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Forecasting and planning Performance Evaluation Cost determination, pricing and cost management 4. Operations control and management 5. Incremental decision making 6. Financial Reporting 7. Motivation of managers
Performance Evaluation
1. After decisions have been made and action taken, actual results flow in (and reported in the financial reports). 2. Comparing actual plan to actual results. 3. Differences helps evaluate the performance of managers, business segments, or even the entire firm. 4. It will give insights where changes will be made.
EVALUA TION
FORECASTING / BUDGETING
MINIMIZATION OF COSTS
FINANCIAL REPORTING
Financial results are reported to both internal and external users.
Financial statements are important internally as indicators of how segments of the business and THEIR MANAGERS are performing. The performance of managers is measured in the light of how investors, shareholders, creditors, tax authorities, and, in the public sector, voters view their results.
MOTIVATION OF MANAGERS
This is the least important. Messages are sent through accounting numbers some subtle, some blunt, some harsh, and others tempered by intent to motivate, encourage, and reward strong performances.
1. The financial goal of the firm is to: Maximize thee long-term wealth of shareholders, or Maximize the present value of shareholders future cash flows from the firm. 2. Corporate managers, on the other hand, have a strong interest on profits.
At a minimum, management must use its resources in a manner that attains desired goal in a efficient manner.
TOP MANAGEMENT
MIDDLE MANAGEMENT
Deals with semi-structured problems relating primarily to obtaining and using resources effectively and efficiently.
LOWER MANAGEMENT
Faces more structured tasks. Their information needs are detailed, time dependent, and reported routinely.
GLOBALIZATION
1. This is being world-wide in scope or application. 2. This can also be defined as becoming universal.
QUALITY ASSURANCE
Ways or means to ensure that high quality of output is achieved, whether in terms of products , services or management.
1. 2. 3. 4.
Total Quality Management Program (TQM) Quality Circles (QC) Continuous improvement program Employee empowerment processes
TECHNICAL EVOLUTION
It impacted mostly the manufacturing companies. 1. Computer Aided Design (CAD). This is the use of high-quality graphics and software to create new products or to change existing products. 2. Computer Aided Manufacturing (CAM). Machines or entire production lines are run and coordinated by computers.
TECHNICAL EVOLUTION Management Information System (MIS). It allows information to be literally on the desktop of every managers.
MANAGEMENT COMPLEXITY
DOWSIZING.
Also known as rightsizing. Common approach to large companies. To remove the entire layers of management and to make the organization lean and mean.
BENCHMARKING
A method of comparing operations, costs, productivity with world class performers in those areas.
MANAGEMENT ACCOUNTING
It is a branch of accounting that meets managers information needs. It is designed to assist managers. Managers must define which data are relevant for a particular purpose and which are not.
1. The Management Accountant maintains accounting records, prepares financial statements, generates managerial reports and analyses, and coordinates budgeting efforts.
2. He is an advisor, an internal consultant, and an integral part of management.
Competence:
Practitioners of management accounting and financial management have a responsibility to: Maintain an appropriate level of professional competence by ongoing development of their knowledge and skills. Perform their professional duties in accordance with relevant laws, regulations and technical standards. Prepare complete and clear reports and recommendations after appropriate analysis of relevant and reliable information
Confidentiality:
Practitioners of management accounting and financial management have a responsibility to: Refrain from disclosing confidential information acquired in the course of their work except when authorized, unless legally obligated to do so. Inform subordinates as appropriate regarding the confidentiality of information acquired in the course of their work and monitor their activities to assure the maintenance of that confidentiality Refrain from using or appearing to use confidential information acquired in the course of their work for unethical or illegal advantage either personally or through third parties.
Integrity:
Practitioners of management accounting and financial management have a responsibility to: Avoid actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict. Refrain from engaging in any activity that would prejudice their ability to carry out their duties ethically. Refuse any gift, favor, or hospitality that would influence or would appear to influence their actions. Refrain from either activity or passively subverting the attainment of the organization's legitimate and ethical objectives. Recognize and and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity. Communicate unfavorable as well as favorable information and professional judgment or opinion. Refrain from engaging or supporting any activity that would discredit the profession.
Objectivity:
Practitioners of management accounting and financial management have a responsibility to: Communicate information fairly and objectively Disclose fully all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, comments, and recommendations presented.
Discuss such problems with immediate superior except when it appears that superior is involved, in which case the problem should be presented to the next higher managerial level. If a satisfactory resolution cannot be achieved when the problem is initially presented, submit the issue to the next higher managerial level. If the immediate superior is the chief executive officer or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive committee, board of directors, board of trustees, or owners. Contact with a level above the immediate superior should be initiated only with the superior's knowledge. assuming the superior is not involved. Except where legally prescribed, communication of such problems to authorities or individuals not employed or engaged by the organization is not considered appropriate.
Clarify relevant ethical issues by confidential discussion with an objective adviser to obtain a better understanding of possible course of action Consult your own attorney as to legal obligations and rights concerning the ethical conflict. If the ethical conflict still exists after exhausting all levels of internal review, there may be no other recourse on significant matters than to resign from the organization and to submit an informative memorandum to an appropriate representative of the organization. After resignation, depending on the nature of the ethical conflict, it may also be appropriate to notify other parties.