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The Changing Role of Managerial Accounting in A Global Business Environment

This document provides an overview of managerial accounting. It defines managerial accounting and discusses its role in identifying, measuring, analyzing, interpreting, and communicating financial information for decision making, planning, controlling, and motivating managers. The document contrasts managerial accounting with financial accounting and outlines the responsibilities of key roles like controllers, treasurers, and internal auditors. It also discusses major themes in managerial accounting like costs/benefits, information/incentives, and evolution/adaptation. Finally, it covers the ethical responsibilities of managerial accountants and guidelines from the Institute of Management Accountants.

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tsy0703
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© © All Rights Reserved
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Download as PPT, PDF, TXT or read online on Scribd
47 views

The Changing Role of Managerial Accounting in A Global Business Environment

This document provides an overview of managerial accounting. It defines managerial accounting and discusses its role in identifying, measuring, analyzing, interpreting, and communicating financial information for decision making, planning, controlling, and motivating managers. The document contrasts managerial accounting with financial accounting and outlines the responsibilities of key roles like controllers, treasurers, and internal auditors. It also discusses major themes in managerial accounting like costs/benefits, information/incentives, and evolution/adaptation. Finally, it covers the ethical responsibilities of managerial accountants and guidelines from the Institute of Management Accountants.

Uploaded by

tsy0703
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 32

Chapter 1

The Changing Role of Managerial


Accounting in a Global Business
Environment

Managerial Accounting:
Definition & Role

Define Managerial Accounting

Managerial accounting is the process of


Identifying
Measuring
Analyzing
Interpreting
Communicating information

1-3

Four fundamental
management processes

Managing Resources, Activities,


and People
An organization . . .

Directing

Acquires Resources

Hires People

Organized
Organized set
set
of
of activities
activities

Controlling

Decision
Making

Planning

1-5

Five objectives of
managerial accounting
activity

How Managerial Accounting Adds


Value to the Organization

Providing
Providing information
information for
for decision
decision making
making and
and
planning.
planning.

Assisting
Assisting managers
managers in
in directing
directing and
and controlling
controlling
activities.
activities.

Motivating
Motivating managers
managers and
and other
other employees
employees
towards
towards organizations
organizations goals.
goals.

Measuring
Measuring performance
performance of
of subunits,
subunits, activities,
activities,
managers,
managers, and
and other
other employees.
employees.

Assessing
Assessing the
the organizations
organizations competitive
competitive position.
position.
1-7

The major differences


between managerial and
financial accounting

Managerial versus Financial


Accounting
Accounting
Accounting System
System
(accumulates
(accumulates financial
financial and
and
managerial
managerial accounting
accounting data
data in
in the
the
cost
cost accounting
accounting system)
system)
Managerial
Managerial Accounting
Accounting
Information
Information for
for decision
decision
making,
making, planning,
planning, and
and
controlling
controlling an
an
organization
organizations
s
operations.
operations.
Internal
Users

Financial
Financial Accounting
Accounting
Published
Published financial
financial
statements
statements and
and other
other
financial
financial reports.
reports.

External
Users
1-9

Managerial versus Financial


Accounting
Managerial Accounting
Users of I nformation Managers, within the organization.
Regulation Not required and unregulated, since it
is intended only for management.

Financial Accounting
Interested parties, outside the organization.
Required and must conform to generally
accepted accounting principles. Regulated
by the Financial Accounting Standards
Board, and, to a lesser degree, the
Securities and Exchange Commission.
Almost exclusively drawn from the
organization's basic accounting system,
which accumulates financial information.

Source of Data The organization's basic accounting


system, plus various other sources,
such as rates of effective products
manufactured, physical quantities of
material and labor used in production,
occupancy rates in hotels and
hospitals, and average take-off delays
Nature of Reports and Reports often focus on subunits within Reports focus on the enterprise in its
Procedures the organization, such as departments, entirety. Based almost exclusively on
divisions, geographical regions, or
historical transaction data.
product lines. Based on a combination
of historical data, estimates, and

1-10

Position of Managerial
Accountants

Line and Staff Positions

A
A line
line position
position is
is
directly
directly involved
involved in
in
achieving
achieving the
the basic
basic
objectives
objectives of
of an
an
organization.
organization.

Example:
Example: A
A
production
production
supervisor
supervisor in
in aa
manufacturing
manufacturing plant.
plant.

A
A staff
staff position
position
supports
supports and
and
assists
assists line
line
positions.
positions.

Example:
Example: A
A cost
cost
accountant
accountant in
in the
the
manufacturing
manufacturing plant.
plant.

1-12

Roles of chief financial


officer (CFO) / controller,
treasurer, and internal
auditor

Controller
The
The chief
chief managerial
managerial and
and financial
financial
accountant
accountant responsibility
responsibility for:
for:

Supervising
Supervising accounting
accounting personnel
personnel

Preparation
Preparation of
of information
information and
and reports,
reports, managerial
managerial
and
and financial
financial

Analysis
Analysis of
of accounting
accounting information
information

Planning
Planning and
and decision
decision making
making

1-14

Treasurer
Responsible
Responsible for
for raising
raising capital
capital and
and
safeguarding
safeguarding the
the organizations
organizations assets.
assets.

Supervises
Supervises relationships
relationships with
with financial
financial institutions.
institutions.

Work
Work with
with investors
investors and
and potential
potential
investors.
investors.

Manages
Manages investments.
investments.

Establishes
Establishes credit
credit policies.
policies.

Manages
Manages insurance
insurance coverage
coverage

1-15

Internal Auditor
Responsible
Responsible for
for reviewing
reviewing accounting
accounting
procedures,
procedures, records,
records, and
and reports
reports in
in both
both
the
the controllers
controllers and
and the
the treasurers
treasurers area
area of
of
responsibility.
responsibility.

Expresses
Expresses an
an opinion
opinion to
to top
top
management
management regarding
regarding the
the
effectiveness
effectiveness of
of the
the
organizations
organizations accounting
accounting
system.
system.

1-16

Major contemporary
themes in managerial
accounting

Major Themes in Managerial


Accounting
Behavioral
Behavioral
Issues
Issues

Costs
Costs and
and
Benefits
Benefits

Information
Information
and
and Incentives
Incentives

Evolution
Evolution and
and
Adaptation
Adaptation

Managerial
Accounting
1-18

Evolution and Adaptation in


Managerial Accounting
E-Business

Product Life Cycles


Time-Based
Competition

Service vs.
Manufacturing Firms
Emergence of New
Industries
Global Competition
Focus on the Customer
Cross-Functional Teams

Change

Information and
Communication
Technology

Just-in-Time Inventory
Total Quality Management
Continuous Improvement
1-19

Ethical responsibilities of
a managerial accountant

Ethical Climate of Business


The
The corporate
corporate scandals
scandals experienced
experienced over
over the
the last
last
few
few years
years have
have shown
shown us
us that
that unethical
nethical behavior
behavior
in
in business
business is
is wrong
wrong in
in aa moral
moral sense
sense and
and can
can be
be
disastrous
disastrous in
in the
the economy.
economy. In
In addition
addition to
to
Sarbanes-Oxley,
Sarbanes-Oxley, there
there will
will likely
likely be
be more
more reforms
reforms
in
in corporate
corporate governance
governance and
and accounting.
accounting.

1-21

Professional
organizations & ethics

Managerial Accounting as a
Career
Professional Organizations

Institute of Management Accountants (IMA)

Publishes
Publishes
Management
Management
Accounting
Accounting
and
and research
research
studies.
studies.

Administers
Administers
Certified
Certified
Management
Management
Accountant
Accountant
program
program

Develops
Develops
Standards
Standards of
of
Ethical
Ethical
Conduct
Conduct for
for
Management
Management
Accountants
Accountants
1-23

Code of Conduct for


Management Accountants
The Institute of Management Accountants (IMA)
Statement of Ethical Professional Practice
consists of two parts that offer guidelines for:
Ethical behavior.
Resolution for an ethical conflict.

1-24

Professional Ethics
Competence
Confidentiality
Integrity
Credibility

1-25

IMA Guidelines for Ethical


Behavior
Recognize
Recognize and
and
communicate
communicate professional
professional
limitations
limitations that
that preclude
preclude
responsible
responsible judgment.
judgment.
Maintain
Maintain
professional
professional
competence.
competence.

Competence

Follow
Follow applicable
applicable
laws,
laws, regulations
regulations
and
and standards.
standards.

Provide
Provide accurate,
accurate, clear,
clear,
concise,
concise, and
and timely
timely decision
decision
Garrison, Noreen, Brewer, Cheng & Yuen
support
support information.
information.

IMA Guidelines for Ethical


Behavior
Do
Do not
not disclose
disclose confidential
confidential
information
information unless
unless legally
legally
obligated
obligated to
to do
do so.
so.
Do
Do not
not use
use
confidential
confidential
information
information for
for
unethical
unethical or
or illegal
illegal
advantage.
advantage.

Garrison, Noreen, Brewer, Cheng & Yuen

Confidentiality
Confidentiality
Ensure
Ensure that
that subordinates
subordinates do
do
not
not disclose
disclose confidential
confidential
information.
information.

IMA Guidelines for Ethical


Behavior
Mitigate
Mitigate conflicts
conflicts of
of
interest
interest and
and advise
advise others
others
of
of potential
potential conflicts.
conflicts.
Refrain
Refrain from
from
conduct
conduct that
that
would
would prejudice
prejudice
carrying
carrying out
out
duties
duties ethically.
ethically.

Integrity
Abstain
Abstain from
from activities
activities that
that
might
might discredit
discredit the
the
profession.
profession.

Garrison, Noreen, Brewer, Cheng & Yuen

IMA Guidelines for Ethical


Behavior
Communicate
Communicate information
information
fairly
fairly and
and objectively.
objectively.

Credibility
Credibility
Disclose
Disclose all
all relevant
relevant
information
information that
that could
could
influence
influence aa users
users
understanding
understanding of
of reports
reports
and
and recommendations.
recommendations.

Garrison, Noreen, Brewer, Cheng & Yuen

Disclose
Disclose delays
delays or
or
deficiencies
deficiencies in
in information
information
timeliness,
timeliness, processing,
processing, or
or
internal
internal controls.
controls.

IMA Guidelines for Resolution of


an Ethical Conflict
Follow
Follow employers
employers established
established policies.
policies.
For
For an
an unresolved
unresolved ethical
ethical conflict:
conflict:
Discuss
Discuss the
the conflict
conflict with
with immediate
immediate supervisor
supervisor or
or next
next
highest
highest uninvolved
uninvolved manager.
manager.
IfIf immediate
immediate supervisor
supervisor is
is the
the CEO,
CEO, consider
consider the
the board
board
of
of directors
directors or
or the
the audit
audit committee.
committee.
Contact
Contact with
with levels
levels above
above the
the immediate
immediate supervisor
supervisor
should
should only
only be
be initiated
initiated with
with the
the supervisors
supervisors knowledge,
knowledge,
assuming
assuming the
the supervisor
supervisor is
is not
not involved.
involved.

1-30

IMA Guidelines for Resolution of


an Ethical Conflict
Follow
Follow employers
employers established
established policies.
policies.
For
For an
an unresolved
unresolved ethical
ethical conflict:
conflict:
Except
Except where
where legally
legally prescribed,
prescribed, maintain
maintain
confidentiality.
confidentiality.
Clarify
Clarify issues
issues in
in aa confidential
confidential discussion
discussion with
with an
an
objective
objective advisor.
advisor.
Consult
Consult an
an attorney
attorney as
as to
to legal
legal obligations.
obligations.

1-31

End of Chapter 1

1-32

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