This document provides an overview of management accounting. It discusses key concepts like management accounting objectives, the management process of planning, controlling and decision making, and the differences between financial and managerial accounting. It also covers current issues in management accounting like strategic cost management, total quality management, and e-business. Certifications for management accountants are mentioned, as well as the role of management accountants in corporate governance and ethics. The value chain and resolution of ethical conflicts are briefly outlined.

1. Introduction – Management
Accounting
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 Questions to think about MA
 MA - Issues
 MA – objectives
 Mgt Process
 Differences btw Financial Accounting and MA
 Certifications
 Current focus in MA
 Value chain
 Role of MA
 Ethics in MA

2. QUESTIONS TO THINK
ABOUT
 Who uses management accounting
information?
 For what purposes is management accounting
information used
 Should management accounting information
provide both financial & nonfinancial
information?
 What organizations need a management
accounting information system?
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3. MA - issues
 Accounting information – identify problems
and solutions, evaluate effectiveness such
decisions.
 Continuous improvement – ways for efficiency
(productivity – reduce cost/waste, increase
quality)
 Information needed – identify opportunities for
improvement, evaluate progress.
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4. MA - issues
 Competitive environment – requires innovative
and relevant mgt accounting practices.
 MA information – focus on customer value,
quality management and competition.
 Strategic decision making- choosing among
alternative strategies with the goal of
reasonable assurance on long term growth
and survival.
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5. MA - issues
 Management empowerment – authorizes
operational personnel plan, control, make
decision (no middle or higher level mgt
intervention)
Why belief employee closest to work (can
provide valuable inputs ideas, plans and
problem solving.
• Activity based management – mgrs focus on
activities with improving customer value
(profit).
- accuracy of cost information (cost to
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6. MA - issues
 Process value analysis – eliminating activities
(non value added) and necessary activities
(efficient)
 Customer Value – diff btw customer receives
(attributes of products/services/quality) and
what the customer gives up (purchase cost,
using and maintaining product).
 -
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7. MA - issues
 Strategic cost management - use cost data to
develop superior strategies (sustainable
competitive advantage)
 - cost leadership strategy ( lower cost than
competitors)
 - product differentation strategy (same cost as
competitor but providing better customer
value)
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8. MA - issues
 Total quality Management (world class firm)
 - producing product with little waste
 - producing according to specifications
 - manufacture zero defect
 - MA provides quality cost information.
 Total quality management emphasized continuous
improvement
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9. MA - issues
 Customer orientation
 Strategic positioning to maintain competitive
advantage
 Cross functional perspective
 importance of value chain from manufacturing
to marketing to distribution to customer service
 E-business for cost reduction
 Time – managers need information to respond
quickly and decisively to changing market
conditions
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10. MA - Objectives
 Costing services, products, other objectives of
interest to management;
 Planning, controlling, evaluating, & continuous
improvement;
 Decision making.
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11. Mgtmt Process
 Planning
 Detailed actions to achieve a particular end
 Controlling
 Monitoring plan implementation & employing
corrective action when necessary (use of
feedback for evaluate)
 Decision making
 Choosing among competing alternatives
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12. Planning
 Setting objectives
 Identifying ways to achieve the objectives
 ■ Example: budgets
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13. Controling
 Monitoring a plan’s implementation
 Feedback is information used to evaluate or
correct implementation of a plan.
 Based on feedback, a manager might:
 – continue the implementation as originally
planned
 – take corrective action if needed, or
 – modify the plan.
 ■ Example: performance reports, feedback
by comparing actual results with plans
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14. Decision Making
 Choosing among competing alternatives
 Example: deciding the selling price of products
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15. Diff btwn FA and MA
 Financial accounting is for external users and
follows restrictive rules and regulations.
 Managerial accounting is for internal users
(managers) who plan, control, and make
decisions.
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17. Certifications
 CMA (Certified Management Accountant)
 knowledge of economics, financial & managerial
accounting, decision analysis & information
systems
 CPA (Certified Public Accountant)
 knowledge of external auditor
 CIA (Certified Internal Auditor)
 specialized needs in internal auditing
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18. Value Chain
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19. Role of Mgmt Accountant
Tightening regulation of
corporate governance
Establishing controls over
management
Raising importance of
management’s assessment of
internal controls
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20. Ethics in MA
- Help managers increase profitability
- Profit maximization should be
achieved through legal and ethical
means.
- Performance evaluation and reward
system (undesirable behavior
minimised)
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21. MA – Code of Ethics
Competence – accordance law
and clear reports
Confidentiality – unethical
advantage
Integrity – conflict of interest
Objectivity- fairly , disclose in
full
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22. Unethical conduct
 Abuse of accounting information
 Acceptance bribes or gifts
 Conflict of interest
 Disclosure of confidential information
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23. Resolution of Conflict
 Resign if exhausting all levels of internal
review
 Communication with external parties not
appropriate if there is legal consequences.
 Discuss with immediate supervisor
 If is the CEO then report to
board/trustee/owners
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