Managerial Accounting Brewer/Garrison/Noreen Introduction to Managerial Accounting Second Edition
Managerial Accounting and the Business Environment Prologue Managerial Accounting and the Business Environment
The Changing Business Environment A more competitive environment emphasizing: Global competition Lower prices and costs Higher quality products More product choices Business environment changes in the past twenty years
The Changing Business Environment New tools for managers! Just-In-Time Total Quality Management Process Reengineering Theory of Constraints
Just-in-Time (JIT) Systems Receive customer orders. Complete products just in time to ship customers. Schedule production. Receive materials just in time for production. Complete parts just in time for assembly into products.
Just-in-Time (JIT) Reduced inventory costs Greater customer satisfaction Higher quality products Less warehouse space needed More rapid response to customer orders Zero defects
Total Quality Management (TQM) Where are we? Where do we want to go? Benchmarking Plan Do we need to change the plan? How do we start? Act Do is Continuous Improvement Check How are we doing?
Process Reengineering A business process is diagrammed in detail. Every step in the business process must be justified. The process is redesigned to include only those steps that make our product more valuable.
Process Reengineering A business process is diagrammed in detail. Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced. Every step in the business process must be justified. The process is redesigned to include only those steps that make our product more valuable.
Theory of Constraints (TOC) A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective
International Competition Meeting world-class competition demands a world-class management accounting system.
Organizational Structure An organization is a group of people united for a common purpose.
Decentralization Delegation of decision-making authority throughout an organization. Decentralization decision–making Decentralization decision–making
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. Staff positions support and assist line positions. Example: Cost accountants in the manufacturing plant.
The Chief Financial Officer (CFO) The CFO is: A member of top management. Responsible for providing timely and relevant data for planning and control activities. Responsible for external financial reporting.
Professional Ethics Ethical practices in business build trust and promote productive relationships. They are necessary for the functioning of a market economy. Many companies and professional organizations, such as the Institute of Management Accountants (IMA), have written codes of ethics which serve as guidelines for employees.
IMA’s Standard of Ethical Conduct Competence Confidentiality Integrity Objectivity Resolution of Ethical Conflict
IMA’s Standard of Ethical Conduct Follow applicable laws, regulations and standards. Maintain professional competence. Competence Prepare complete and clear reports after appropriate analysis.
IMA’s Standard of Ethical Conduct Do not disclose confidential information unless legally obligated to do so. Do not use confidential information for personal advantage. Confidentiality Ensure that subordinates do not disclose confidential information.
IMA’s Standard of Ethical Conduct Refrain from activities that could discredit the profession. Avoid activities that could affect your ability to perform duties. Avoid conflicts of interest and advise others of potential conflicts. Do not subvert organization’s legitimate objectives. Integrity Refuse gifts or favors that might influence behavior. Recognize and communicate personal and professional limitations. Communicate unfavorable as well as favorable information.
IMA’s Standard of Ethical Conduct Communicate information fairly and objectively. Objectivity Disclose all information that might be useful to management.
IMA’s Standard of Ethical Conduct Resolution of Ethical Conflict Follow established policies. For unresolved ethical conflicts: Discuss the conflict with immediate superior. If immediate superior is the CEO, consider the board of directors or the audit committee. Except where legally prescribed, maintain confidentiality.
IMA’s Standard of Ethical Conduct Resolution of Ethical Conflict Clarify issues in a confidential discussion with an objective advisor. Consult an attorney as to legal obligations. The last resort is to resign.
Other Codes of Conduct Company International Many companies have adopted formal ethics codes of conducts that provide broad guidelines for proper behavior. International The International Federation of Accountants’ (IFAC) Guidelines on Ethics for Professional Accountants governs the activities of all accountants throughout the world.
Certified Management Accountant (CMA) Rigorous Professional Exam Greater Responsibilities Higher Compensation
End of Prologue