Eric Noreen on H. Thomas Johnson and Robert S. Kaplan's Relevance Lost: The Rise and Fall of Management Accounting.

Abstract The article presents comments on H. Thomas Johnson and Robert S. Kaplan's book "Relevance Lost: The Rise and Fall of Management Accounting," which concerns management accounting for decades. The book can be divided into three major parts although the authors have not done so. Chapters 2 through 6 are concerned with the evolution of management accounting practice through about 1925. In this part, the authors argue that managerial accounting preceded financial accounting and that management accounting practice (at least until about 1925) rationally evolved in response to environmental changes. Since 1925, management accounting practice has stagnated and earlier concerns with providing information for managers have been replaced with the need to provide valuations of inventory and cost of sales for external reports. In the second part (chapters 7 through 9) Johnson and Kaplan (J & K) argue that some of today's 60-year-old management accounting practices no longer provide information relevant to current business problems. In the third part (chapters 10 and 11) J & K sketch ways in which they think management accounting practice might be improved.