The Changing Role of Managerial Accounting in a Dynamic Business Environment

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Chapter One

• The Changing Role of Managerial Accounting in a
  Dynamic Business Environment

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Managing Resources, Activities, and People
Directing

• An organization . . .

Decision Making
Acquires Resources
Organized set of activities
Planning
Controlling
Hires People
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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.

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The Balanced Scorecard
How do we look to owners?
In which activities must we excel?
How do customers see us?
How can we continue to improve?
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Managerial versus Financial Accounting
Accounting System (accumulates financial
and managerial accounting data)
Managerial Accounting Information for
decision making, and control of an
organizations operations.
Financial Accounting Published financial statement
s and other financial reports.
Internal Users
External Users
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Managerial versus Financial Accounting
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Line and Staff Positions

• A line position is directly involved in achieving
  the basic objectives of an organization.
• Example A production supervisor in a
  manufacturing plant.

• A staff position supports and assists line
  positions.
• Example A cost accountant in the manufacturing
  plant.

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Controller

• The chief managerial and financial accountant
  responsibility for
• Financial planning and analysis.
• Cost control.
• Financial reporting.
• Accounting information systems.

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Treasurer

• Responsible for raising capital and safeguarding
  the organizations assets.
• Supervises relationships with financial
  institutions.
• Work with investors and potentialinvestors.
• Manages investments.
• Establishes credit policies.

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Internal Auditor

• Responsible for reviewing accounting procedures,
  records, and reports in both the controllers and
  the treasurers area of responsibility.
• Expresses an opinion to topmanagement regarding
  theeffectiveness of theorganizations
  accountingsystem.

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Role of Managerial Accountant
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Major Themes in Managerial Accounting
Behavioral Issues
Information and Incentives
Costs and Benefits
Managerial Accounting
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Evolution and Adaptation in Managerial Accounting
Service Vs. Manufacturing Firms
Computer-Integrated Manufacturing
Information and Communication Technology
Emergence of New Industries
Change
Global Competition
Product Life Cycles
Total Quality Management
Focus on the Customer
Cross-Functional Teams
Time-Based Competition
Just-in-Time Inventory
Continuous Improvement
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Cost Management Systems

• Objectives
• Measure the cost of resources consumed.
• Identify and eliminate non-value-added costs.

CostManagementSystem
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Cost Management Systems

• Determine efficiency and effectiveness of major
  activities.
• Identify and evaluate new activities that can
  improve performance.

• Objectives
• Measure the cost of resources consumed.
• Identify and eliminate non-value-added costs.

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Strategic Cost Management and the Value Chain
Product Design
Production
Research and Development
Marketing
Securing raw materials and other resources
Distribution
Customer Service
Start
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Theory of Constraints

• A sequential process of identifying and
  removing constraints in a system.

Restrictions or barriers that impedeprogress
toward an objective
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Managerial Accounting as a Career

• Professional Organizations

Institute of Management Accountants (IMA)
Publishes Management Accounting and
research studies.
Administers Certified Management Accountant progra
m
Develops Standards of Ethical Conduct
for Management Accountants
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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.

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Professional Ethics

• Competence
• Confidentiality
• Integrity
• Objectivity
• Resolution of Ethical Conflict

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Professional Ethics
Competence
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Professional Ethics
Confidentiality
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Professional Ethics
Integrity
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Professional Ethics
Integrity
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Professional Ethics
Communicate information fairly and objectively.
Objectivity
Disclose all information that might be useful to
management.
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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.

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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.

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End of Chapter 1