Examining the Role of Responsibility Accounting in organizational Structure

Abstract

As the centralized operations in organizations become more complicated in case of business development, the need to delegate authorities and responsibilities will depend on the size of the business. In a decentralized business organization, directors are responsible for planning and controlling the corporate operation.
If the authority to manage daily operations is transferred from high-level managers to middle managers, the former will have more opportunity to focus on strategic planning.
The responsibility accounting system is designed to report and accumulate costs by individual levels of responsibility. Each supervisory area is charged only with the cost for which it is responsible and over which it has control. There are three basic types of responsibility centers: cost centers, revenue centers, and investment centers. When budgeted amounts are compared with actual amounts and deviations are found, responsibility accounting can be used to find the causes of such deviation and hence improve the function. We can also determine each manager's responsibility to achieve his attainable goals in the organization.