Anup Kumar Saha
Chapter 1
Anup
Kumar
Saha
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Managerial Accounting and
the Business Environment
Copyright © Anup Kumar Saha
Chapter One
Work of Management
Anup Kumar Saha
Planning
Directing and
Motivating
Controlling
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Planning
Anup Kumar Saha
Identify
alternatives.
Select alternative that does
the best job of furthering
organization’s objectives.
Develop budgets to guide
progress toward the
selected alternative.
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Directing and Motivating
Anup Kumar Saha
Directing and motivating involves managing dayto-day activities to keep the organization
running smoothly.
 Employee work assignments.
 Routine problem solving.
 Conflict resolution.
 Effective communications.
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Controlling
Anup Kumar Saha
The control function ensures
that plans are being followed.
Feedback in the form of performance reports
that compare actual results with the budget
are an essential part of the control function.
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Comparison of Financial and
Managerial Accounting
Exh.
1-2
Anup Kumar Saha
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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Organizational Structure
Anup Kumar Saha
Decentralization is the delegation of decisionmaking authority throughout an organization.
Corporate Organization Chart
Board of Directors
President
Purchasing
Personnel
Vice President
Operations
Chief Financial
Officer
Treasurer
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Controller
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The Changing Business Environment
Anup Kumar Saha
•
•
•
•
•
•
Just-in-time production
Total quality management
Process reengineering
Theory of constraints
International competition
E-commerce
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Business environment
changes in the past
twenty years
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Just-in-Time (JIT) Systems
Anup Kumar Saha
Receive
customer
orders.
Complete products
just in time to
ship customers.
Schedule
production.
Receive materials
just in time for
production.
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Complete parts
just in time for
assembly into products.
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Total Quality Management (TQM)
Anup Kumar Saha
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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is
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Process Reengineering
Anup Kumar Saha
A business process
is diagrammed
in detail.
Every step in
the business
process must
be justified.
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Anticipated results:
Process is simplified.
Process is completed
in less time.
Costs are reduced.
Opportunities for
errors are reduced.
The process is redesigned
to eliminate all
non-value-added activities
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Theory of Constraints
Anup Kumar Saha
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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Why Have Ethical Standards?
Anup Kumar Saha
Ethical standards in business are essential for a
smooth functioning advanced market 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.
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Codes of Conduct on
the International Level
Anup Kumar Saha
The Guidelines on Ethics for Professional
Accountants, issued by the International
Federation of Accountants (IFAC), govern the
activities of professional accountants worldwide.
In addition to competence, objectivity, independence,
and confidentiality, the IFAC’s code deals with
the accountant’s ethical responsibilities in:
Taxes
Fees and commissions
Advertising and solicitation
Handling of monies
Cross-border activities.
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Certified Management Accountant
Anup Kumar Saha
A management accountant
who has the necessary qualifications and
who passes a rigorous professional exam earns
the right to be known as a Certified
Management Accountant (CMA).
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Anup Kumar Saha
THANK YOU ALL
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