THE GAP BETWEEN THE THEORY AND PRACTICE OF MANAGEMENT ACCOUNTING IN SRI LANKA: FROM A FUNCTIONALIST TO AN INSTITUTIONAL PERSPECTIVE

Numerous empirical studies in the West and in the Orient have established beyond doubt that a distinct gap exists between the theory and practice of Management Accounting (MA). The Sri Lankan situation does not seem to be different according to empirical evidence gathered from a sample of forty-five quoted public companies (Fonseka, et al., 2005) and extended subsequently through revisiting fifteen of them in the year 2008. The responses revealed that the ‘gap’ persists. Drawing from the Institutional Theory which came into focus in the 1990 s this paper argues that instead of being unduly worried about the gap companies should focus on the evolution and shaping of MA practices in the respective organizations. Such an approach will explain the diversity of MA practices, provide useful insights into their effectiveness and reveal ground level realities to share among organizations for their mutual benefit. Key words: Management Accounting, Theory, Practice, Functionalism and Institutional TheoryFor full paper: fmscresearch@sjp.ac.l