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Feb 2018

An evaluation of Global Management Accounting Principles in the sustainability of a mechanised piggery

The aim of this study was to evaluate the relevance of Global Management Accounting Principles (GMAPs) in the sustainability of a mechanised piggery in a South African context. The agricultural industry globally, but specifically in South Africa, is facing many influential factors over which little or no control can be exerted. These influential factors or complexities have an impact on sustainability of commercial farming operations.

In 2014, we published the first set of GMAPs to provide guidance on best practice for management accounting functions. A case study was undertaken to explore the appropriateness of GMAPs in the context of a commercial farming operation in the form  of a mechanised pork production operation, Piggery A. Business sustainability was the lens through which GMAPs were evaluated in the case of Piggery A. 

Key conclusions:

  • All commercial farming operations should consider GMAPs as a tool to establish best practice in the support of decision-making that promotes sustainability of farming operations.
  • Despite the presence of principles of GMAPs in Piggery A, Piggery A was unable to continue to compete against factors in the external environment within which it was operating. Employing GMAPs will therefore not guarantee success of the  business, but will support sound business decision-making.
  • The study discovered that the most basic need of Piggery A, in terms of management accounting, was the production of management information in a decision-useful way. Therefore, the most important principles of GMAPs for Piggery A would be: “information is relevant” and “impact on value is analysed”, followed closely by “Communication provides insight that is influential”.

Research has found that businesses are placing more emphasis on sustainability, because it: i) has a positive effect on their profitability; ii) improves employee engagement and participation, and iii) positively affects the establishment of relationships with suppliers and customers.

CIMA et at., 2013

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An evaluation of Global Management Accounting Principles in the sustainability of a mechanised piggery