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2012 McGraw-Hill Education (Asia)

Managerial Accounting and the

Business EnvironmentChapter 1

Garrison, Noreen, Brewer, Chen ! "uen

Overview

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2012 McGraw-Hill Education (Asia)

Accounting Discipline Overview

Managerial accountingmeasures, analyzes, and

reports inancial and noninancial inormation to help

managers ma!e decisions to ulill organizational goals"Managerial accounting need not #e $AA% compliant"

&inancial accountingocus on reporting to e'ternal

users including investors, creditors, and governmental

agencies" &inancial statements must #e #ased on

$AA%"

Cost accounting ( measures, analyzes, and reports

inancial and noninancial inormation relating to the

costs o ac)uiring or using resources in a irm*

+ -1 %earson %rentice .all" All rights reserved"

Mgt" vs cost

acctg"

Cont"

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McGraw-Hill Education (Asia) Slide 3

Management Accounting and Cost

Accounting

Management Accounting relates to the provision o appropriate inormation, including cost

inormation or decision/ma!ing, planning, control, and

perormance evaluation"

Cost accounting deines costs and valuates inventories to help managers run

#usinesses


Management Accounting and Cost Accounting0are intertwined and0the terms are sometimes interchangea#le

their unctions are to help companies ma!e #etter decisions

&incl" smanagerial

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Comparison o &inancial and ManagerialAccounting

strategy

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2trategy

A strategyis a 3game plan4

that ena#les a company

to attract customers#y distinguishing itselrom competitors"

5he ocal point o a

company6s strategy should

#e its target customers"

5he ocal point o a

company6s strategy should

#e its target customers"


Customer value

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Customer alue %ropositions

7nderstand and respond to

individual customer needs"

7nderstand and respond to

individual customer needs"

Customer8ntimacy

2trategy

Operational

E'cellence

2trategy

Deliver products and services

aster, more conveniently,

and at lower prices"

Deliver products and services

aster, more conveniently,

and at lower prices"

%roduct

9eadership

2trategyOer higher )uality products"

Oer higher )uality products"


:ole o mgt" accountants

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7/35McGraw-Hill Education (Asia) Slide 7

9earning O#;ective 1

7nderstand the role o7nderstand the role o

management accountantsmanagement accountants

in an organization"in an organization"


Org" structure

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C o r p o r a t e O r g a n i z a t i o n C h a r t

P u r c h a s i n g P e r s o n n e l V i c e P r e s i d e n t

O p e r a t i o n s

T r e a s u r e r C o n t r o l l e r

C h i e f F i n a n c i a l

O f f i c e r

P r e s i d e n t

B o a r d o f D i r e c t o r s

Organizational 2tructure

Decentralization is the delegation of decision-Decentralization is the delegation of decision-

making authority throughout an organization.making authority throughout an organization.Decentralization is the delegation of decision-Decentralization is the delegation of decision-

making authority throughout an organization.making authority throughout an organization.


9ine vs" sta

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9ine and 2ta :elationships

inepositions are directlyrelated to achievement othe #asic o#;ectives o anorganization"

!"ample# Productionsuper$isors in amanufacturing plant.

%taffpositions supportand assist line positions"

!"ample# Costaccountants in themanufacturing plant.


C&O

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5he Chie &inancial Oicer %roviding timely and relevant data to support planning

and control activities" %reparing inancial statements or e'ternal users"

A mem#er o the top management team

responsi#le or> %roviding timely and relevant data to support planning

and control activities" %reparing inancial statements or e'ternal users"

Garrison, Noreen, Brewer, Chen ! "uen9ean, 58C, 2i'

sigma

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9earning O#;ective

#nderstand the $asic#nderstand the $asic

conce%ts underl&inconce%ts underl&in

'ean roduction, the'ean roduction, the

heor& o* Constraints,heor& o* Constraints,

and +i +ia.and +i +ia.


alue chain

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%rocess Management

Business functions making up the $alue chainBusiness functions making up the $alue chain

%roduct Customer:?D Design Manuacturing Mar!eting Distri#ution 2ervice

A #usinessprocess is a series o

steps that are ollowed in order to

carry out some tas! ina #usiness"


Cont"

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%rocess Management

5here are three approaches toimproving #usiness processes " " "

ean

Production

Theory of

Constraints &TOC'

%i"

%igma


5raditional mng"

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5raditional 3%ush4 Manuacturing Company

&orecast 2ales Order components

%roduce goods in

anticipation o 2ales

Ma!e 2ales rom

&inished $oods

8nventory

2tore 8nventory

2tore

8nventory


Cont"

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5raditional 3push4manuacturing

5raditional 3%ush4 Manuacturing Company

9argeinventories

&inished

goods

:aw

materials

@or! in

process

(aterials )aitingto *e processed.(aterials )aitingto *e processed.

Completed productsa)aiting sale.

Completed productsa)aiting sale.

Partially completed productsre+uiring more )ork *efore

they are ready for sale.

Partially completed productsre+uiring more )ork *efore

they are ready for sale.Garrison, Noreen, Brewer, Chen ! "uen

9ean youtu#e

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9ean %roduction>

https>www"youtu#e"comwatchv;dilnB

C-


Cont"
https://www.youtube.com/watch?v=Vjdil2nBCf0https://www.youtube.com/watch?v=Vjdil2nBCf0https://www.youtube.com/watch?v=Vjdil2nBCf0https://www.youtube.com/watch?v=Vjdil2nBCf0

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9ean %roduction

5he lean thin!ing

model is a ive

step approach"

5he lean thin!ing

model is a ive

step approach"

8dentiy valuein speciic

productsservices"

8dentiy value

in speciic

productsservices"

8dentiy the#usiness process

that delivers value"

8dentiy the

#usiness process

that delivers value"

Organize wor!

arrangements around

the low o the

#usiness process"

Organize wor!

arrangements around

the low o the

#usiness process"

Create a pull

system that responds

to customer orders"

Create a pull

system that responds

to customer orders"

Continuously pursue

perection in the

#usiness process"

Continuously pursue

perection in the

#usiness process"Garrison, Noreen, Brewer, Chen ! "uen

Cont"

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Customer places

an order

Create %roduction

Order

$enerate component

re)uirements

%roduction #egins

as parts arrive

$oods delivered

when needed

Components

are ordered

9ean %roduction

5he ive step process results in a 3pull4 manuacturing system

that reduces inventories, decreases deects, reduces

wasted eort, and shortens customer response times"

5he ive step process results in a 3pull4 manuacturing system

that reduces inventories, decreases deects, reduces

wasted eort, and shortens customer response times"


Cont"

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9ean %roduction

9ean thin!ing can #e used to improve #usiness

processes that lin! companies together"

5he term supply chain managementreers to thecoordination o #usiness processes across

companies to #etter serve end consumers"


5OC

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A constraint

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,. ecognize that

the )eakest link

is no longer so.

,. ecognize that

the )eakest link

is no longer so.

. /dentify the

)eakest link.

. /dentify the

)eakest link.

0. 1llo) the)eakest link to

set the tempo.

0. 1llo) the)eakest link to

set the tempo.

2. Focus on

impro$ing

the )eakest

link.

2. Focus on

impro$ing

the )eakest

link.

Only actionsthat strengthen

the )eakest link

in the 3chain4

impro$e the

process.

5heory o Constraints


sigma

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2i' 2igma

A process improvement method relying on customereed#ac! and act/#ased data gathering and analysis

techni)ues to drive process improvement"

A process improvement method relying on customereed#ac! and act/#ased data gathering and analysis

techni)ues to drive process improvement"

:eers to a process thatgenerates no more

than "F deects per million

opportunities"

:eers to a process thatgenerates no more

than "F deects per million

opportunities"

2ometimesassociated

with the term zero

defects"

2ometimesassociated

with the term zero

defects"


youtu#e

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SIX SIGMAhttp://www.youtube.com/watch?v=LcamODK

t-s

http://www.youtube.com/watch?v=!"v#$-c

M%y&

Cont"
http://www.youtube.com/watch?v=LcamODKt-sQhttp://www.youtube.com/watch?v=LcamODKt-sQhttp://www.youtube.com/watch?v=H4vZN-cMJyYhttp://www.youtube.com/watch?v=H4vZN-cMJyYhttp://www.youtube.com/watch?v=H4vZN-cMJyYhttp://www.youtube.com/watch?v=H4vZN-cMJyYhttp://www.youtube.com/watch?v=LcamODKt-sQhttp://www.youtube.com/watch?v=LcamODKt-sQ

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2i' 2igma


Ethical standards

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9earning O#;ective

7nderstand the7nderstand the

importance o upholdingimportance o upholding

ethical standards"ethical standards"


Code o conduct

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CompetenceCompetenceFollo) applica*le

la)s5 regulations

and standards.

Follo) applica*le

la)s5 regulations

and standards.

(aintain

professional

competence.

(aintain

professional

competence.

Pro$ide accurate5 clear5

concise5 and timely decision

support information.

Pro$ide accurate5 clear5

concise5 and timely decision

support information.

8MA $uidelines or Ethical Behavior

ecognize andcommunicate professional

limitations that preclude

responsi*le 6udgment.

ecognize and

communicate professional

limitations that preclude

responsi*le 6udgment.


conidentiality

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ConfidentialityConfidentiality

Do not disclose confidentialDo not disclose confidential

information unless legallyinformation unless legally

o*ligated to do so.o*ligated to do so.

Do not disclose confidentialDo not disclose confidential

information unless legallyinformation unless legally

o*ligated to do so.o*ligated to do so.

!nsure that su*ordinates do!nsure that su*ordinates do

not disclose confidentialnot disclose confidential

information.information.

!nsure that su*ordinates do!nsure that su*ordinates do

not disclose confidentialnot disclose confidential

information.information.

Do not useDo not useconfidentialconfidential

information forinformation for

unethical or illegalunethical or illegal

ad$antage.ad$antage.

Do not useDo not useconfidentialconfidential

information forinformation for

unethical or illegalunethical or illegal

ad$antage.ad$antage.



integrity

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(itigate conflicts of

interest and ad$ise others

of potential conflicts.

(itigate conflicts of

interest and ad$ise others

of potential conflicts.

1*stain from acti$ities that

might discredit the

profession.

1*stain from acti$ities that

might discredit the

profession.

efrain fromconduct that

)ould pre6udice

carrying out

duties ethically.

efrain fromconduct that

)ould pre6udice

carrying out

duties ethically.

/ntegrity/ntegrity



credi#ility

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Communicate informationfairly and o*6ecti$ely.

Communicate informationfairly and o*6ecti$ely.

Disclose all rele$antinformation that could

influence a user7s

understanding of reports

and recommendations.

Disclose all rele$ant

information that could

influence a user7s

understanding of reports

and recommendations.

Credi*ilityCredi*ility


Disclose delays or

deficiencies in informationtimeliness5 processing5 or

internal controls.

Disclose delays or

deficiencies in informationtimeliness5 processing5 or

internal controls.


Cont"

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Follo) employer7s esta*lished policies.For an unresol$ed ethical conflict#

Discuss the conlict with immediate supervisor orne't highest uninvolved manager"

8 immediate supervisor is the CEO, consider the#oard o directors or the audit committee"

Contact with levels a#ove the immediate supervisorshould only #e initiated with the supervisor6s

!nowledge, assuming the supervisor is not involved"

Follo) employer7s esta*lished policies.

For an unresol$ed ethical conflict#

Discuss the conlict with immediate supervisor orne't highest uninvolved manager"

8 immediate supervisor is the CEO, consider the#oard o directors or the audit committee"

Contact with levels a#ove the immediate supervisorshould only #e initiated with the supervisor6s

!nowledge, assuming the supervisor is not involved"

8MA $uidelines or :esolution o an EthicalConlict


Cont"

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Follo) employer7s esta*lished policies.

For an unresol$ed ethical conflict#

E'cept where legally prescri#ed, maintainconidentiality"

Clariy issues in a conidential discussion with ano#;ective advisor"

Consult an attorney as to legal o#ligations"

Follo) employer7s esta*lished policies.For an unresol$ed ethical conflict#

E'cept where legally prescri#ed, maintainconidentiality"

Clariy issues in a conidential discussion with ano#;ective advisor"

Consult an attorney as to legal o#ligations"

8MA $uidelines or :esolution o an EthicalConlict


Corporate

governance

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Corporate $overnance

The system *yThe system *y

)hich a company is directed)hich a company is directed

and controlled.and controlled.

Board oDirectorsBoard oDirectors

5op

Management

5op

Management

2toc!holders2toc!holders

5o pursue

o#;ectives o

8ncentives andmonitoring or


2ar#anes/O'ley act

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5he 2ar#anes/O'ley Act o --5he 2ar#anes/O'ley Act o -- was intended to protect the

interests o those who invest in pu#licly traded companies #yimproving the relia#ility and accuracy o corporate inancial

reports and disclosures" 2i' !ey aspects o the legislation include>

5he Act re)uires #oth the CEO and C&O to certiy in writing

that their company6s inancial statements and disclosures

airly represent the results o operations"

5he Act esta#lishes the %u#lic Company Accounting Oversight

Board to provide additional oversight o the audit proession"

5he Act places the power to hire, compensate, and terminate pu#lic accounting irms in the hands o the audit committee"

5he Act places restrictions on audit irms, such as prohi#iting

pu#lic accounting irms rom providing a variety o non/audit

services to an audit client"

5he 2ar#anes/O'ley Act o -- was intended to protect the

interests o those who invest in pu#licly traded companies #y

improving the relia#ility and accuracy o corporate inancial

reports and disclosures" 2i' !ey aspects o the legislation include>

5he Act re)uires #oth the CEO and C&O to certiy in writing

that their company6s inancial statements and disclosures

airly represent the results o operations"

5he Act esta#lishes the %u#lic Company Accounting Oversight

Board to provide additional oversight o the audit proession"

5he Act places the power to hire, compensate, and terminate

pu#lic accounting irms in the hands o the audit committee"

5he Act places restrictions on audit irms, such as prohi#iting

pu#lic accounting irms rom providing a variety o non/audit

services to an audit client"


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5he 2ar#anes/O'ley Act o --

(continued)

5he Act re)uires a pu#lic company6s independent auditor

to issue an opinion on the eectiveness o the company6s

internal control over inancial reporting to accompany

management6s assessment, and #oth are included in thecompany6s annual report"

/ 5he Act esta#lishes severe penalties or certain #ehaviors,

such as>

0 7p to - years in prison or altering or destroying anydocuments that may eventually #e used in an oicial

proceeding"

0 7p to 1- years in prison or retaliating against a

3whistle #lower"4

(continued)

5he Act re)uires a pu#lic company6s independent auditor

to issue an opinion on the eectiveness o the company6s

internal control over inancial reporting to accompany

management6s assessment, and #oth are included in thecompany6s annual report"

/ 5he Act esta#lishes severe penalties or certain #ehaviors,

such as>

0 7p to - years in prison or altering or destroying anydocuments that may eventually #e used in an oicial

proceeding"

0 7p to 1- years in prison or retaliating against a

3whistle #lower"4


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End o Chapter 1

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