The Changing Role of Managerial Accounting in a Dynamic Business Environment

1. 1 Chapter One The Changing Role of Managerial Accounting in a Dynamic Business Environment

2. Managing Resources, Activities, and People Directing An organization . . . Decision Making Acquires Resources Organized set of activities Planning Controlling Hires People

3. 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 organization’s goals. • Measuring performance of activities, managers, and other employees. • Assessing the organization’s competitive position.

4. Financial Perspective Goals Measures Customer Perspective Operations Perspective Goals Measures Goals Measures Innovation Perspective Goals Measures The Balanced Scorecard How do we look to owner’s? In which activities must we excel? How do customers see us? How can we continue to improve?

5. Managerial versus Financial Accounting Accounting System (accumulates financial and managerial accounting data) Managerial Accounting Information for decision making, and control of an organization’s operations. Financial Accounting Published financial statements and other financial reports. Internal Users External Users

6. Managerial versus Financial Accounting

7. Aline position is directly involved in achieving the basic objectives of an organization. Example:A production supervisor in a manufacturing plant. Astaff position supports and assists line positions. Example:A cost accountant in the manufacturing plant. Line and Staff Positions

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

9. Treasurer Responsible for raising capital and safeguarding the organization’s assets. • Supervises relationships with financial institutions. • Work with investors and potentialinvestors. • Manages investments. • Establishes credit policies.

10. Internal Auditor Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. • Expresses an opinion to topmanagement regarding theeffectiveness of theorganizations accountingsystem.

11. Role of Managerial Accountant

12. Major Themes in Managerial Accounting Behavioral Issues Information and Incentives Costs and Benefits Managerial Accounting

13. 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 Continuous Improvement Just-in-Time Inventory

14. Cost Management Systems Objectives • Measure the cost of resources consumed. • Identify and eliminate non-value-added costs. CostManagementSystem

15. 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. Cost Management Systems

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

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

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

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.

20. Professional Ethics • Competence • Confidentiality • Integrity • Objectivity • Resolution of Ethical Conflict

21. Follow applicable laws, regulations and standards. Maintain professional competence. Prepare complete and clear reports after appropriate analysis. Professional Ethics Competence

22. Do not disclose confidential information unless legally obligated to do so. Do not use confidential information for personal advantage. Ensure that subordinates do not disclose confidential information. Professional Ethics Confidentiality

23. Avoid conflicts of interest and advise others of potential conflicts. Do not subvert organization’s legitimate objectives. Recognize and communicate personal and professional limitations. Professional Ethics Integrity

24. 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. Communicate unfavorable as well as favorable information. Professional Ethics Integrity

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

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.

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.

28. End of Chapter 1