsibility accounting the emphasis is on men rather than on systems.