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By: JD Hancock


We are probably all more familiar with the use and conceptualisation of management accounting methods to seek to maximise our financial benefits. The philosophical foundations of almost all the management accounting techniques and methods available is neoclassical economic theory, which fundamentally assumes that decision-makers are rational and that the ultimate goal of all management accounting tools is to maximise economic or financial profits.


This is an accepted characteristic of management accounting which for more than a hundred years has, for many, remained unquestioned, and untouchable. Our textbook presents all of the existing tools and techniques of management accounting in a broader perspective, against a setting that decision-making scenarios are changeable over time and no management accounting tool offers an exact science; we also accept that there is potential to question the underlying philosophical premises (e.g., profit maximisation) over time.

Every now and then, something comes along which reminds us of the embedded and static nature of the management accounting discipline, and forces us to question its underlying premise. For example, consider a move that was announced by the UK Government in 2013, when the new Culture Secretary announced that the Arts industry must increasingly justify its claims for public funding through economic and financial arguments rather than via ‘artistic value’. She stated that the Arts industry must “hammer home the value of culture to our economy […..] culture’s economic impact”.

Clearly, the background to such significant moves by the UK government was the growing financial and economic downturn in recent times, not just in the UK but worldwide, and this represented yet another element to new policies of austerity.

Where costs, calculation, value, etc., are concerned, management accounting is going to be required and, as explained above, there is always inherently a leaning of traditional management accounting tools towards calculations for economic and financial gain. But does this capture the whole story? As a management accountant, how would you approach this issue if you were advising the UK (or other) Government? Can, or should, we value the Arts purely in economic and financial terms?

Source: BBC NEWS (Entertainment and Arts) website (24.04.13),



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