Chapter 01 - Managerial Accounting and The Business Environment

Managerial Accounting and
the Business Environment

Chapter One
McGrawHill/Irwin
Copyright2008,TheMcGrawHillCompanies,Inc.
1-2
Imports into the United States
US Imports (billions of $)
300
250
Canada
200
China
Germany
150
Japan
100
Mexico
United Kingdom
50
-
1990
1995
2000
2004
Years
McGrawHill/Irwin
1-3
Exports from the United States
US Exports (billions of $)
200
180
160
Canada
140
China
120
100
Germany
80
Japan
60
Mexico
40
United Kingdom
20
-
1990
1995
2000
2004
Years
McGrawHill/Irwin
1-4
Internet Usage
The
The Internet
Internet fuels
fuels globalization
globalization
by
by providing
providing companies
companies with
with greater
greater
access
access to
to geographically
geographically dispersed
dispersed
customers,
customers, employees,
employees, and
and suppliers.
suppliers.
The
The number
number of
of internet
internet users
users more
more
than
than doubled
doubled during
during the
the first
first four
four
years
years of
of the
the new
new millennium.
millennium.
McGrawHill/Irwin
1-5
Strategy
A strategy
is a game plan
that enables a company
to attract customers
by distinguishing itself
from competitors.
The
The focal
focal point
point of
of aa
companys
companys strategy
strategy should
should
be
be its
its target
target customers.
customers.
McGrawHill/Irwin
1-6
McGrawHill/Irwin
Customer Value Propositions

Customer
Intimacy
Strategy
Understand
Understand and
and respond
respond to
to
individual
individual customer
customer needs.
needs.
Operational
Excellence
Strategy
Deliver
Deliver products
products and
and services
services
faster,
faster, more
more conveniently,
conveniently,
and
and at
at lower
lower prices.
prices.
Product
Leadership
Strategy
Offer
Offer higher
higher quality
quality products.
products.
1-7
Work of Management
Planning
Planning
Directing
Directing and
and
Motivating
Motivating
Controlling
Controlling
McGrawHill/Irwin
1-8
Planning
Identify
Identify
alternatives.
alternatives.
Select
Select alternative
alternative that
that does
does
the
the best
best job
job of
of furthering
furthering
organizations
organizations objectives.
objectives.
Develop
Develop budgets
budgets to
to guide
guide
progress
progress toward
toward the
the
selected
selected alternative.
alternative.
McGrawHill/Irwin
1-9
Directing and Motivating

Directing and motivating involves managing
day-to-day activities to keep the organization
running smoothly.
Employee work assignments.
Routine problem solving.
Conflict resolution.
Effective communications.
McGrawHill/Irwin
1-10
Controlling
The
The control
control function
function ensures
ensures
that
that plans
plans are
are being
being followed.
followed.
Feedback
Feedback in
in the
the form
form of
of performance
performance reports
reports
that
that compare
compare actual
actual results
results with
with the
the budget
budget
are
are an
an essential
essential part
part of
of the
the control
control function.
function.
McGrawHill/Irwin
1-11
Planning and Control Cycle

Formulating
Formulatinglonglongand
andshort-term
short-termplans
plans
(Planning)
(Planning)
Comparing
Comparingactual
actual
to
toplanned
planned
performance
performance
(Controlling)
(Controlling)
Decision
Making
Exhibit
1-2
Begin
Implementing
Implementing
plans
plans(Directing
(Directing
and
andMotivating)
Motivating)
Measuring
Measuring
performance
performance
(Controlling)
(Controlling)
McGrawHill/Irwin
1-12
Learning Objective 1
Identify the major

differences and similarities
between financial and
managerial accounting.
McGrawHill/Irwin
1-13
McGrawHill/Irwin
Comparison of Financial and

Managerial Accounting
1-14
Understand the role of

management accountants
in an organization.
McGrawHill/Irwin
1-15
Organizational Structure
Decentralization
Decentralization is
is the
the delegation
delegation of
of decisiondecisionmaking
making authority
authority throughout
throughout an
an organization.
organization.
C o r p o r a te O r g a n iz a tio n C h a r t
B o a r d o f D ir e c to r s
P r e s id e n t
P u r c h a s in g
P e rs o n n e l
V ic e P r e s id e n t
O p e r a tio n s
C h ie f F in a n c ia l
O ffic e r
T re a s u re r
McGrawHill/Irwin
C o n tr o lle r
1-16
Line and Staff Relationships

Line positions are directly
related to achievement of
the basic objectives of an
organization.
Example: Production
supervisors in a
manufacturing plant.
McGrawHill/Irwin
Staff positions support

and assist line positions.
Example: Cost
accountants in the
manufacturing plant.
1-17
The Chief Financial Officer (CFO)

A member of the top management team
responsible for:
Providing timely and relevant data to support
planning and control activities.
Preparing financial statements for external users.
McGrawHill/Irwin
1-18
Understand the basic

concepts underlying Lean
Production, the Theory of
Constraints, and Six
Sigma.
McGrawHill/Irwin
1-19
Process Management
A business
process is a series of
steps that are followed in order to
carry out some task in
a business.
R&D
Product
Design
Customer
Manufacturing Marketing Distribution Service
Business functions making up the value chain

McGrawHill/Irwin
1-20
Process Management
There are three approaches to
improving business processes . . .
Theory of
Constraints (TOC)
Lean
Production
McGrawHill/Irwin
Six
Sigma
Traditional Push
Manufacturing Company
1-21
Forecast Sales
Make Sales from

Finished Goods
Inventory
McGrawHill/Irwin
Order components
Store
Inventory
Store Inventory
Produce goods in
Anticipation of Sales
1-22
Traditional Push
Manufacturing Company
Traditional push
manufacturing
Raw
materials
Work in
process
Materials
Materials waiting
waiting
to
to be
be processed.
processed.
McGrawHill/Irwin
Large
inventories
Finished
goods
Completed
Completed products
products
awaiting
awaiting sale.
sale.
Partially
Partially completed
completed products
products
requiring
requiring more
more work
work before
before
they
they are
are ready
ready for
for sale.
sale.Copyright2008,TheMcGrawHillCompanies,Inc.
1-23
Lean Production
Identify
Identify value
value
in
in specific
specific
products/services.
products/services.
Identify
Identify the
the
business
business process
process
that
that delivers
delivers value.
value.
The
The lean
lean thinking
thinking
model
model is
is aa five
five
step
step approach.
approach.
Organize
Organize work
work
arrangements
arrangements around
around
the
the flow
flow of
of the
the
business
business process.
process.
Continuously
Continuously pursue
pursue
perfection
perfection in
in the
the
business
business process.
process.
Create
Create aa pull
pull
system
system that
that responds
responds
to
to customer
customer orders.
orders.
McGrawHill/Irwin
Exhibit
1-6
1-24
Lean Production
The
The five
five step
step process
process results
results in
in aa pull
pull manufacturing
manufacturing system
system
that
that reduces
reduces inventories,
inventories, decreases
decreases defects,
defects, reduces
reduces
wasted
wasted effort,
effort, and
and shortens
shortens customer
customer response
response times.
times.
Customer Places
an Order
Create Production
Order
Generate Component
Requirements
Goods Delivered
when needed
Production Begins
as Parts Arrive
Components
are Ordered
McGrawHill/Irwin
1-25
Lean Production
Lean thinking may be used to improve business
processes that link companies together.
The term supply chain management refers to

the coordination of business processes across
companies to better serve end consumers.
McGrawHill/Irwin
1-26
Theory of Constraints
A constraint (also called a bottleneck) is anything that
prevents you from getting more of what you want.
The Theory of Constraints is based on the observation that
effectively managing the constraint is the key to success.
The
The constraint
constraint in
in aa system
system is
is determined
determined
by
by the
the step
step that
that has
has the
the smallest
smallest capacity.
capacity.
McGrawHill/Irwin
1-27
Theory of Constraints
Only actions
that strengthen
the weakest link
in the chain
improve the
process.
2.
2.Allow
Allow the
the
weakest
weakestlink
link to
to
set
set the
thetempo.
tempo.
3.
3. Focus
Focus on
on
improving
improving
the
theweakest
weakest
link.
link.
1.
1.Identify
Identifythe
the
weakest
weakest link.
link.
4.
4.Recognize
Recognizethat
that
the
theweakest
weakest link
link
is
isno
nolonger
longerso.
so.
McGrawHill/Irwin
1-28
Six Sigma
AA process
process improvement
improvement method
method relying
relying on
on customer
customer
feedback
feedback and
and fact-based
fact-based data
data gathering
gathering and
and analysis
analysis
techniques
techniques to
to drive
drive process
process improvement.
improvement.
Refers
Refers to
to aa process
process that
that generates
generates no
no more
more
than
than 3.4
3.4 defects
defects per
per million
million opportunities.
opportunities.
Sometimes
Sometimes associated
associated
with
with the
the term
term zero
zero defects.
defects.
McGrawHill/Irwin
1-29
Exhibit
1-8
Six Sigma
The Six Sigma DMAIC Framework
Stage
Goals
Define
Establish the scope and purpose of the project.
Diagram the flow of the current process.
Establish the customer's requirements for the
process.
Measure Gather baseline performance data related to
the existing process.
Narrow the scope of the project to the most
important problems.
Analyze Identify the root cause(s) of the problems
identified in the Measure stage.
Improve Develop, evaluate, and implement solutions
to the problems.
Control Ensure that problems remain fixed.
Seek to improve the new methods over time.
McGrawHill/Irwin
1-30
E-Commerce
E-commerce
E-commerce refers
refers to
to business
business
conducted
conducted using
using the
the Internet.
Internet.
In
In addition
addition to
to dot.com
dot.com companies,
companies, traditional
traditional
businesses,
businesses, such
such as
as banks
banks and
and retailers,
retailers,
continue
continue to
to expand
expand their
their Internet
Internet presence.
presence.
The
The growth
growth in
in e-commerce
e-commerce is
is occurring
occurring
because
because the
the Internet
Internet has
has important
important advantages
advantages
over
over more
more conventional
conventional marketplaces
marketplaces for
for many
many
kinds
kinds of
of transactions.
transactions.
McGrawHill/Irwin
1-31
Enterprise Systems
A single software system that

integrates data across an organization,
thereby enabling all employees to
have simultaneous access to a
common set of data.
All
All data
data are
are recorded
recorded only
only
once
once in
in the
the companys
companys
centralized
centralized database.
database.
The
The unique
unique data
data elements
elements
contained
contained within
within aa database
database
can
can be
be linked
linked together.
together.
McGrawHill/Irwin
1-32
Understand the
importance of upholding
ethical standards.
McGrawHill/Irwin
1-33
Code of Conduct for

Management Accountants
The Institute of Management Accountants (IMA)

Standards of Ethical Conduct for Practitioners
of Management Accounting and Financial
Management have two major parts,
which offer guidelines for:
Ethical behavior.
Resolution for an ethical conflict.
McGrawHill/Irwin
1-34
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
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
support
support information.
information.
McGrawHill/Irwin
1-35

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.
Confidentiality
Confidentiality
Ensure
Ensure that
that subordinates
subordinates do
do
not
not disclose
disclose confidential
confidential
information.
information.
McGrawHill/Irwin
1-36

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
Integrity
Abstain
Abstain from
from activities
activities that
that
might
might discredit
discredit the
the
profession.
profession.
McGrawHill/Irwin
1-37

Communicate
Communicateinformation
information
fairly
fairlyand
andobjectively.
objectively.
Credibility
Credibility
Disclose
Disclose delays
delays or
or
deficiencies
deficienciesin
in information
information
timeliness,
timeliness, processing,
processing, or
or
internal
internal controls.
controls.
Disclose
Discloseall
allrelevant
relevant
information
informationthat
thatcould
could
influence
influenceaausers
users
understanding
understandingof
of reports
reports
and
andrecommendations.
recommendations.
McGrawHill/Irwin
IMA Guidelines for Resolution

of an Ethical Conflict
1-38
Follow employers established policies.

For unresolved ethical conflicts:
Discuss the conflict with immediate supervisor or
next highest uninvolved manager.
If immediate supervisor is the CEO, consider the
board of directors or the audit committee.
Contact with levels above the immediate
supervisor should only be initiated with the
supervisors knowledge, assuming the supervisor
is not involved.
McGrawHill/Irwin
IMA Guidelines for Resolution

of an Ethical Conflict
1-39
Follow employers established policies.

For unresolved ethical conflicts:
Except where legally prescribed, maintain
confidentiality.
Clarify issues in a confidential discussion with
an objective advisor.
Consult an attorney as to legal obligations.
McGrawHill/Irwin
1-40
Why Have Ethical Standards?

Ethical
Ethical standards
standards in
in business
business are
are essential
essential for
for aa
smooth
smooth functioning
functioning advanced
advanced market
market economy.
economy.
Without ethical standards in business, the

economy, and all of us who depend on it for
jobs, goods, and services, would suffer.
Abandoning ethical standards in business would

lead to a lower quality of life with less
desirable goods and services at higher prices.
McGrawHill/Irwin
1-41
Company Codes of Conduct

Broad-based
Broad-based statements
statements of
of aa
companys
companys responsibilities
responsibilities to:
to:
Employees
Employees
Customers
Customers
Suppliers
Suppliers
And
And to
to the
the communities
communities in
in
which
which the
the company
company operates.
operates.
McGrawHill/Irwin
Codes of Conduct on
the International Level
1-42
The
The Code
Code of
of Ethics
Ethics for
for Professional
Professional
Accountants,
Accountants, issued
issued by
by the
the International
International
Federation
Federation of
of Accountants
Accountants (IFAC),
(IFAC), govern
govern the
the
activities
activities of
of professional
professional accountants
accountants worldwide.
worldwide.
In
In addition
addition to
to competence,
competence, objectivity,
objectivity, independence,
independence,
and
and confidentiality,
confidentiality, the
the IFACs
IFACs code
code deals
deals with
with
the
the accountants
accountants ethical
ethical responsibilities
responsibilities in:
in:
Taxes
Taxes
Independence
Independence
Fees
Fees and
and commissions
commissions
Advertising
Advertising and
and solicitation
solicitation
Handling
Handling of
of monies
monies
Cross-border
Cross-border activities.
activities.
McGrawHill/Irwin
1-43
Corporate Governance
The
The system
system by
by
which
which aa company
company is
is directed
directed
and
and controlled.
controlled.
Board
Board of
of
Directors
Directors
Incentives and
monitoring for
Top
To pursue
Top
Management
Management objectives of
Stockholders
Stockholders
McGrawHill/Irwin
1-44
Corporate Governance
An
An effective
effective corporate
corporate governance
governance system
system
should
should also
also protect
protect the
the interests
interests of
of the
the
companys
companys other
other stakeholders.
stakeholders.
Employees
Employees
Customers
Customers
Creditors
Creditors
Suppliers
Suppliers
And
And the
the communities
communities in
in
which
which the
the company
company operates.
operates.
McGrawHill/Irwin
1-45
The Sarbanes-Oxley Act of 2002
The
TheSarbanes-Oxley
Sarbanes-OxleyAct
Actof
of2002
2002was
wasintended
intendedto
toprotect
protectthe
the
interests
interestsof
ofthose
thosewho
whoinvest
investin
inpublicly
publiclytraded
tradedcompanies
companiesby
by
improving
improvingthe
thereliability
reliabilityand
andaccuracy
accuracyof
ofcorporate
corporatefinancial
financial
reports
reportsand
anddisclosures.
disclosures. Six
Sixkey
keyaspects
aspectsof
ofthe
thelegislation
legislationinclude:
include:
The
TheAct
Actrequires
requiresboth
boththe
theCEO
CEOand
andCFO
CFOto
tocertify
certifyin
inwriting
writing
that
thattheir
theircompanys
companysfinancial
financialstatements
statementsand
anddisclosures
disclosures
fairly
fairlyrepresent
representthe
theresults
resultsof
ofoperations.
operations.
The
TheAct
Actestablishes
establishesthe
thePublic
PublicCompany
CompanyAccounting
AccountingOversight
Oversight
Board
Boardto
toprovide
provideadditional
additionaloversight
oversightof
ofthe
theaudit
auditprofession.
profession.
The
TheAct
Actplaces
placesthe
thepower
powerto
tohire,
hire,compensate
compensateand
andterminate
terminate
public
publicaccounting
accountingfirms
firmsin
inthe
thehands
handsof
ofthe
theaudit
auditcommittee.
committee.
The
TheAct
Actplaces
placesrestrictions
restrictionson
onaudit
auditfirms,
firms,such
suchas
asprohibiting
prohibiting
public
publicaccounting
accountingfirms
firmsfrom
fromproviding
providingaavariety
varietyof
ofnon-audit
non-audit
services
servicesto
toan
anaudit
auditclient.
client.
McGrawHill/Irwin
1-46
The Sarbanes-Oxley Act of 2002
The
TheAct
Actrequires
requiresthat
thataacompanys
companysannual
annualreport
reportcontain
containan
an
internal
internalcontrol
controlreport
reportthat
thatisisaccompanied
accompaniedby
byan
anopinion
opinionfrom
from
the
thecompanys
companysaudit
auditfirm
firmabout
aboutthe
thefairness
fairnessof
ofthat
thatreport.
report.
The
TheAct
Actestablishes
establishessevere
severepenalties
penaltiesfor
forcertain
certainbehaviors,
behaviors,
such
suchas:
as:
Up
Upto
to20
20years
yearsin
inprison
prisonfor
foraltering
alteringor
ordestroying
destroyingany
any
documents
documentsthat
thatmay
mayeventually
eventuallybe
beused
usedin
inan
anofficial
official
proceeding.
proceeding.
Up
Upto
to10
10years
yearsin
inprison
prisonfor
forretaliating
retaliatingagainst
againstaa
whistle
whistleblower.
blower.
McGrawHill/Irwin
1-47
Enterprise Risk Management

A process used
by a company to
proactively identify
and manage risk.
Should I try to avoid the risk,

share the risk, accept the
risk, or reduce the risk?
Once
Once aa company
company identifies
identifies its
its risks,
risks, perhaps
perhaps the
the
most
most common
common risk
risk management
management tactic
tactic is
is to
to reduce
reduce
risks
risks by
by implementing
implementing specific
specific controls.
controls.
McGrawHill/Irwin
1-48
Enterprise Risk Management

Examples of Business Risks
Products harming customers
Losing market share due to the
unforeseen actions of competitors
Poor weather conditions shutting
down operations
Website malfunction
A supplier strike halting the flow
of raw materials
Financial statements unfairly
reporting the value of inventory
An employee accessing
unauthorized information
McGrawHill/Irwin
Examples of Controls to
Reduce Business Risks
Develop a formal and rigorous
new product testing program
Develop an approach for legally
gathering information about
competitors' plans and practices
Develop contingency plans for
overcoming weather-related
disruptions
Thoroughly test the website
before going "live" on the Internet
Establish a relationship with two
companies capable of providing
raw materials
Count the physical inventory on
hand to make sure that it agrees
with the accounting records
Create passwords barriers that
prohibit employees from obtaining
information not needed to do their
jobs
1-49
Certified Management Accountant
A
A management
management accountant
accountant
who
who has
has the
the necessary
necessary qualifications
qualifications and
and
who
who passes
passes aa rigorous
rigorous professional
professional exam
exam earns
earns
the
the right
right to
to be
be known
known as
as aa Certified
Certified
Management
Management Accountant
Accountant (CMA).
(CMA).
Information
Information about
about becoming
becoming aa CMA
CMA and
and the
the CMA
CMA
program
program can
can be
be accessed
accessed on
on the
the IMAs
IMAs website
website at
at
www.imanet.org
www.imanet.org or
or by
by calling
calling 1-800-638-4427.
1-800-638-4427.
McGrawHill/Irwin
1-50
McGrawHill/Irwin
End of Chapter 1

Chapter 01 - Managerial Accounting and The Business Environment

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Chapter 01 - Managerial Accounting and The Business Environment

Transféré par

Droits d'auteur :

Formats disponibles

Managerial Accounting and

the Business Environment

Imports into the United States

Exports from the United States

Customer Value Propositions

Directing and Motivating

Planning and Control Cycle

Identify the major

Comparison of Financial and

Understand the role of

Line and Staff Relationships

Staff positions support

The Chief Financial Officer (CFO)

Understand the basic

Business functions making up the value chain

Make Sales from

The term supply chain management refers to

A single software system that

Code of Conduct for

The Institute of Management Accountants (IMA)

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior

IMA Guidelines for Ethical Behavior

IMA Guidelines for Resolution

Follow employers established policies.

IMA Guidelines for Resolution

Follow employers established policies.

Why Have Ethical Standards?

Without ethical standards in business, the

Abandoning ethical standards in business would

Company Codes of Conduct

The Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002

Enterprise Risk Management

Should I try to avoid the risk,

Enterprise Risk Management

Certified Management Accountant

Vous aimerez peut-être aussi