Lithuanian organizations use the terms management accounting and controlling in parallel. While modern management accounting tools like activity-based costing and balanced scorecard are important for effective controlling, their implementation depends on how their essence is understood and applied within each organization. A survey of over 200 Lithuanian organizations found that declaring implementation of management accounting concepts does not ensure they are substantiating decision-making processes. Information generated must be accurately integrated into management to create value for stakeholders.

1. Controlling in Lithuania:
Lithuania
Conceptions and
instruments
Two years ago when controlling workshops in Lithuania were just starting, the
first question to arise was what controlling meant. Is it about control or about
performance measurement, or about management?
Most of the participants understood what strategy, sis show that in most cases controlling is associ-
balanced scorecard, and budgeting were. They ated with control and management accounting,
did it in their everyday life but they did not call it in planning, and measurement. Analysis of signifi -
such a way. Aiming to spread the idea of control- cance in different management levels disclosed the
ling in Lithuania, the pioneers of the controlling difference of opinions. Non-controllers handle
group were faced with the problem of finding out management accounting as significant in the stra-
how people understood it. Pilot research which led tegic management level, and controllers in the
to the disclosure of the essence of controlling from operational level. Analysis of tools leads to the
the perspective of conception, functions, signifi - conclusion that instruments for management ac-
cance in different management levels and tools counting and controlling are the same. Summariz-
was performed. Respondents were divided into ing those results, it could be maintained that con-
two groups: Those who preferred themselves as trolling is a process the methodological basis of
controllers and those who did not. Results were which are management accounting tools.
compared from the perspectives of conceptions,
Dr. Edita Gimžauskien, functions, significance in different management le- Recent fashions of management accounting are
Kaunas University of Technol- vels, and tools of management accounting and activity-based costing and balanced scorecard.
ogy, Deputy Leader of ICV
controlling. Looking from the perspective of the 1990s, they
working group Lithuania
are not so new. But anyway, the world hasn’t got
Analysis of the conceptions allowed us to ascertain anything more fashionable in the field of manage-
that management accounting is interpreted as an ment accounting. The Lithuanian experience, while
informational methodical, analytical system. At the implementing those modern techniques, is not so
same time, controlling is a less determined object, different from other companies in the world. Peculi-
the main function of which is coordination. The arities of this experience could be pointed out from
“Lithuanian organizations
opinions of “controllers” and “non-controllers” the perspectives of implementation level, disclosure
use the terms management were different. “Non-controllers” know more about of the main conceptual idea and functionality.
accounting and controlling management accounting and, accordingly, attri-
in parallel. Modern manage- butes of more clearly-defined management areas. Modern management conceptions influence value
ment accounting tools are
Controllers argue that the role of management ac- creation for shareholders, employees and custo-
a precondition for effective
controlling but it depends counting is more informational. mers when generated information supports ma-
on how the essence of those nagement decisions. On the other hand, the imple-
tools are understood and Controllers have a clearly-defined understanding mentation of a modern management accounting
realized in particular orga-
of what controlling and management accounting conception does not ensure its substantiation and
nization and how they are
integrated into decision- are. Non-controllers are not so assertive. Functions application. The information is suitable for deci-
making processes.” of management accounting and controlling analy- sion-making when conceptual principles of the sys-
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2. Members of the ICV
working group Lithuania,
2009.
tem really work in an organization. The declarati- The implementation of a theoretically descriptive “In this chart you can see
on that an organization had fully or partly imple- method of management accounting in practice that adopters of ACB more
frequently measure perform-
mented the conception does not mean that it is does not automatically imply its incorporation into
ance in a wider range of
true. The question is whether adopters and users of decision-making processes. There are cases when activities than non-adopters.
the system understand the main idea and princi- organizations which have implemented such tech- In some cases the implemen-
ples of the system, and whether they have succee- niques do not manage fully all their capacities. In tation level was declared
but not really working. On
ded with the realization of it in practice. The pro- such situations the management accounting sys-
the other hand, the results
blem is to find out in which cases the declaration tems become ends in themselves, not means to an suggest that there are or-
about systems implementation remains a declarati- end. On the other hand, the question is whether this ganizations which measure
on, and which factors show that the systems (AB- information is accurate, relevant and suitable for costs and performance
in prime and supporting
CM or BSC) really work. decision-making in different management areas.
activities but do not declare
ABCM implementation.”
The survey covered a total sample of over 200 or- According to the results it can be maintained that
ganizations in Lithuania. Ninety completed questi- information generated with the help of manage-
onnaires were suitable for future analysis. Most of ment accounting concepts (ABCM or BSC) in Lithu-
the respondents were small or medium-sized orga- anian organizations assists traditional manage-
nizations. 48% of the respondents that took part in ment areas: Problems identification solution (43%)
the research have been active in the market for ten and communication with shareholders (42%). It is
or more years, and 39% from five to ten years. This logical that respondents don’t see management
parameter shows that the practice of management accounting as a means for communication with
accounting and performance measurement is stea- government institutions and controllers (4%) (they
dy enough. Furthermore, more than half of the re- have financial accounting for this purpose). This
spondents indicated that their turnover in the last information does not serve as a background for
year had grown by 50% or more. Fast growth re- incentive and motivation systems and communica-
flects changes in the structures and processes of an tion between managers and employees (about
organization. 24%). The situation of strategic planning is better,
because about 35% of respondents accept the role
The first variable measured was the implementa- of management accounting and performance
Measurement of activities in
tion level of ABC and BSC. About 38% of the re- measurement process for strategy creation, harmo-
value chain
spondents were adopters of ABC. The rest (62%) nization with mission, vision, values and adjust- Spearman’s R 0.467 Signifi-
either knew about ABCM, but have not attempted ment to short- and long-term tasks. cance at .00 levels
to implement it, or did not know about it at all. The
BSC conception has been implemented in only 13
companies (14.4%).
The main conceptual idea of ABC is the measure-
ment of costs and performance in each part of an
organization’s value chain. It can be presumed
that if an organization measures the costs and
performance in its prime activities but does not in
its supporting activities, it means that the idea of
ABC was not properly understood and implemen-
ted. That is the case where the implementation le-
Figure 1
vel of ABC is merely declarative.
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