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Bill French

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© 1998 American Accounting Association Accounting Horizons Vol. 12 No. 4 December 1998 pp. 363–373

Financial Information and Quality Management—Is There a Role for Accountants?
Leif M. Sjoblom
Leif M. Sjoblom is a Professor at the International Institute for Management Development. SYNOPSIS: Different opinions exist with respect to the usefulness of financial information for operational decision making. While academics encourage the provision of accounting information on quality, few companies provide it. This article explores the usefulness (or lack thereof) of Cost of Quality (COQ) and quality-related financial information through the use of a survey and informal discussions and interviews with quality managers. Financial information can be used to flag quality problems, to select and prioritize quality improvement projects and to choose corrective action. The results suggest that financial information has a limited role in supporting these operational decisions. The limitations of current COQ systems, and the lack of relevant, reliable and timely financial information, are among the reasons cited for not using COQ. However, there is a perceived need for additional financial reporting in order to attract the attention of top management and to motivate managers. In order to make COQ more relevant to practitioners, future research must not only focus on improving and disseminating best practices, but also on the multi-disciplinary implementation process. Data Availability: Contact the author. INTRODUCTION Financial tools for quality, such as Cost of Quality1 (COQ), have attracted considerable interest from the accounting profession in recent years. Quality management has long been a key issue in manufacturing and marketing. While the subject was almost nonexistent in the accounting literature ten years ago, recent textbooks mention quality as “having a profound...

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