In 1998, IFAC come out with the IFAC’s evolution of management accounting is to counter the claim of lost

relevance in management accounting.

STAGE 1 - COST DETERMINATION AND FINANCIAL CONTROL

-summary: - prior to 1950, MA-technical activity, main source, use of methods -ra,fa,budgeting-predominant
- Prior to 1950, the focus of management accounting is on the cost determination and the financial control
through budgeting and cost accounting technique.
-Management accounting was seen as a technical activity
-The main source of data was from financial statements including balance sheet, income statement and cash flow
statement.
-The use of methods such as ratio analysis, financial statement analysis, budgeting and other cost accounting
techniques were predominant during this period.

STAGE 2- INFORMATION FOR MANAGEMENT PLANNING AND CONTROL

-From 1950 to 1965, the focus of management accounting shifted to the provision of information for
management planning and control
-Management accounting was seen as a management activity
-It involved the staff support to line management through the provision of information for management planning
and control purposes.
-The aim is to enable the management team to plan, control and take the best course of action in their decision
making processes.
-The use of management accounting techniques which could support the decision analysis and responsibility
accounting was introduced. Hence, the introduction of traditional methods such as standard costing, cost volume
profit, break even analysis, budgeting and performance management measurement was increased during this
period.

STAGE 3: REDUCTION OF RESOURCE WASTE IN BUSINESS PROCESSES

-From 1965 to 1985, the focus was on reducing waste in resources used in business process, process analysis and
cost management technologies.
-The MA was seen as a team-based activity.
- The waste in resource was made possible through the elimination of ‘non value added activities’.
-During this period, the management accounting techniques included JIT, TQM, EOQ, ABC, inventory evaluation
such as FIFO and LIFO, management resource planning (MRP) and multiple regression.

STAGE 4: CREATION OF VALUE THORUGH EFFECTIVE USE OF RESource

- From 1985 to 1995, the attention shifted to the creation of value through the effective use of resources and
technologies which examine the driver of customer value, shareholder value and organizational innovation
--The MA was seen as a part of the management process
-Relatively the use of modern manangement accounting techniques such as Balnced scorecard, vaue chain
analysis, target costing, strategic management accpunting were prevalent in this period.
-Even though the evolution of management accounting can be distinguished in four recognisable satges, the
techniques used in previous phases continued to be used in later stages.

STAGE 5:
-From 2000 till now, the focus of management accounting is on accountable strategic resource management
which take into account the Analysis of drivers of stakeholder value, risk management and sustainability
reporting.
-The MA is seen as a part of the strategic management process
-The strategic resource management tempered by increased in accountability to a broader range of stakeholders.