Managerial Accounting
An Overview
Chapter One
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What is managerial accounting
• Managerial accounting is concerned with
providing information to the managers for
use within the organization
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Work of Management
Planning
Directing and
Motivating
Controlling
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Planning and Control Cycle
Formulating longand short-term plans
(Planning)
Comparing actual
to planned
performance
(Controlling)
Decision
Making
Exh.
1-1
Begin
Implementing
plans (Directing
and Motivating)
Measuring
performance
(Controlling)
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Comparison of Financial and
Managerial Accounting
Financial Accounting
Managerial Accounting
External persons who
make financial decisions
Managers who plan for
and control an organization
Historical perspective
Future emphasis
3. Verifiability
versus relevance
Emphasis on
verifiability
Emphasis on relevance
for planning and control
4. Precision versus
timeliness
Emphasis on
precision
Emphasis on
timeliness
5. Subject
Primary focus is on
the whole organization
Focuses on segments
of an organization
6. GAAP
Must follow GAAP
and prescribed formats
Need not follow GAAP
or any prescribed format
Mandatory for
external reports
Not
Mandatory
1. Users
2. Time focus
7. Requirement
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Exh.
1-2
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Total Quality Management (TQM)
TQM improves productivity by encouraging the use of fact
and analysis for decision making and if properly implemented,
avoids counter-productive organizational infighting.
Continuous
Improvement
Systematic
problem solving
using tools such
as benchmarking
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Theory of Constraints
A constraint (also called a bottleneck) is anything that
prevents you from getting more of what you want.
The constraint in a system is determined
by the step that has the smallest capacity.
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Theory of Constraints
Only actions
that strengthen
the weakest link
in the “chain”
improve the
process.
2. Allow the
weakest link to
set the tempo.
3. Focus on
improving
the weakest
link.
1. Identify the
weakest link.
4. Recognize that
the weakest link
is no longer so.
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. Code of Conduct for
Management Accountants
OR
Professional Certification- A Smart Investment
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•
•
•
•
1. An Ethics Perspective
2. A Strategic Management Perspective
3. An Enterprise risk Management Perspective
4. A Corporate Social Responsibilities
Perspective
• 5. A Process Management Perspective
• 6. A leadership perspective.
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An ethics perspective:
• Ethical behavior is the lubricant that keeps the
economy running. Without that lubricant the
economy would operate much less efficientlyless would be available to consumers, quality
would be lower, and prices would be higher. In
other words without fundamental trust in the
integrity of business, the economy would
operate much less efficiently.
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A strategic management perspective
• Companies need to develop a strategy that
defines how they intend to succeed in the
marketplace. A strategy is a game plan that
enables a company to attract customers by
distinguishing itself from competitors.
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An enterprise risk management
perspective
• Every strategy, plan and decision involves risks.
Enterprise risk management is a process used
by a company to identify those risks and
develop responses to them that enable it to the
reasonably assured of meeting its goals.
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A corporate social responsibility
perspective
• Companies have a CSR to serve other
stakeholders- such as customers, employees,
suppliers, communities, and environmental and
human rights advocates whose interest are tied
to the company's performance.
• CSR is a concept whereby organizations
consider the needs of all stakeholders when
making decisions.
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A process management perspective
• Most companies organize themselves by
functional departments such as the marketing
department, R&D department, accounting
department and other departments. These
departments tends to have clearly defined chain
of command that specifies superior and
subordinate relationships.
• A business process is a series of steps that are
followed in order to carry out some tasks in a
business.
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A leadership perspective
• An organization’s employees bring diverse
needs, beliefs, and goals to the workplace.
Therefore, an important role for organizational
leaders is to unite the behaviors of their fellow
employees around two common themes :
pursuing strategic goals, and making optimal
decisions.
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