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MANAGERIAL ACCOUNTING

CASE: CONTROLLERSHIP

1. Identify some of the problems in the relationship between the Controllers department and the Production Department. a. Communication Gap/Improper Coordination in Cascading Financial Contribution to Production line The accountants report is only focused on costs over budget. Production does not see how this report affects their real performance in the shop, and how it could help them in performing improvements in their process, and how they could help the companys financial health. Production sees paper works that the accountants require as additional work load giving no value to their tasks in the shopfloor. Controllers were not able to make production realize the impact/significance of this report to their business. In addition to this, production personnel do not see themselves as partners in business, so they look at cost vs budget report as controllers responsibility only. b. Controllers are only visible if the production line fails to meet their target budget. This means that they do not really verify the numbers with the actual status at the floorline.

2. What should Renato Pacencia do next? a. As a controller, he should perform process assessment and review in the production line by 1. Verifying the cost performance report with the actual at the shopfloor. 2. Asssess how production comes up with the figures given 3. Conduct a survey among production personnel on what hinders them to provide correct information, so that the controlling department can do its share in improving process as well.

4. Verify through interview or survey productions depth of knowledge in terms of cost performance report, its relevance to their daily tasks and how it affects them. 5. Conduct a project study on how to simplify the forms accountants require, so production can provide a truthful data even in just a short time. b. He should conduct briefing, orientation and training to production about the cost performance report. This includes how to obtain data, how to compute and interpret these metrics and how it significantly affects each entity in the company. This refers to OPEN BOOK MANAGEMENT providing transparency in the system, so that production will have a better understanding of the report they are issuing. With that, controlling can acquire productions cooperation in supplying the required correct data. Production can give their cooperation with controlling department if the would see whats in it for them. If production sees this reports significance to their daily task, they would do their share in improving their process or find ways to eliminate/prevent costs going over the budget.