The presentation cover accounting first then some component on how managements accounting works. For you to understand how management accounts work need to understand accounting • 1. Accounting – What and why ? • 2. Basics of the World of Finance (where it fit?) • 3. What are the types of Accounting and when and why do you need them? • 4. What have we seen when business neglected Principles of Accounting ? • 5. What steps do you need to have to build Accounting function ? • 6. Conclusion Get the video on this presentation. https://www.youtube.com/watch?v=6ExV7PvE7fA

1. Finance success
Program - M10 of 20
How to design
management
accounts 1 of 3

2. Introduction to management accounts
Table of Content
1. Accounting – What and why ?
2. Basics of the World of Finance (where it fit?)
3. What are the types of Accounting and when and why do you need them?
4. What have we seen when business neglected Principles of Accounting ?
5. What steps do you need to have to build Accounting function ?
6. Conclusion

3. 1. Accounting
Summarize and Classify transactions according to Needs of Users
of financial information to assist in decision making
Transactions – are decisions or actions taken by management in
the business during a specific period
Information is classified and summarized based on approved or
agreed frameworks

4. 1.1 accounting
(what)

5. 1.2. Why? 4 Basic
classification
• Performance at organization, product,
division, function levels, etc in a specific
period
• Position at organization, subsidiary,
division level at particular date

6. 2. Basics of the World of Finance (where it fit?)
©The Essential Finance Handbook for entrepreneur

7. 2.1 Finance vs
Accounting

8. 2.2 Accounting
principles
Fundamentals of Accounting

9. 3. Types of
Accounting?
Cost
Accounting
Management
Accounting
Tax
Accounting
Financial
Accounting

10. 3.1 Cost
accounting

11. 3.2 Management
accounting

12. 3.3 Cost vs
management
accounting

13. 3.4 Tax accounting
• Use monetary figures based on legislation
• The taxes is how government – local or national
will collect
• Used only by lawyers and regulators
• It likely to be understated when it comes to
income and assets due to the nature of taxation
model – income tax, capital tax, donation tax,
estate tax, etc.

14. 3.5 Financial accounting

15. 3.5 Financial accounting
(cont.)
• Use monetary figures only and notes
• Use frameworks like IFRS, IFRS for SME, US GAAP, etc.
• Designed for external users like creditors, regulators and
investors/stockholders/shareholders
• It does need to have directors and preparers declaring the roles and environment to
clear the matter.
• Issued regular – semi- annually or annually but there instances where quarterly
reports are issued
• The reports need to verified based on the needs of users, very likely to be overstated.

16. 4. What have we seen when business neglected Principles of
Accounting ?

17. 4.1 accounting scams/fraud

18. 4.2 Accounting Movie time
• Top 5 accounting scams in the world https://www.youtube.com/watch?v=TZggvpensfk
• Enron Movies : Trailer https://www.youtube.com/watch?v=-w6duQhWuVk and movie
https://www.youtube.com/watch?v=AiWKPQAWuug,
• SA recent scandal Steinhoff : https://www.youtube.com/watch?v=Tet1xTTptnE

19. 4.3 What have we seen when business neglected Accounting ?
Businesses are not profitable Run out of cash flow
Unable to manage debt and
credit risks
Unable to attract investors
Regulators close them down
due to non-compliance

20. 5. What steps to
build Accounting
function?

21. 5.1 Step 1 – find
and work with
honest &
Competent people

22. 5.2 Step 2 –
create structure
for record
keeping
What to keep ?
How long to keep?
Where to keep i.e. online vs physical?
Which legislation apply ?
Who to keep ?
Who to access – at what level ?

23. 5.3 Step 3 build
controls

24. 5.4 Step 4 – create checklists
for record keeping
• At function level
• At job title level
• At project level
• At product level
• At process level, etc.

25. 5.5 Step 5. source independent assessments
This really depends on several factors
• Growth Strategy
• Financing Strategy – Debt or Equity
• Exit Strategy as owner of the business
• Legislation and regulations
• Size of investment

26. 5.5 Step 5 - source independent assessments (cont.)
Audit Independent Review
Agreed up Procedures Compilation

27. 6. conclusion
The Numbers Tell a Story on how decisions are made in a business, however the story may be disorted when
üRecords are not kept
üPeople are incompetent, dishonest and greedy
üNo set guidelines on how to deal with a problems
üNo supervisory controls to ensure policies and procedures are adhered to
üNo consequences for errors or misappropriation

28. Contact details
• Precious Mvulane CA (SA), RA
Email: info@gadcs.co.za or
precious@gadcs.co.za
Product: www.financesuccess.co.za
Author Page: www.preciousmvulane.com
Company website : www.gadcs.co.za