In recent years many large corporations have reaped the benefits of following best practice in financial and management accounting to become more competitive. However, very few studies have been undertaken to determine whether such best practice can be used as a benchmark to improve performance in small and medium enterprises (SMEs). Accordingly, the main purpose of this study was to develop and test a conceptual model of 'best financial and cost accounting practice' (BFCAP) based on the practices of strategic planning, budgeting and budgetary control, and financial and cost accounting as related to financial effectiveness. To determine whether existing practices were consistent with a conceptual model of BFCAP that is linked to financial effectiveness, a survey was undertaken of some 200 SMEs in Queensland. The findings of the study indicated that the model does in fact explain relationships between strategic planning, best practice financial and cost accounting practices, and financial effectiveness.