1. Managerial Accounting and the Business Environment
Chapter 1: Managerial Accounting and the Business Environment.
This chapter describes the larger business environment within which management accounting operates. It is divided into nine sections: (1) management accounting and globalization, (2) strategy, (3) organizational structure, (4) process management, (5) the importance of ethics in business, (6) corporate governance, (7) enterprise risk management, (8) corporate social responsibility and Sustainability reporting, and (9) the professional qualifications of Management Accountants.
Chapter 1
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2. Management Accounting and Cost Accounting
relates to the provision of appropriate information, including cost information for decision-making, planning, control, and performance evaluation.
Cost accounting
defines costs and valuates inventories to help managers to run businesses
Management accounting is one of the core functions of businesses to help plan, evaluate and control businesses. It relates to the provision of appropriate information for decision-making.
It is critical that management accounting information is prepared, provided, and used on a timely basis. Late information is no information.
It is important for management accounting information to be relevant, and such relevant information needs to be obtained efficiently and effectively.
Cost-benefit evaluation is a key concept in management accounting.
Cost accounting defines costs and valuates inventories to help managers to run businesses. It intertwines with Management Accounting and the terms are sometimes interchangeable.
With the fast changing globalised economy, Management Accounting play an important role in supporting management to make quick and relevant decisions.
Management Accounting and Cost Accounting
are intertwined and
the terms are sometimes interchangeable
their functions are to help companies make better decisions
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3. Garrison, Noreen, Brewer, Cheng & Yuen
World Merchandise Trade Volume By Major Product Group, (Volume Indices, 1950=100)
The World Merchandise Trade Volume data show enormous increases in global trading activities from 1950 to 2009; in particular, the manufacturing sector.
Source: World Trade Organization, International Trade Statistic 2010
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4. Regional Shares In World Merchandise Exports, 2009
The Regional Shares In World Merchandise Exports data show that Europe and Asia had the lion shares (total of 70%) of the world merchandise exports.
Garrison, Noreen, Brewer, Cheng & Yuen

5. Distribution of Fortune Global 500 companies between 2005 and 2010
2009
2007
2005
Australia 8 9
China 46 37 24 16
India 7 6 5
Japan 71 68 67 81
Malaysia 1
Singapore 2
South Korea 10 14 11
Taiwan
Thailand
Asia Pacific
155
145
128
127 US
139
140
162
176
Canada 13
Europe
184
188
183
178
Others
500
European companies consistently form the strongest foundation of the Fortune Global 500 totaling 184 companies in 2010
From 2005 to 2010, among the Fortune Global 500 companies, China companies increased almost 3 folds from 16 to 46 (a gain of 30 companies) whereas US companies reduced from 176 to 139 (a drop of 37 companies)
In the second half of 2010, China officially overtook Japan as the second biggest economy in the world, reflecting the growing power of China companies.
The number of Fortune 500 Global firms from Taiwan and India companies trailed closely behind South Korea and were comparable with Australia, forming another powerful group in the Asia-Pacific region.
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6. Top 10 Companies of Fortune Global 500 (ranked by revenue)
2010
2009
Rank
Company
Revenues
Profits
($ millions) 1
Wal-Mart Stores
408,214
14,335
Royal Dutch Shell
458,361
26,277 2
285,129
12,518
Exxon Mobil
442,851
45,220 3
284,650
19,280
405,607
13,400 4 BP
246,138
16,578
367,053
21,157 5
Toyota Motor
204,106
2,256
Chevron
263,159
23,931 6
Japan Post Holdings
202,196
4,849
Total
234,674
15,500 7
Sinopec
187,518
5,756
ConocoPhillips
230,764
-16,998 8
State Grid
184,496
-343
ING Group
226,577
-1,067 9
AXA
175,257
5,012
207,814
1,961 10
China National Petroleum
165,496
10,272
204,352
-4,349
Asian and China companies not only increase in the total numbers on the Fortune Global 500 list but also are taking more top spots.
Four out of ten companies in 2010 were from Asia (2 from Japan and 2 from China). There were only two Asian companies on the top 10 in 2009 (1 from China and 1 from Japan).
Together with the earlier slides, data show the important contribution of Asia companies to the world economy.
source:
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7. Internet Penetration Rate And Borderless Trading Potential
1-7
Internet Penetration Rate And Borderless Trading Potential
The Internet fuels globalization by providing companies with greater access to geographically dispersed customers, employees, and suppliers.
The Internet fuels globalization by providing companies with greater access to geographically dispersed customers, employees, and suppliers.
While the number of internet users continues to grow, as of June 2010, about 71 % of the world’s population was still not connected to the Internet. This suggests the Internet’s impact on business has yet to fully develop.
As of June 2010, more than 71% of the world's population was still not connected to the Internet.
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8. Garrison, Noreen, Brewer, Cheng & Yuen
1-8
Strategy
A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.
A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.
The focal point of a company’s strategy should be its target customers.
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9. Customer Value Propositions
1-9
Customer Value Propositions
Understand and respond to individual customer needs.
Customer Intimacy Strategy
Operational Excellence Strategy
Deliver products and services faster, more conveniently, and at lower prices.
Part I.
Companies that adopt a customer intimacy strategy strive to understand and respond to individual customer needs better than competitors. Examples of companies that pursue this strategy include: Ritz-Carlton, Nordstrom, and Starbucks.
Part II.
Companies that adopt an operational excellence strategy strive to deliver products and services faster, more conveniently, and at a lower price than competitors. Examples of companies that pursue this strategy include: Daiso, Southwest Airlines, Wal-Mart, and The Vanguard Group.
Part III.
Companies that adopt a product leadership strategy strive to offer higher quality products than competitors. Examples of companies that pursue this strategy include: Louis Vuitton, BMW, Cisco Systems, and W.L. Gore.
Product Leadership Strategy
Offer higher quality products.
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10. Understand the role of management accountants in an organization.
Learning Objective 1
Understand the role of management accountants in an organization.
Learning objective number 1 is to understand the role of management accountants in an organization.
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11. Organizational Structure
1-11
Organizational Structure
Decentralization is the delegation of decision-making authority throughout an organization.
Decentralization is the delegation of decision-making authority throughout an organization by giving managers the authority to make decisions relating to their area of responsibility.
An organization chart shows how responsibility is divided among managers and it shows formal lines of reporting and communication.
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12. Line and Staff Relationships
1-12
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.
An organization chart also shows line and staff positions in an organization. A person in a line position is directly involved in achieving the basic objectives of the organization. A person in a staff position is indirectly involved in achieving those basic objectives. Staff positions support line positions, but they do not have direct authority over line positions.
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13. The Chief Financial Officer (CFO)
1-13
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.
The Chief Financial Officer (CFO) is the member of the top management team who is responsible for providing timely and relevant data to support planning and controlling activities and for preparing financial statements for external users.
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14. Garrison, Noreen, Brewer, Cheng & Yuen
Learning Objective 2
Understand the basic concepts underlying Lean Production, the Theory of Constraints, and Six Sigma.
Learning objective number 2 is to understand the basic concepts underlying Lean Production, the Theory of Constraints, and Six Sigma.
Garrison, Noreen, Brewer, Cheng & Yuen

15. Business functions making up the value chain
1-15
Process Management
A business process is a series of steps that are followed in order to carry out some task in a business.
Business functions making up the value chain
Product Customer
R&D Design Manufacturing Marketing Distribution Service
Part I.
A business process is a series of steps that are followed in order to carry out some task in a business.
Part II.
A value chain consists of the major business functions that add value to a company’s products and services. 
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16. Theory of Constraints (TOC)
1-16
Process Management
There are three approaches to improving business processes . . .
Theory of Constraints (TOC)
Lean Production
Six Sigma
Next, we will discuss three different approaches to improving business processes:
 Lean production,
 The theory of constraints (TOC), and
 Six Sigma.
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17. Traditional “Push” Manufacturing Company
1-17
Traditional “Push” Manufacturing Company
Forecast Sales
Store Inventory
Order components
Make Sales from Finished Goods Inventory
Store Inventory
Produce goods in anticipation of Sales
In a traditional manufacturing company, work is pushed through the system in order to produce as much as possible and to keep everyone busy—even if products cannot be immediately sold.
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18. Traditional “Push” Manufacturing Company
1-18
Traditional “Push” Manufacturing Company
Traditional “push” manufacturing
Large inventories
Raw materials
Work in process
Finished goods
Materials waiting to be processed.
Partially completed products requiring more work before they are ready for sale.
Completed products awaiting sale.
Part I.
The “push” approach almost inevitably results in large inventories of raw materials, work in process, and finished goods.
Part II
Raw materials are the materials that are used to make a product.
Part III.
Work in process inventories consist of units of product that are only partially complete and will require further work before they are ready for sale to the customer.
Part IV.
Finished goods consist of units of product that have been completed but have not yet been sold to customers.
Garrison, Noreen, Brewer, Cheng & Yuen

19. Lean Production The lean thinking model is a five step approach.
1-19
Lean Production
 Identify value in specific products/services.
 Identify the business process that delivers value.
The lean thinking model is a five step approach.
 Organize work arrangements around the flow of the business process.
Part I. The lean thinking model is a five step management approach that organizes resources, such as people and machines, around the flow of business processes and that pulls units through these processes in response to customer orders.
 The first step is to identify the value to customers in specific products and services.
Part II.
 The second step is to identify the business process that delivers this value to customers. The linked steps that comprise a business process typically span the departmental boundaries that are specified in an organization chart.
Part III.
 The third step is to organize work arrangements around the flow of the business process. This is often accomplished by creating what is known as a manufacturing cell.
Part IV.
 The fourth step is to create a pull system where production is not initiated until a customer has ordered a product. This facet of the lean thinking model is often called just-in-time production, or JIT for short.
Part V.
 The fifth step is to continuously pursue perfection in the business process.
 Continuously pursue perfection in the business process.
 Create a pull system that responds to customer orders.
Garrison, Noreen, Brewer, Cheng & Yuen

20. 1-20
Lean Production
The five step process results in a “pull” manufacturing system that reduces inventories, decreases defects, reduces wasted effort, and shortens customer response times.
Customer places an order
Create Production Order
Generate component requirements
The result of this five step process is to lower inventories, decrease defects, reduce wasted effort, and shorten customer response times.
Production begins as parts arrive
Goods delivered when needed
Components are ordered
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21. Garrison, Noreen, Brewer, Cheng & Yuen
1-21
Lean Production
Lean thinking can be used to improve business processes that link companies together. 
The lean thinking model can also be used to improve the business processes that link companies together. 
The term supply chain management is commonly used to refer to the coordination of business processes across companies to better serve end consumers.
The term supply chain management refers to the coordination of business processes across companies to better serve end consumers.
Garrison, Noreen, Brewer, Cheng & Yuen

22. Garrison, Noreen, Brewer, Cheng & Yuen
1-22
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 constraint in a system is determined by the step that has the smallest capacity.
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 least capacity.
The Theory of Constraints is based on the insight that effectively managing the constraint is the key to success. The goal is to manage the constraint with the intent of generating more business rather than cutting the workforce.
Garrison, Noreen, Brewer, Cheng & Yuen

23. Theory of Constraints 2. Allow the weakest link to set the tempo.
1-23
Theory of Constraints
2. Allow the weakest link to set the tempo.
Only actions that strengthen the weakest link in the “chain” improve the process.
3. Focus on improving the weakest link.
1. Identify the weakest link.
The Theory of Constraints approach to process improvement involves four steps:
 Identify the weakest link in the chain which is the constraint.
 Do not place a greater strain on the system than the weakest link can handle – if you do, the chain will break.
 Concentrate improvement efforts on strengthening the weakest link.
 If the improvement efforts are successful, the weakest link will improve to the point that it is no longer the weakest link. At this point, a new weakest link must be identified and the improvement process starts over again.
4. Recognize that the weakest link is no longer so.
Garrison, Noreen, Brewer, Cheng & Yuen

24. 1-24
Six Sigma
A process improvement method relying on customer feedback and fact-based data gathering and analysis techniques to drive process improvement.
Refers to a process that generates no more than 3.4 defects per million opportunities.
Sometimes associated with the term zero defects.
Six Sigma is a process improvement method that relies on customer feedback and fact-based data gathering and analysis techniques to drive process improvement.
The term Six Sigma refers to a process that generates no more than 3.4 defects per million opportunities.
Because this rate of defects is so low, Six Sigma is sometimes associated with the term “zero defects.”
Garrison, Noreen, Brewer, Cheng & Yuen

25. Garrison, Noreen, Brewer, Cheng & Yuen
1-25
Six Sigma
The DMAIC (Define, Measure, Analyze, Improve, and Control) framework has five stages: 
 The Define stage identifies the scope and purpose of the project, the flow of the current process, and the customer’s requirements.
 The Measure stage gathers baseline performance data concerning the existing process and narrows the scope of the project to the most important problems.
 The Analyze stage identifies the root causes of the problems that were identified during the Measure stage. The Analyze stage often reveals non-value-added activities that should be eliminated, wherever possible.
 The Improve stage is where potential solutions are developed, evaluated, and implemented to eliminate non-value-added activities and any other problems uncovered in the Analyze stage.
 The Control stage ensures that problems remain fixed and that the new methods are improved over time.
Garrison, Noreen, Brewer, Cheng & Yuen

26. Understand the importance of upholding ethical standards.
Learning Objective 3
Understand the importance of upholding ethical standards.
Learning objective number 3 is to understand the importance of upholding ethical standards.
Garrison, Noreen, Brewer, Cheng & Yuen

27. Code of Conduct for Management Accountants
1-27
Code of Conduct for Management Accountants
All Professional Management Accountants Bodies issue their own Code of Conduct but they all share similar fundamental principles and conceptual approaches as the one issued by the Institute of Management Accountants.
The Institute of Management Accountants’ (IMA) Statement of Ethical Professional Practice consists of two parts that offer guidelines for:
 Ethical behavior.
 Resolution for an ethical conflict.
The Institute of Management Accountants’ Statement of Ethical Professional Practice consists of two parts — guidelines for ethical behavior and guidelines for resolution of an ethical conflict.
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28. IMA Guidelines for Ethical Behavior
1-28
IMA Guidelines for Ethical Behavior
Recognize and communicate professional limitations that preclude responsible judgment.
Maintain professional competence.
Competence
Follow applicable laws, regulations and standards.
Management accountants have responsibility for ethical behavior in four broad areas. The first area is professional competence.
Management accountants must:
Maintain professional competence.
Follow applicable laws, regulations, and standards.
Provide accurate, clear, concise, and timely decision support information.
Recognize and communicate professional limitations that preclude responsible judgment.
Provide accurate, clear, concise, and timely decision support information.
Garrison, Noreen, Brewer, Cheng & Yuen

29. IMA Guidelines for Ethical Behavior
1-29
IMA Guidelines for Ethical Behavior
Do not disclose confidential information unless legally obligated to do so.
Do not use confidential information for unethical or illegal advantage.
Confidentiality
The second area is confidentiality. Management accountants must:
Not disclose confidential information unless legally obligated to do so.
Ensure that subordinates do not disclose confidential information.
Not use confidential information for unethical or illegal advantage.
Ensure that subordinates do not disclose confidential information.
Garrison, Noreen, Brewer, Cheng & Yuen

30. IMA Guidelines for Ethical Behavior
1-30
IMA Guidelines for Ethical Behavior
Mitigate conflicts of interest and advise others of potential conflicts.
Refrain from conduct that would prejudice carrying out duties ethically.
Integrity
The third area is integrity. Management accountants must:
Mitigate conflicts of interest and advise others of potential conflicts.
Refrain from conduct that would prejudice carrying out duties ethically.
Abstain from activities that might discredit the profession.
Abstain from activities that might discredit the profession.
Garrison, Noreen, Brewer, Cheng & Yuen

31. IMA Guidelines for Ethical Behavior
1-31
IMA Guidelines for Ethical Behavior
Communicate information fairly and objectively.
Disclose delays or deficiencies in information timeliness, processing, or internal controls.
Credibility
The fourth area is credibility. Management accountants must:
Communicate information fairly and objectively.
Disclose all relevant information that could influence a user’s understanding of reports and recommendations.
Disclose delays or deficiencies in information timeliness, processing, or internal controls.
Disclose all relevant information that could influence a user’s understanding of reports and recommendations.
Garrison, Noreen, Brewer, Cheng & Yuen

32. IMA Guidelines for Resolution of an Ethical Conflict
1-32
IMA Guidelines for Resolution of an Ethical Conflict
Follow employer’s established policies.
For an unresolved ethical conflict:
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 supervisor’s knowledge, assuming the supervisor is not involved.
When faced with an ethical conflict, the employer’s established policies for conflict resolution should be followed. If the conflict cannot be resolved within established policies, a management accountant should:
Discuss the conflict with immediate superior or next highest uninvolved manager.
If immediate supervisor is the CEO, consider discussing the conflict with the board of directors or the audit committee.
Remember that contact with levels above immediate supervisor should only be initiated with the supervisor’s knowledge, assuming the supervisor is not involved.
Garrison, Noreen, Brewer, Cheng & Yuen

33. IMA Guidelines for Resolution of an Ethical Conflict
1-33
IMA Guidelines for Resolution of an Ethical Conflict
Follow employer’s established policies.
For an unresolved ethical conflict:
Except where legally prescribed, maintain confidentiality.
Clarify issues in a confidential discussion with an objective advisor.
Consult an attorney as to legal obligations.
Additional guidelines for an unresolved ethical conflict are:
  Except where legally prescribed, communication with individuals not employed by the organization is not appropriate.
Clarify relevant ethical issues with an objective advisor, such as a member of the IMA’s Ethics Counseling Service.
Consult an attorney regarding your legal obligations.
Garrison, Noreen, Brewer, Cheng & Yuen

34. Why Have Ethical Standards?
1-34
Why Have Ethical Standards?
Ethical standards in business are essential for a smooth functioning 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.
Ethical standards are motivated by a very practical consideration — if the standards are not followed in business, then the economy, and all of us, would suffer.
Abandoning ethical standards would lead to a lower standard of living with lower-quality goods and services, less to choose from, and higher prices. In short, ethical standards are essential for the smooth functioning of an advanced market economy.
Garrison, Noreen, Brewer, Cheng & Yuen

35. Company Codes of Conduct
1-35
Company Codes of Conduct
Broad-based statements of a company’s responsibilities to:
And to the communities in which the company operates.
Employees
Customers
Suppliers
Many companies have a formal code of conduct. These codes are generally broad-based statements of a company’s responsibilities to its employees, its customers, its suppliers, and the communities in which the company operates.
Garrison, Noreen, Brewer, Cheng & Yuen

36. Codes of Conduct on the International Level
1-36
The Code of Ethics for Professional Accountants, issued by the International Federation of Accountants (IFAC), governs the activities of professional accountants worldwide.
In addition to integrity and objectivity, resolution of ethical
conflicts, competence, and confidentiality, the IFAC’s code
deals with the accountant’s ethical responsibilities in:
Taxes,
Independence,
Fees and commissions,
Advertising and solicitation,
Handling of monies, and
Cross-border activities.
The Code of Ethics for Professional Accountants, issued by the International Federation of Accountants (IFAC), governs the activities of all professional accountants throughout the world. In addition to outlining ethical requirements in matters dealing with integrity and objectivity, resolution of ethical conflicts, competence, and confidentiality, the IFAC’s code also outlines the accountant’s ethical responsibilities in matters relating to:
Taxes,
Independence,
Fees and commissions,
Advertising and solicitation,
Handling of monies, and
Cross-border activities.
Garrison, Noreen, Brewer, Cheng & Yuen

37. The system by which a company is directed and controlled.
1-37
Corporate Governance
The system by which a company is directed and controlled.
Board of Directors
Top Management
Stockholders
To pursue objectives of
Incentives and monitoring for
Corporate governance is the system by which a company is directed and controlled.
If properly implemented, the corporate governance system should provide incentives for the board of directors and top management to pursue objectives that are in the interests of the company’s owners and it should provide for effective monitoring of performance.
Garrison, Noreen, Brewer, Cheng & Yuen

38. The Sarbanes-Oxley Act of 2002
1-38
The Sarbanes-Oxley Act of 2002 was intended to protect the interests of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures. Six key aspects of the legislation include: 
 The Act requires both the CEO and CFO to certify in writing that their company’s financial statements and disclosures fairly represent the results of operations.
 The Act establishes the Public Company Accounting Oversight Board to provide additional oversight of the audit profession.
 The Act places the power to hire, compensate, and terminate public accounting firms in the hands of the audit committee.
 The Act places restrictions on audit firms, such as prohibiting public accounting firms from providing a variety of non-audit services to an audit client.
The Sarbanes-Oxley Act of 2002 was intended to protect the interests of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures. Six key aspects of the legislation include:
 The Act requires both the CEO and CFO to certify in writing that their company’s financial statements and disclosures fairly represent the results of operations.
 The Act establishes the Public Company Accounting Oversight Board to provide additional oversight of the audit profession.
 The Act places the power to hire, compensate, and terminate public accounting firms in the hands of the audit committee.
 The Act places restrictions on audit firms, such as prohibiting public accounting firms from providing a variety of non-audit services to an audit client.
Garrison, Noreen, Brewer, Cheng & Yuen

39. The Sarbanes-Oxley Act of 2002
1-39
The Sarbanes-Oxley Act of 2002
(continued)
 The Act requires a public company’s independent auditor
to issue an opinion on the effectiveness of the company’s
internal control over financial reporting to accompany
management’s assessment, and both are included in the
company’s annual report.
The Act establishes severe penalties for certain behaviors, such as:
Up to 20 years in prison for altering or destroying any documents that may eventually be used in an official proceeding.
Up to 10 years in prison for retaliating against a “whistle blower.” 
(continued)
 The Act requires a public company’s independent auditor to issue an opinion on the effectiveness of the company’s internal control over financial reporting to accompany management’s assessment, and both are included in the company’s annual report.
 The Act establishes severe penalties for certain behaviors, such as:
Up to 20 years in prison for altering or destroying any documents that may eventually be used in an official proceeding.
Up to 10 years in prison for retaliating against a “whistle blower.”
Garrison, Noreen, Brewer, Cheng & Yuen

40. Enterprise Risk Management
1-40
Enterprise Risk Management
Should I try to avoid the risk, share the risk, accept the risk, or reduce the risk?
A process used by a company to proactively identify and manage risk.
Part I.
Enterprise risk management is a process used by a company to proactively identify the risks that it faces and manage those risks.
Part II.
Once a company identifies its risks, perhaps the most common risk management tactic is to reduce risks by implementing specific controls.
Once a company identifies its risks, perhaps the most common risk management tactic is to reduce risks by implementing specific controls.
Garrison, Noreen, Brewer, Cheng & Yuen

41. Enterprise Risk Management
1-41
This slide contains a subset of the business risks and controls shown in Exhibit 1-9 of the textbook. Collectively, these examples illustrate the diversity of risks that companies can face.
Garrison, Noreen, Brewer, Cheng & Yuen

42. Corporate Social Responsibility
Corporate social responsibility (CSR) is a concept whereby organizations consider the needs
of all stakeholders when making decisions.
Customers
Employees
Suppliers
Communities
Stockholders
Environmental & Human Rights Advocates
Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions. CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.
Stakeholders include groups, such as customers, employees, suppliers, communities, stockholders, and environmental and human rights advocates, whose interests are tied to the company’s performance.
CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.
Garrison, Noreen, Brewer, Cheng & Yuen

43. Corporate Social Responsibility
This slide presents examples of corporate social responsibilities that are of interest to the six stakeholder groups just mentioned.
Garrison, Noreen, Brewer, Cheng & Yuen

44. Sustainability Reporting
Global Reporting Initiative (GRI)
promotes a systematic and standardized approach
to corporate social responsibility and embed it in corporate culture;
to stimulate demand for sustainability information;
thus benefitting both reporting organizations and report users.
International Federation of Accountants (IFAC) Sustainability Framework
Organizations should
achieve a “Triple Bottom-Line”
financial, social, and environmental goals
(or 3Ps: Profit, People, and Planet)
promote a sound corporate governance and ethical responsibility to ensure financial success through ethical operations and transactions;
promote cultural diversity and equality;
provide opportunities for social and economic development of the communities; and
minimize environmental damages, and provide a safe working and living environment for the communities.
GRI and IFAC play an important role in promoting sustainability reporting. The triple bottom-line concept is critical for long-term sustainability of businesses.
Garrison, Noreen, Brewer, Cheng & Yuen

45. Sustainability Reporting: GRI Registered Companies
Eurpoean companies led the pack in sustainability reporting followed by Asian companies. The growing trend of adopting GRI sustainability reporting standards is encouraging. It increased from 10 companies in 1999 to 1,772 companies in 2010.
Examples of GRI Registered Companies
Asia: Air China, AsusTek, Canon, Reliance Industries, Samsung Securities, SingTel
Europe: Air France-KLM, BP, Daimler, Nestle, Nokia
United States: AT&T, Dell, ExxonMobil, Intel, Johnson & Johnson
Garrison, Noreen, Brewer, Cheng & Yuen

46. Professional Qualification of Management Accountants
1-46
Professional Qualification of Management Accountants
Traditional accounting qualifications e.g. Chartered Accountants (ACA), Certified Public Accountants (CPA) and Chartered Certified Accountants (ACCA)
Management accountants qualifications, e.g.:
Institution
Abbrev
Country
Qualification
The Institute of Management Accountants
IMA US
CMA
Certified Management Accountants of Canada
(previously known as The Society of Management Accountants of Canada)
CMA Canada
Canada
The Chartered Institute of Management Accountants
CIMA UK
FCMA , ACMA
The Institute of Certified Management Accountants of Australia
ICMA
Australia
- CMA Philippines
Philippines
- CMA Indonesia
Indonesia
- CMA Sri Lanka
Sri Lanka
- CMA India
India
The Institute of Cost and Works Accountants of India
ICWAI
FICWA, AICWA
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) or Chartered Management Accountant (FCMA, ACMA) or other management accountant’s qualifications such as Cost and Works Accountants in India.
Management accountants who become professionally qualified accountants are often given greater responsibilities and higher compensation than other management accountants who are professionally qualified.
Information about becoming a professionally qualified management accountant can be accessed on the IMA’s website at CIMA’s website ( other relevant institutions’ website by simple search on Google or other search engines.
Garrison, Noreen, Brewer, Cheng & Yuen

47. Garrison, Noreen, Brewer, Cheng & Yuen
End of Chapter 1
End of chapter 1.
Garrison, Noreen, Brewer, Cheng & Yuen