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A Proposed Framework to Enhance Management Accounting Practice in
Schools Management
Sharul Effendy Janudin
1*
, Haslina Abdullah
2
1,2
Faculty of Management and Economics, Universiti Pendidikan Sultan Idris
*Corresponding Author
DOI: https://dx.doi.org/10.47772/IJRISS.2025.91100272
Received: 10 November 2025; Accepted: 20 November 2025; Published: 06 December 2025
ABSTRACT
This conceptual paper develops a theoretically grounded framework to strengthen Management Accounting
Practices (MAPs) in schools. Although management accounting is widely applied in the corporate sector, its
adoption in educational settings remains limited, resulting in weak analytical decision-making, inadequate
financial transparency, and inefficient budgeting. Drawing on Contingency Theory, Dynamic Capabilities
Theory, and principles of public-sector accountability, this study conceptualises how contextual conditions
shape the design and quality of Management Accounting Information (MAI), and how decision-making
capability and financial innovation mediate the relationship between MAI and school performance. The
proposed framework integrates budgeting cycles, cost measurement tools, reporting systems, and performance
indicators to offer a more systematic and evidence-based approach to school financial governance. It also
provides a foundation for future empirical validation through pilot studies, qualitative interviews, and
quantitative modelling. By positioning MAPs as strategic enablers rather than administrative routines, the
model offers practical guidance for school leaders and policymakers seeking to enhance transparency, resource
optimisation, and data-driven decision-making in alignment with Malaysia’s education transformation agenda.
Keywords: management accounting practices, decision-making capability, financial innovation, school
performance, public-sector accountability
INTRODUCTION
Education institutions are increasingly needed to demonstrate accountability, efficiency, and transparency in
resource management. In Malaysia, the Ministry of Education underlines financial integrity and evidence-
based decision-making at the school level. Despite this, many schools still depend on basic bookkeeping and
compliance-oriented financial reporting, rather than strategic management accounting.
Management Accounting Practices (MAPs) which involve budgeting, cost control, performance measurement,
and decision support can provide a structured approach to enhance school governance and performance.
However, challenges such as inadequate training, limited digital tools, and fragmented data systems often
hinder effective implementation. Therefore, this paper aims to propose a framework for enhancing
management accounting practices in schools, integrating both contextual and behavioral perspectives.
Specifically, this study seeks to:
1. Examine the factors influencing the implementation of MAPs in schools.
2. Explore the mediating roles of decision-making capability and innovation in financial management.
3. Develop a conceptual framework for improving school financial and non-financial performance.
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LITERATURE REVIEW
Management Accounting in Nonprofit and Educational Settings
Recent studies emphasize that management accounting practices in nonprofit and educational institutions differ
substantially from those in the private sector. Hyndman & McKillop (2019) and Grossi et al. (2022) show that
nonprofits rely heavily on budgeting and performance measurement systems to demonstrate accountability
rather than profitability. Similarly, Broadbent, Jacobs & Laughlin (2020) argue that educational organisations
require accounting systems that integrate financial indicators with pedagogical and stakeholder measures. In
school contexts, research in Australia (Caldwell, 2021), the UK (Day & Smethem, 2023), and Indonesia (Anas,
2024; Maslufi, 2025) demonstrates that budgeting, cost monitoring, internal control, and digital reporting
systems significantly influence school performance and resource allocation decisions.
Management Accounting Practices in the School Context
Management Accounting Practices (MAPs) refer to the processes that generate financial and non-financial
information to support managerial decisions (Drury, 2018). While widely adopted in the private sector, the
education sector often underutilizes such practices (Broadbent & Guthrie, 2008). In schools, MAPs can
improve resource allocation, promote cost awareness, and enhance accountability.
School-based financial and management accounting practices have gained increasing attention across
Southeast Asia as governments move toward decentralised and accountable education systems. In Malaysia,
several studies have established frameworks for effective school-based financial management (Radzi, Ghani,
& Siraj, 2013, 2015, 2017), highlighting budgeting, cost control, and reporting as core elements that enhance
transparency and decision quality. Complementary research by Kenayathulla et al. (2017) and the Institut
Aminuddin Baki (n.d.) confirmed that continuous training in financial management significantly strengthens
principals’ capacity to implement sound accounting procedures. Radzi (2016) further emphasised strategic
financial planning as essential for resource optimisation in national schools. Parallel findings in Thailand
(Wongkhiaw, 2025) and Indonesia (Anas, 2024; Maslufi, 2025) demonstrate that accountability audits,
transparency, and ICT integration improve financial governance and school performance. Similarly, Rint
(2024) identified budgeting and internal control as persistent challenges under school-based management
reforms in the Philippines. Collectively, these studies reveal that management accounting practices at the
school level are pivotal to educational effectiveness, fiscal integrity, and sustainable institutional performance.
Dimensions of Management Accounting Information (MAI)
The construct of Management Accounting Information (MAI) refers to the quality and characteristics of
accounting information that support managerial decision-making, control, and planning. Chenhall and Morris
(1986) identified four core dimensions of MAI: broad scope, timeliness, aggregation, and integration. These
dimensions describe how accounting systems differ in the type, frequency, and level of data provided to
managers.
Broad scope refers to information that goes beyond traditional financial data to include non-financial, external,
and future-oriented information (Chenhall & Morris, 1986; Mia & Chenhall, 1994). It enables managers to
anticipate changes in environmental and competitive conditions, making it essential for decision-making in
dynamic settings such as schools and SMEs.
Timeliness concerns how quickly information is provided to managers for decision-making and control
(Chenhall & Morris, 1986). Timely data improve responsiveness and the ability to implement corrective
actions (Chong, 1996; Gul & Chia, 1994). In educational institutions, timely reporting supports efficient
budget control and resource management.
Aggregated information refers to the extent to which data are summarized by functional area, time period, or
decision relevance (Chenhall & Morris, 1986; Hall, 2011). High aggregation helps school managers compare
performance across departments or time frames, facilitating strategic decisions. Integration indicates how
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accounting systems link information across departments, functions, and activities (Chenhall & Morris, 1986;
Otley, 2016). Integrated information enables coordination between administrative, academic, and financial
units — crucial for complex organizations like schools.
Later studies (e.g., Chong & Eggleton, 2003; Hall, 2011; Bouwens & Abernethy, 2000) confirmed that these
dimensions influence managerial performance, innovation, and decision quality, especially under conditions of
uncertainty. In educational management, these dimensions underpin budgeting systems, performance
indicators, and school-based financial management frameworks, ensuring that accounting information supports
not just compliance but also strategic educational outcomes.
Decision-Making Capability
Decision-making capability refers to an organization’s or manager’s capacity to make timely, informed, and
effective decisions using reliable management accounting information. According to Nielsen (2015), decision
capability is enhanced when management accounting systems are deeply embedded within strategic and
operational processes, allowing managers to interpret financial and non-financial signals coherently. Jalal
(2022) found that efficient collection and communication of accounting information improve decision
outcomes, while delays or excessive data complexity weaken managers’ responsiveness. Similarly, Trevisan
(2023) highlighted that decision capability is influenced by how accounting systems accommodate diverse
values and ambiguity, especially in non-profit or creative environments such as education. Dahal (2024)
empirically demonstrated that management accounting practices mediate the relationship between decision
quality and organizational performance, reinforcing that decision-making capability depends on both
information quality and contextual alignment.
The American Accounting Association (2022) further emphasized that decision capability arises from
integrating planning, budgeting, and performance measurement within managerial processes. In the education
sector, school leaders’ ability to allocate resources, monitor budgets, and evaluate performance relies on the
same principles—high-quality, timely, and integrated information strengthens school management
effectiveness and accountability. Decision-making capability reflects the ability of school leaders to interpret
accounting information and translate it into strategic actions. According to Eisenhardt and Martin (2000),
effective decision-making is a dynamic capability that allows organizations to adapt to changes and allocate
resources effectively.
Innovation in Financial Management
Innovation in financial management refers to the process of applying new ideas, technologies, and methods to
improve the efficiency, transparency, and responsiveness of financial decision-making. According to Teece
(1986), innovation capability is a dynamic resource that allows organizations to reconfigure internal processes
to achieve superior performance and sustained competitiveness. Within financial management, such innovation
manifests through the adoption of digital budgeting platforms, automated accounting systems, and
performance dashboards that provide real-time financial insights (Bhimani & Willcocks, 2014; Scapens &
Jazayeri, 2003). These tools enhance data accuracy, reduce manual errors, and enable evidence-based decision-
making.
Bhimani (2020) further notes that the digital transformation of management accounting—through cloud-based
reporting, analytics, and AI integration—has reshaped how organizations plan, control, and report their
finances. In educational institutions, financial innovation supports school-based management reforms by
streamlining resource allocation, promoting accountability, and facilitating stakeholder reporting (Radzi,
Ghani, & Siraj, 2017). Similarly, Karanja and Nzulwa (2020) argue that embracing financial innovation fosters
agility in resource utilization and improves performance, especially under budget constraints. Therefore,
innovative financial management is not merely a technological upgrade but a strategic capability that aligns
accounting practices with institutional goals, enhances decision-making, and promotes sustainable
performance in schools.
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School Performance
School performance represents a multidimensional construct encompassing financial, operational, learning,
and stakeholder outcomes. Kaplan and Norton’s (1996) Balanced Scorecard (BSC) provides a comprehensive
framework to measure performance from four perspectives—financial efficiency, internal process
effectiveness, learning and growth, and stakeholder satisfaction. In the school context, this framework allows
administrators to move beyond traditional financial indicators by integrating non-financial measures such as
teaching quality, curriculum innovation, student achievement, and community engagement (Mavragani,
Nikolaou, & Tsagarakis, 2016). Hoque (2014) argues that the Balanced Scorecard aligns educational
objectives with strategic goals by linking resources, performance indicators, and accountability measures.
Empirical studies have shown that management accounting practices (MAPs) act as the mechanism connecting
financial information to these performance dimensions (Mokhtar & Jusoh, 2017; Radzi, Ghani, & Siraj, 2017).
Through budgeting, performance evaluation, and variance analysis, MAPs translate school objectives into
measurable outcomes. Moreover, Pang (2019) and Nguyen (2021) demonstrate that integrating BSC with
MAP enhances school governance and decision quality by ensuring that data-driven insights inform both
pedagogical and administrative decisions. In Malaysia, the application of MAPs within the Balanced Scorecard
approach has improved school-based management, resource efficiency, and accountability (Aziz & Said,
2022). Therefore, adopting BSC as a performance measurement tool enables schools to monitor progress
holistically, balancing financial prudence with academic excellence and stakeholder trust.
Theoretical Foundations
To strengthen the conceptual foundation, this framework integrates three theoretical perspectives commonly
applied in public-sector financial management: Contingency Theory, Dynamic Capabilities Theory (DCT), and
Public Sector Accounting and Accountability Theory.
Contingency Theory (Otley, 1980; Chenhall, 2003) explains that the design and usefulness of management
accounting systems depend on contextual factors such as school size, governance structure, environmental
uncertainty, and technological readiness. This theory justifies the inclusion of contextual factors as antecedents
in the proposed model. Dynamic Capabilities Theory (Teece, Pisano & Shuen, 1997) emphasizes an
organization’s ability to integrate, build, and reconfigure resources to respond to change. In school settings,
this relates to the leadership’s capability to use MAI for strategic decision-making and financial innovation.
Thus, DCT provides the logic for positioning decision-making capability and innovation as mediators. Finally,
Public Sector Accounting and Accountability Theory (Broadbent & Guthrie, 2008; Hood, 1995) explains how
transparency, stewardship, and performance reporting shape financial behaviour in public institutions,
including schools. This perspective positions the framework within the broader context of public
accountability, reinforcing school performance as a multidimensional outcome. Together, these theories
provide a strong justification for the relationships proposed in the framework.
CONCEPTUAL FRAMEWORK
The proposed framework (figure 1) postulates that contextual factors—such as organizational structure,
information technology, leadership support, and environmental uncertainty—influence the Management
Accounting Information (MAI) available within schools. According to Chenhall and Morris (1986), these
contextual conditions determine the extent to which accounting systems provide broad, timely, aggregated, and
integrated information. Schools operating in complex or dynamic environments require more sophisticated
MAI to support decision-making and accountability.
Enhanced MAI subsequently improves decision-making capability, as decision quality depends on the
availability of accurate, relevant, and timely data (Nielsen, 2015; Jalal, 2022). High-quality MAI facilitates
analytical reasoning, strategic responsiveness, and evidence-based judgment, enabling school leaders to make
informed financial and administrative decisions. Effective decision-making also acts as a catalyst for
innovation, particularly in financial management. When managers possess strong analytical and interpretive
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capabilities, they are more likely to adopt innovative tools such as digital budgeting systems, performance
dashboards, and data-driven reporting (Teece, 1986; Bhimani, 2020).
In turn, innovation in financial management contributes directly to school performance by improving resource
utilization, accountability, and operational efficiency. This aligns with Kaplan and Norton’s (1996) Balanced
Scorecard perspectives, which emphasize the interconnectedness of internal processes, learning and growth,
financial efficiency, and stakeholder satisfaction. Furthermore, MAI also has a direct effect on school
performance by providing the informational foundation for planning, monitoring, and performance evaluation,
even independent of decision-making or innovation mechanisms.
Finally, both decision-making capability and financial innovation serve as mediating variables in this
framework. They explain how information quality (MAI) is transformed into actionable strategies that enhance
institutional outcomes. Strong MAI systems enable superior decisions, which then promote innovation in
managing educational resources, ultimately driving sustainable improvements in school performance. Hence,
this integrative model positions management accounting information as the cornerstone linking contextual
conditions, managerial behavior, and innovation-driven performance outcomes in educational institutions.
Operational Definitions of Key Constructs
For clarity and conceptual precision, the key constructs in the proposed framework are operationally defined
based on established accounting and educational management literature. Budgeting cycles refer to the
structured annual processes through which schools plan, allocate, monitor, and review financial resources to
support pedagogical and administrative activities. Cost measurement tools encompass methods such as
programme costing, variance analysis, and activity-based costing that allow schools to identify, classify, and
evaluate expenditures associated with teaching, infrastructure, and student activities. The reporting system
denotes the mechanisms—both manual and digital—used to record, summarise, and communicate financial
information to internal and external stakeholders, including platforms such as school accounting modules and
MOE-approved digital systems. Management Accounting Information (MAI) is defined as decision-relevant
financial and non-financial information characterised by broad scope, timeliness, aggregation, and integration,
consistent with the dimensions proposed by Chenhall and Morris (1986). Decision-making capability refers to
the ability of school leaders to interpret MAI, assess alternatives, and apply evidence-based judgment in
resource allocation and strategic planning. Innovation in financial management reflects the adoption of new
technologies, digital tools, and modern practices—such as automated budgeting systems, dashboards, and
analytics—that enhance efficiency, accuracy, and transparency in school financial processes. Finally, school
performance is conceptualised as a multidimensional construct capturing financial efficiency, internal process
effectiveness, human capital development, teaching and learning quality, and stakeholder satisfaction, aligned
with the Balanced Scorecard perspectives. These operational definitions establish a consistent foundation for
understanding how each construct functions within the proposed framework.
Figure 1 : A Proposed Framework To Enhance Management Accounting Practices in School Management
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DISCUSSION AND IMPLICATIONS
Future Validation Plan
To strengthen the applicability and credibility of the proposed framework, future research should incorporate
an empirical validation process using a multi-method approach. A small-scale pilot study could first be
conducted in one or two schools—preferably representing different contexts such as urban and rural settings—
to assess the practicality of implementing key components of the framework, including budgeting processes,
reporting mechanisms, and management accounting information flows. Semi-structured interviews with
principals, senior assistants, finance clerks, and school accountants would provide deeper insights into existing
practices, challenges, and readiness for adopting enhanced MAPs. These qualitative findings can be
complemented by a comparative analysis with established school financial management models to examine
areas of alignment and divergence. Building on this groundwork, a broader quantitative study may be
undertaken using survey instruments designed to measure contextual factors, MAI dimensions, decision-
making capability, innovation in financial management, and school performance. Structural Equation
Modelling (e.g., SEM-PLS) can then be employed to statistically test the relationships proposed in the
framework and evaluate the mediating effects of decision-making capability and innovation. Together, this
staged validation strategy ensures that the framework is not only theoretically sound but also practical,
feasible, and empirically supported for implementation in real school environments.
Theoretical Implications
This proposed framework integrates Contingency Theory and Dynamic Capabilities Theory to provide a
holistic explanation of how contextual factors and internal capabilities interact to enhance school performance.
From the perspective of Contingency Theory (Chenhall, 2003; Otley, 2016), the framework recognizes that the
effectiveness of Management Accounting Information (MAI) depends on the fit between contextual
variables—such as school environment, size, governance, and technological readiness—and the information
systems adopted. This theory underscores that there is no universally optimal management accounting system;
rather, its usefulness is contingent upon the specific circumstances in which schools operate. Thus, contextual
alignment shapes the design and utilization of MAI, influencing how schools collect, process, and apply
information for managerial purposes.
Complementing this, Dynamic Capabilities Theory (Teece, Pisano, & Shuen, 1997; Eisenhardt & Martin,
2000) explains how schools develop internal competencies to sense opportunities, seize innovations, and
reconfigure resources to achieve superior performance. Within this framework, decision-making capability and
innovation in financial management are conceptualized as dynamic capabilities that enable schools to adapt to
changes in educational policy, funding mechanisms, and stakeholder expectations. The integration of these
theories positions Management Accounting Practices (MAPs) not merely as administrative routines but as
strategic enablers that enhance agility, learning, and continuous improvement. By linking information quality
(MAI) with decision-making and innovation processes, the framework extends traditional management
accounting discourse into the domain of educational performance, where strategic and adaptive capabilities are
increasingly critical.
In essence, this theoretical integration advances the literature by bridging structural contingencies with
dynamic managerial competencies. It contributes to both management accounting and educational leadership
scholarship by illustrating that effective school performance emerges from the interaction between contextual
fit and the institution’s ability to transform accounting information into strategic actions and innovative
practices. Future empirical research can further validate these relationships to enrich theory on the role of
management accounting in dynamic, knowledge-based public institutions such as schools.
This framework integrates Contingency Theory and Dynamic Capabilities Theory to explain how contextual
and internal capabilities interact to enhance school performance. It expands existing literature by positioning
MAPs as a strategic enabler rather than an administrative tool.
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Practical Implications
In implementing the proposed framework, schools must recognise that strengthened management accounting
practices require not only improved systems but also the development of human and organizational
capabilities. Effective adoption depends heavily on continuous training for principals, senior assistants, and
finance personnel, particularly in areas such as budgeting, cost analysis, digital reporting, and data
interpretation. This underscores the need for structured professional development programmes and coaching
initiatives that equip school leaders with the competencies needed to shift from compliance-oriented routines
to evidence-based financial decision-making. Equally important is the presence of robust change-management
strategies, including clear communication pathways, stakeholder engagement, and gradual integration of new
processes to minimize resistance among staff. To support long-term sustainability, schools must also ensure
alignment with digital management systems endorsed by the Ministry of Education, such as cloud-based
accounting modules, electronic reporting tools, and integrated school information systems. The integration of
these digital technologies enhances transparency, accuracy, and auditability while enabling real-time access to
management accounting information. Collectively, these practical considerations highlight that the successful
implementation of the framework requires investment in people, processes, and technology, ensuring that
financial innovation and managerial capabilities effectively translate into improved school governance and
performance.
For School Leaders
This framework emphasizes the importance of evidence-based decision-making supported by reliable and
timely management accounting information (MAI). School principals and senior administrators should
enhance their data literacy and analytical skills to interpret financial and non-financial indicators effectively.
By utilizing budgeting data, performance dashboards, and cost analysis reports, school leaders can make more
strategic decisions concerning resource allocation, staff deployment, and program evaluation. Furthermore,
embedding decision-making processes within a culture of accountability can strengthen transparency and
stakeholder confidence in financial governance.
For Policymakers and Educational Authorities
The framework highlights the necessity for the Ministry of Education and state education departments to invest
in digital accounting infrastructure and capacity building for school financial officers. Policymakers should
promote the adoption of cloud-based accounting systems, digital budgeting platforms, and automated reporting
tools to enhance timeliness, accuracy, and auditability of school financial data. Additionally, structured
training programs through institutions such as the Institut Aminuddin Baki (IAB) can ensure that principals
and accountants possess the competencies to apply management accounting practices (MAPs) strategically
rather than administratively. These policy initiatives can support a nationwide shift toward data-driven school
management.
For Educators and Academic Staff
Teachers and department heads play a vital role in linking financial management decisions to learning
outcomes. By fostering a culture of innovation and accountability, educators can participate in designing cost-
effective instructional programs and resource-efficient teaching practices. Collaboration between financial and
academic teams enables schools to align spending decisions with pedagogical priorities, thus improving both
performance outcomes and sustainability. Encouraging innovation—such as using digital tools for tracking
classroom expenditures or measuring program impact—empowers educators to act as partners in institutional
improvement.
Overall, the framework provides actionable guidance for practitioners at multiple levels of the education
system. It promotes a shift from compliance-oriented financial management toward strategic, innovation-
driven governance, ensuring that every financial decision contributes meaningfully to educational quality and
long-term institutional performance.
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Policy Implications
The proposed framework has strong policy relevance as it aligns with national efforts to strengthen educational
governance, accountability, and performance through evidence-based management. It supports the aspirations
outlined in the Malaysia Education Blueprint (2013–2025), which emphasizes school autonomy, professional
accountability, and the effective use of data to improve student outcomes. By integrating Management
Accounting Information (MAI) and innovation in financial management within the decision-making process,
the framework reinforces the Ministry of Education’s (MOE) commitment to enhancing transparency,
efficiency, and fiscal discipline across schools.
From a governance perspective, the framework complements the MOE Financial Governance Standards and
School-Based Management (SBM) policy initiatives by promoting accurate, timely, and integrated reporting
mechanisms. Through digital transformation and data-driven systems, schools can improve monitoring and
compliance with public sector financial regulations while ensuring resources are aligned with educational
priorities. The proposed model also supports Malaysia’s broader agenda for digital government transformation
and Education 5.0@UPSI, where digital innovation and analytics are central to institutional improvement and
accountability.
Moreover, this framework provides a structured reference for policymakers to design capacity-building
programs that strengthen financial literacy and managerial competencies among school leaders. Establishing
standardized management accounting systems and performance dashboards across schools could enable the
MOE to benchmark efficiency and identify best practices at both district and national levels. By
institutionalizing these practices, policymakers can ensure that financial decisions are not only compliant but
also strategic—directly contributing to improved educational quality and sustainable performance.
In sum, this framework offers policymakers a roadmap to bridge financial governance, data analytics, and
innovation in education management. It advocates a paradigm shift from procedural oversight to strategic
value creation, ensuring that every ringgit invested in education yields measurable outcomes in student
learning, institutional performance, and societal development.
CONCLUSION AND FUTURE RESEARCH
This paper proposes a conceptual framework to enhance management accounting practices in schools by
integrating contextual, informational, and behavioral components. It argues that effective use of management
accounting information—mediated by decision-making capability and innovation—can significantly improve
both financial and non-financial performance.
Future research should empirically validate this framework through quantitative methods (e.g., SEM-PLS)
using survey data from school leaders, or through qualitative case studies exploring implementation dynamics
across urban and rural contexts.
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