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    Chapter One: The Changing Role of Managerial Accounting in A Dynamic Business Environment

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    Meenal Malhotra
    Managerial accounting provides information for Decision Making and planning. Financial accounting is used to publish financial statements and other financial reports. Managerial Accounting Information is for decision making, and control of an organization's operations.

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    Attribution Non-Commercial (BY-NC)
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    Chapter One: The Changing Role of Managerial Accounting in A Dynamic Business Environment

    Uploaded by

    Meenal Malhotra
    70 views28 pages
    Managerial accounting provides information for Decision Making and planning. Financial accounting is used to publish financial statements and other financial reports. Managerial Accounting Information is for decision making, and control of an organization's operations.

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    Managerial accounting provides information for Decision Making and planning. Financial accounting is used to publish financial statements and other financial reports. Managerial Accounting Information is for decision making, and control of an organization's operations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    70 views28 pages

    Chapter One: The Changing Role of Managerial Accounting in A Dynamic Business Environment

    Uploaded by

    Meenal Malhotra
    Managerial accounting provides information for Decision Making and planning. Financial accounting is used to publish financial statements and other financial reports. Managerial Accounting Information is for decision making, and control of an organization's operations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 28

    1-1

    Chapter One

    The Changing Role of Managerial Accounting in a Dynamic Business Environment


    McGraw-Hill/Irwin
    The McGraw-Hill Companies, Inc., 2002

    Managing Resources, Activities, and People


    An organization . . .

    1-2

    Directing

    Acquires Resources

    Organized set of activities

    Decision Making

    Controlling

    Planning

    Hires People
    McGraw-Hill/Irwin
    The McGraw-Hill Companies, Inc., 2002

    How Managerial Accounting Adds Value to the Organization


    Providing information for decision making and planning. Assisting managers in directing and controlling activities. Motivating managers and other employees towards organizations goals. Measuring performance of activities, managers, and other employees. Assessing the organizations competitive position.
    McGraw-Hill/Irwin

    1-3

    The McGraw-Hill Companies, Inc., 2002

    1-4

    The Balanced Scorecard


    How do we look to owners?

    Financial Perspective Goals Measures


    In which activities must we excel?

    Customer Perspective Goals Measures


    How do customers see us?

    Operations Perspective Goals Measures

    Innovation Perspective Goals Measures


    McGraw-Hill/Irwin

    How can we continue to improve?

    The McGraw-Hill Companies, Inc., 2002

    Managerial versus Financial Accounting


    Accounting System (accumulates financial and managerial accounting data)
    Managerial Accounting Information for decision making, and control of an organizations operations. Internal Users
    McGraw-Hill/Irwin

    1-5

    Financial Accounting Published financial statements and other financial reports. External Users
    The McGraw-Hill Companies, Inc., 2002

    Managerial versus Financial Accounting


    Managerial Accounting Users of information Managers within company Regulation Financial Accounting Interested outside parties

    1-6

    Required. Must comform to Not required because for internal GAAP which is regulated by use only FASB and SEC. Basic accounting system plus Almost exclusively from the Source of Data various other sources basic accounting system Reports often focus on subunits. Reports focus on the enterprise Nature of Reports Based on a combination of in its entirety. Based on and Procedures historical data, estimates, and historical transactions. projections of future events.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-7

    Line and Staff Positions


    A line position is directly involved in achieving the basic objectives of an organization.

    A staff position supports and assists line positions.

    Example: A production supervisor in a manufacturing plant.

    Example: A cost accountant in the manufacturing plant.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-8

    Controller
    The chief managerial and financial accountant responsibility for:
    Financial

    planning and analysis. Cost control. Financial reporting. Accounting information systems.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-9

    Treasurer
    Responsible for raising capital and safeguarding the organizations assets.

    Supervises relationships with financial institutions. Work with investors and potential investors. Manages investments. Establishes credit policies.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-10

    Internal Auditor
    Responsible for reviewing accounting procedures, records, and reports in both the controllers and the treasurers area of responsibility.

    Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-11

    Role of Managerial Accountant


    Organization Chart
    Stockholders Board of Directors

    President
    Controller Treasurer Vice President Production Vice President Sales

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    Major Themes in Managerial Accounting


    Behavioral Issues

    1-12

    Information and Incentives

    Costs and Benefits

    Managerial Accounting
    McGraw-Hill/Irwin
    The McGraw-Hill Companies, Inc., 2002

    Evolution and Adaptation in Managerial Accounting


    Service Vs. Manufacturing Firms
    Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Continuous Improvement
    McGraw-Hill/Irwin

    1-13

    Computer-Integrated Manufacturing
    Information and Communication Technology Product Life Cycles Total Quality Management Time-Based Competition Just-in-Time Inventory
    The McGraw-Hill Companies, Inc., 2002

    Change

    1-14

    Cost Management Systems


    Objectives
    Measure the cost of resources consumed. Identify and eliminate non-valueadded costs.

    Cost Management System

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-15

    Cost Management Systems


    Objectives
    Measure the cost of resources consumed. Identify and eliminate non-valueadded costs.
    Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    Strategic Cost Management and the Value Chain


    Product Design Production Research and Development Securing raw materials and other resources

    1-16

    Marketing

    Distribution Customer Service


    The McGraw-Hill Companies, Inc., 2002

    Start
    McGraw-Hill/Irwin

    1-17

    Theory of Constraints
    A sequential process of identifying and removing constraints in a system.
    Restrictions or barriers that impede progress toward an objective

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-18

    Managerial Accounting as a Career


    Professional Organizations
    Institute of Management Accountants (IMA)

    Publishes Management Accounting and research studies.

    Administers Certified Management Accountant program

    Develops Standards of Ethical Conduct for Management Accountants


    The McGraw-Hill Companies, Inc., 2002

    McGraw-Hill/Irwin

    1-19

    Professional Ethics
    Ethical business practices build trust and promote loyal, productive relationships with customers, employees and suppliers. Many companies have written codes of ethics which serve as guides for employees to follow.

    McGraw-Hill/Irwin

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    1-20

    Professional Ethics
    Competence

    Confidentiality
    Integrity

    Objectivity
    Resolution of Ethical Conflict

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-21

    Professional Ethics
    Follow applicable laws, regulations and standards. Maintain professional competence.

    Competence
    Prepare complete and clear reports after appropriate analysis.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-22

    Professional Ethics
    Do not disclose confidential information unless legally obligated to do so.

    Do not use confidential information for personal advantage.

    Confidentiality
    Ensure that subordinates do not disclose confidential information.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-23

    Professional Ethics
    Avoid conflicts of interest and advise others of potential conflicts. Do not subvert organizations legitimate objectives.

    Integrity

    Recognize and communicate personal and professional limitations.


    McGraw-Hill/Irwin
    The McGraw-Hill Companies, Inc., 2002

    1-24

    Professional Ethics
    Avoid activities that could affect your ability to perform duties. Refrain from activities that could discredit the profession. Refuse gifts or favors that might influence behavior.

    Integrity
    Communicate unfavorable as well as favorable information.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-25

    Professional Ethics
    Communicate information fairly and objectively.

    Objectivity

    Disclose all information that might be useful to management.


    McGraw-Hill/Irwin
    The McGraw-Hill Companies, Inc., 2002

    1-26

    Professional Ethics
    Resolution of Ethical Conflict
    Follow established policies of your organization.
    If unresolved or if policy does not exist:
    Clarify relevant concepts in a confidential discussion with an objective advisor to explore possible courses of action.
    Discuss problem with immediate supervisor.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-27

    Professional Ethics
    Resolution of Ethical Conflict
    If immediate supervisor is involved in the
    unethical behavior, discuss at the next level.

    If problem is not resolved, the last resort is to


    resign.

    Generally, do not communicate ethical conflicts


    to outsiders.

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

    1-28

    End of Chapter 1

    McGraw-Hill/Irwin

    The McGraw-Hill Companies, Inc., 2002

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