The relevance of selected management accounting techniques in three sectors of the local service industry

Abstract

Service businesses are becoming more competitive, diversified and dynamic. Top managers have recognised that in order for their company to be successful, they have to rely on management accounting information. This dissertation is aimed to envisage whether local service from three constituents of the service industry, consider budgeting, subdivision of accounts and internal ratios relevant for managing their business activities. The study conducted by means of qualitative research, focuses on six local service firms from the Management Consultancy, Insurance and Transport sectors. Personal interviews served to investigate at a considerable level of depth, the relevance of the selected management accounting techniques by establishing the magnitude of importance of such techniques and the extent of their use in the six service companies. It is evident that irrespective of their size and industry, the local service companies under review consider budgeting, subdivision of accounts and internal ratios as highly relevant for planning, decision-making and control of business operations. However the extent of their use mainly depends on management's aptitude to understand and interpret the results obtained and the level of communication of financial information within firms.