Process oriented managerial accounting

The difficulty inherent in choosing a proper and accurate product costing method for manufacturing enterprises has been widely discussed by academics and practitioners. Elementary forms of traditional methods, which mostly featured absorption characteristics (absorption costing) and would have been used for calculating costs of products in manufacturing industries, have been described in detail by many authors. This paper is focussing on Business Process Management as one of the essential managerial paradigms which emerged in the second half of the twentieth century. Business Process Management was a reaction especially to external changes not only in the market but also in technology, society or the environment. Change has become a certainty in almost every aspect of business. But the main point of Business Process Management is value creation through business processes instead of single functional units. Analysis and management of processes must include also measurement of performance and costs. Cost structures have undergone changes as well which led to development of new cost management methods. Process managers, so called process owners, need relevant information about process costs, process improvement projects return on investment or value creation but traditional methods cannot provide such information. This paper discusses some process-oriented managerial accounting methods as well as process modelling requirements for economic and business information. These methods includes e.g. activity based costing, throughput accounting or lean accounting. Traditionally, process modelling is focused on activity flows, business goals and performance metrics but connection to accounting is often unclear. Therefore, integration of Business Process Management and managerial accounting through a process model is proposed.