T1 ch1
•Download as PPT, PDF•
2 likes•456 views
This document provides an overview of managerial accounting and its role in organizations. It defines managerial accounting as identifying, measuring, analyzing, interpreting, and communicating financial and non-financial information to assist managers in planning, directing, and controlling organizational operations. The document outlines five objectives of managerial accounting, major contemporary themes, differences from financial accounting, roles of accounting professionals, and ethical responsibilities. It also discusses concepts like the balanced scorecard, cost management systems, and the value chain.
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (11)
Similar to T1 ch1
Similar to T1 ch1 (20)
More from Abdullah Rabaya
More from Abdullah Rabaya (20)
Recently uploaded
Recently uploaded (20)
T1 ch1
- 1. THE CHANGING ROLE OF MANAGERIAL ACCOUNTING IN A GLOBAL BUSINESS ENVIRONMENT Chapter 1Chapter 1
- 2. Explain an organization and its four fundamental management processes Define managerial accounting (MA) and its role in the management process. Describe five objectives of MA activity. Briefly describe some of the major contemporary themes in managerial accounting. Explain the concepts of strategic cost management and the value chain. Explain the major differences between managerial and financial accounting. Describe the roles of MA, CFO/controller, treasurer, and internal auditor. Discuss the professional organizations, certification process, and ethical standards in the field of managerial accounting. Understand the ethical responsibilities of a managerial accountant. Learning Objectives 1-2
- 3. AnAn organizationorganization…… Acquires Resources Hires People Organized setOrganized set ofof activitiesactivities Organized setOrganized set ofof activitiesactivities PlanningPlanning DirectingDirecting Decision Making Decision Making ControllingControlling 1-3
- 4. Managerial accounting is the process of Identifying Measuring Analyzing information Interpreting Communicating Define Managerial Accounting 1-4
- 5. Normally information related to: Costing Budget Cash flows Pricing Examples of Managerial Accounting Activity 1-5
- 6. How Managerial Accounting Adds Value to the Organization 5 objectives of managerial accounting activity: •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 subunits, activities, managers, and other employees ~ i.e. BSC •Assessing the organization’s competitive position. 5 objectives of managerial accounting activity: •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 subunits, activities, managers, and other employees ~ i.e. BSC •Assessing the organization’s competitive position. 1-6
- 7. The Balanced Scorecard Financial Perspective Goals Measures Customer Perspective Goals Measures Operations Perspective Goals Measures Innovation Perspective Goals Measures How do we look to owners? How do customers see us? How can we continue to improve? In whichIn which activitiesactivities must wemust we excel?excel? 1-7
- 8. Managerial versus FinancialManagerial versus Financial AccountingAccounting Accounting SystemAccounting System (accumulates financial and(accumulates financial and managerial accounting data in themanagerial accounting data in the cost accounting system)cost accounting system) Accounting SystemAccounting System (accumulates financial and(accumulates financial and managerial accounting data in themanagerial accounting data in the cost accounting system)cost accounting system) Managerial AccountingManagerial Accounting Information for decisionInformation for decision making, planning, andmaking, planning, and controlling ancontrolling an organization’sorganization’s operations.operations. Managerial AccountingManagerial Accounting Information for decisionInformation for decision making, planning, andmaking, planning, and controlling ancontrolling an organization’sorganization’s operations.operations. Financial AccountingFinancial Accounting Published financialPublished financial statements and otherstatements and other financial reports.financial reports. Financial AccountingFinancial Accounting Published financialPublished financial statements and otherstatements and other financial reports.financial reports. InternalInternal UsersUsers ExternalExternal UsersUsers 1-8
- 9. Managerial vs Financial AccountingManagerial vs Financial Accounting Managerial Accounting Financial Accounting Users of Information Internal users External users Regulation Unregulated and not mandatory Regulated by accounting standards or securities commission and mandatory Source of Data Accounting systems plus other systems that gathers financial and non-financial information. i.e. total tunrover, volumes of sales, occupancy rates in hotels, delays in take off Accounting systems that accumulates financial information Nature of Reports and Procedures Reports focus on subunits such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events. Reports focus the entire business unit and mostly historical data 1-9
- 10. Where are MA located in the organization?Where are MA located in the organization? Organization Chart – top mgt, staff, line positions •Line and staff positions •Controller •Treasurer •Internal auditor Organization Chart – top mgt, staff, line positions •Line and staff positions •Controller •Treasurer •Internal auditor 1-10
- 11. Line and Staff PositionsLine and Staff Positions • A line position is directly involved in achieving the basic objectives of an organization. • Example: A production supervisor in a manufacturing plant. • A line position is directly involved in achieving the basic objectives of an organization. • Example: A production supervisor in a manufacturing plant. • A staff position supports and assists line positions. • Example: A cost accountant in the manufacturing plant. • A staff position supports and assists line positions. • Example: A cost accountant in the manufacturing plant. 1-11
- 12. ControllerController The chief managerial and financial accountant responsibility for: • Supervising accounting personnel • Preparation of information and reports, managerial and financial • Analysis of accounting information • Planning and decision making The chief managerial and financial accountant responsibility for: • Supervising accounting personnel • Preparation of information and reports, managerial and financial • Analysis of accounting information • Planning and decision making 1-12
- 13. TreasurerTreasurer Responsible for raising capital and safeguarding the organization’s assets. • Supervises relationships with financial institutions. • Work with investors and potential investors. • Manages investments. • Establishes credit policies. • Manages insurance coverage Responsible for raising capital and safeguarding the organization’s assets. • Supervises relationships with financial institutions. • Work with investors and potential investors. • Manages investments. • Establishes credit policies. • Manages insurance coverage 1-13
- 14. Internal AuditorInternal 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 top management regarding the effectiveness of the organizations accounting system. Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. • Expresses an opinion to top management regarding the effectiveness of the organizations accounting system. 1-14
- 15. Evolution in Business EnvironmentEvolution in Business Environment and Adaptation in Managerialand Adaptation in Managerial AccountingAccounting E-Business Service vs. Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Product Life Cycles Time-Based Competition Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement change inchange in managerialmanagerial accountingaccounting 1-15
- 16. Information & Decision Making Incentives & Performance measures Behavioral issues Cost and benefit Major Themes in Managerial Accounting 1-16
- 17. Cost Management SystemsCost Management Systems Objectives • Measure the cost of resources consumed. • Identify and eliminate non-value-added costs. Objectives • Measure the cost of resources consumed. • Identify and eliminate non-value-added costs. Planning & Control System 1-17
- 18. Cost Management SystemsCost Management Systems Objectives • Determine efficiency and effectiveness of major activities. • Identify and evaluate new activities that can improve performance. Objectives • Determine efficiency and effectiveness of major activities. • Identify and evaluate new activities that can improve performance. Planning & Control System 1-18
- 19. ProductProduct DesignDesign ProductProduct DesignDesign ResearchResearch andand DevelopmentDevelopment ResearchResearch andand DevelopmentDevelopment Strategic Cost Management and the ValueStrategic Cost Management and the Value ChainChain Securing rawSecuring raw materials andmaterials and other resourcesother resources Securing rawSecuring raw materials andmaterials and other resourcesother resources ProductionProductionProductionProduction MarketingMarketingMarketingMarketing DistributionDistributionDistributionDistribution CustomerCustomer ServiceService CustomerCustomer ServiceServiceStartStart 1-19 Objectives: To identify number of activities and the related cost drivers i.e. ABC
- 20. Ethical Climate of BusinessEthical Climate of Business The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting. The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting. 1-20
- 22. ISLAM & MGMT ACCTG
- 23. Islamic Worldview • Tawhid – unity of God • Khilafah – responsibility to himself & ummah • Adalah – justice / wealth concentration • Rubbubiyah – avoid greed and self interest • Tazkiyah – growth and purification
- 24. Muslim Accountant • SIDDIQ – trustworthy • FATANAH – knowledgeable • AMANAH – trust, honesty • TABLIGH – spread the word of Islam • ISTIQAMAH – continuous improvement ~ Working as Ibadah ~ Accountability
- 25. Implications on MA practices • Shura – decision making • Fairness – costing, pricing, profit making • Honesty, responsibility, accountability – reward system (performance), management control
- 26. Conclusion • Muslim should act in a manner that benefits himself and the society ~ brotherhood • Are you a ritual Muslim? Merely follow the pattern without understanding the hikmah • What to achieve? Fasting vs tired or Fasting vs piety / taqwa • Heart (inner) vs actions (outer) its connection to the God • ‘amal makruf nahi munkar’ ~ self control • As a Muslim accountant: • Not to breach the contracts • Not to waste resources • Not to practice ‘couldn’t care less’ attitude • Work sincerely • Ensure justice • Consider welfare of others • Do righteous i.e. confidentiality, halal
Editor's Notes
- Managerial accounting is an integral part of the management process. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit an organization’s goals. (LO1)
- In pursuing its goals, an organization acquires resources, hires people, and then engages in an organized set of activities. It is up to the management team to make the best use of the organization’s resources, activities, and people in achieving the organization’s goals. The day-to-day work of the management team comprises four activities: • Decision making • Directing operational activities • Planning • Controlling (LO2)
- Managerial accounting is an integral part of the management process. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit an organization’s goals. (LO1)
- Managerial accounting is an integral part of the management process. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit an organization’s goals. (LO1)
- Managerial accountants add value to an organization by providing information, assisting in directing and controlling activities, motivating managers and employees towards the organization’s goals, measuring performance, and assessing the organization’s competitive position. (LO3)
- The balanced scorecard is a model of business performance evaluation that balances measures of financial performance, internal operations, innovation and learning, and customer satisfaction. If an organization is to remain viable in a changing and ever more competitive business environment, its managers need to continually ask the questions emphasized in the balanced scorecard. (LO3)
- Both managerial and financial accounting information draw upon data from an organization’s basic accounting system. One part of that system, the cost accounting system, accumulates cost data for both managerial and financial accounting. Managerial accounting information is used for decision making, planning, directing, and controlling an organization's operations, and assessing its competitive position. It is intended for managers of all levels within the organization. Financial accounting information is used to prepare the published financial statements and other financial reports. It is intended for external Users, such as stockholders, financial analysts, lenders, unions, consumer groups, and governmental agencies. (LO4)
- This exhibit summarizes the differences between managerial and financial accounting. Managerial accounting reports are intended for managers within the organization and are not subject to any regulation. The data is drawn from the basic accounting system as well as other sources. The reports often focus on departments or subunits and are based on historical data, estimates and future projections. Financial accounting reports are intended for external users and are subject to regulation. The data is drawn almost completely from the basic accounting system and are almost exclusively historical. (LO4)
- Line positions are directly involved in providing goods and services while staff positions support the line positions. Management accountants are staff positions that need to work closely with line management. (LO5)
- Line positions are directly involved in providing goods and services while staff positions support the line positions. Management accountants are staff positions that need to work closely with line management. (LO5)
- The chief financial office, also known as the controller, is the title given to the top managerial and financial accountant. This person is responsible for accounting personnel and preparing the information and reports used in both managerial and financial accounting. The CFO is an integral member of the management team, often involved in planning and decision making at all levels and across all functional areas. (LO6)
- The treasurer typically is responsible for raising capital and safeguarding the organization’s assets. In addition, the treasurer manages the organization’s investments, its credit policy and its insurance coverage. (LO6)
- The internal auditor is responsible for reviewing the accounting procedures, records and reports in both the controller’s and the treasurer’s areas. The internal auditor expresses an opinion to top management about the effectiveness of the accounting system. (LO6)
- Managerial accounting information must be adapted to reflect the changes in the business environment. For example: E-Business (Amazon.com) has changed the way we buy a book, make an airline reservation (Expedia.com) or make a computer purchase (Dellcomputer.com). The changes shown here are especially pertinent to managerial accounting. (LO7)
- Managerial accounting is an integral part of the management process. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit an organization’s goals. (LO1)
- A cost management system is a planning and control system with four objectives: Measure the cost of resources consumed in the organization’s significant activities Identify and eliminate non-value-added costs. These are costs of activities that can be eliminated without deteriorating quality, performance or value. (LO7)
- Determine the efficiency and effectiveness of all major activities Identify and evaluate new activities that can improve future performance The emphasis on the organization’s activities is crucial to the goal of producing quality goods and services at the lowest possible cost. (LO7)
- Usually many activities are involved in securing basic raw materials and turning them into valuable products or services. The set of linked, value- creating activities, ranging from securing basic raw materials and energy to the ultimate delivery of products and services, is called the value chain. Although there may be only one organization involved in a particular value chain, usually there are many. (LO8)
- The stream of corporate scandals has taught us that not only is unethical behavior in business wrong in a moral sense, but it also can be disastrous to the business and the economy. There will most likely be reforms in corporate governance and accounting. The Sarbanes-Oxley Act is one example. These scandals have served as a wake-up call to focus more on ethical issues in practice and teaching. (LO9) I am sure we can all think of a few fairly recent corporate scandals. Examples: Enron, Tyco. Worldcom and Arthur Anderson to name a few.
- As professionals, managerial accountants have an obligation to themselves, their colleagues, and their organizations to adhere to high standards of ethical conduct. In recognition of this obligation, the IMA has developed the following ethical standards for its members, who are practitioners of managerial accounting and financial management. (LO10)