1. Intermediate Cost Analysis and Management
Course Introduction/ Determine the Difference Between Internal and External Reporting
Intermediate Cost Analysis
and Management
1.1

3. Terminal Learning Objective
Action: Determine the Difference Between Internal and External Reporting
Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors
Standard: With at least 80% accuracy:
Define the 4 characteristics of accounting information
Identify key components of GFEBS output
Classify GFEBS reports as internal or external

4. Cost Maturation Process
Single Use
Estimated
Future Cost
Cost Benefit
Analysis
Cost Informed
Decisions
Persistent Use
Expected and Actual Cost
Continuous Improvement
Cost-Managed Organizations
Universal Use
Planned & Actual Cost
Role Based, Org Based, Output Based Control
Cost-Managed Enterprise
Cost War Cost War High Cost War Full
Insurgency Intensity Conflict Spectrum Operations
Starting here
(Some work is being done now) TARGET

5. Transforming the Army: Four Requirements for Success
Need Status Action
Leadership Team with ACE to create “informed” leaders
Exploit existing strong leadership capabilities
ACE Build strong staff, strong organization
Select, develop ACEs (Asst to Comdr – Enterprise)
Design and deliver advanced training
Process Modify “winning the cost war” template as needed
Cost Info Use new tools as they come online

6. ACE Development: PCAM & ICAM
Principles of Cost Analysis and Management
Targeted at entry level CP11 Personnel, Sergeants, Lieutenants, Junior Captains
Course Length: Three Weeks
Intermediate Cost Analysis and Management
Targeted at mid career CP11 Personnel, Staff Sergeants and above, Senior Captains, Majors and above

7. Stackable Credentials
Based on the Financial Management Career Field
All CEs will require basic, advanced, and master skills with a concentration in:
Readiness – Capacity management and force cost analysis
Materiel – Logistics and working capital funds cost analysis
Human Capital – Manpower cost analysis
Services & Infrastructure – Services and capital asset costing
FAs and CPs that are common to all CEs should train to become a master in any CE
* NOTE: Stackable credentials are based on Financial Management (BC36/CP11) career field demands for cost management, which is the Army maximum; other career fields will use a subset of these requirements.

8. ICAM Develop advanced cost management skills
Next step for those already fulfilling the role of ACE or who wish to become an ACE

9. Purpose of this Course Develop skills in Cost Management
Includes conference, demonstration and practical exercises, and case study
Emphasizes critical thinking
Introduces Excel templates to facilitate calculations
Introduce and apply skills in Leadership Driven Management
Heavy emphasis on case studies requires students to analyze real-world scenarios

10. Remember Valley Forge Refer to the article by Ms. Matiella
Why does the Army need to become more cost effective?
What is the difference between Cost Benefit Analysis and a Cost-Managed Organization?
How do fiscal constraints pose an “asymmetric threat”?
How should we respond?

11. Program of Instruction Overview
Week One
Week Two
Week Three
Understanding Cost
Learning the Process
Applying the Process
Accounting Basics
Cost Relationships
Cost Tradeoffs
Cost Projection
Cost Explanation
Cost Benefit Analysis
CBA Examples
Cost Management
After Action Review
Cost Management Cases
Cost Control Theory
Org Based Control
Role Based Control
Output Based Control
Change Management

12. What Do Accountants Do?

13. What Do Accountants Do? (Cont.)
Provide INFORMATION that is USEFUL to Decision Makers
Will make a difference in the decision
Timely – frequency and lag time
Relevance is in the eye of the User

14. What Do Accountants Do? (Cont.)
Provide INFORMATION that is USEFUL to Decision Makers
Information must be RELIABLE
Free from Bias
Verifiable
Will make a difference in the decision
Timely – frequency and lag time
Relevance is in the eye of the User

15. What Do Accountants Do? (Cont.)
Provide INFORMATION that is USEFUL to Decision Makers
Information must be RELIABLE
Free from Bias
Verifiable
Information must be RELEVANT
Will make a difference in the decision
Timely – frequency and lag time
Relevance is in the eye of the User

16. What Do Accountants Do? (Cont.)
Provide INFORMATION that is USEFUL to Decision Makers
Information must be RELIABLE
Free from Bias
Verifiable
Information must be RELEVANT
Will make a difference in the decision
Timely – frequency and lag time
Relevance is in the eye of the User

17. What Do Accountants Do? (Cont.)
Provide INFORMATION that is USEFUL to Decision Makers
Information must be RELIABLE
Free from Bias
Verifiable
Information must be RELEVANT
Will make a difference in the decision
Timely – frequency and lag time
Relevance is in the eye of the User

18. Who are the Users? Users may be INTERNAL or EXTERNAL
Internal users are:
Managers and Leaders
What types of Decisions might they make?
What information might they need?
External users are:
Investors, Creditors, Regulators and Legislators

19. Who are the Users? (Cont.)
Users may be INTERNAL or EXTERNAL
Internal users are:
Managers and Leaders
What types of Decisions might they make?
What information might they need?
External users are:
Investors, Creditors, Regulators and Legislators

20. Who are the Users? (Cont.)
Users may be INTERNAL or EXTERNAL
Internal users are:
Managers and Leaders
What types of Decisions might they make?
What information might they need?
External users are:
Investors, Creditors, Regulators and Legislators

21. Who are the Users? (Cont.)
Users may be INTERNAL or EXTERNAL
Internal users are:
Managers and Leaders
What types of Decisions might they make?
What information might they need?
External users are:
Investors, Creditors, Regulators, Legislators and Citizens

22. External User Needs
Examining an organization’s performance over time demands__________
Assures that the information from all organizations is prepared according to the same set of principles

23. External User Needs (Cont.)
Examining an organization’s performance over time demands Consistency
Assures users that the information is prepared in the same manner over multiple time periods
Assures that the information from all organizations is prepared according to the same set of principles

24. External User Needs (Cont.)
Examining an organization’s performance over time demands Consistency
Assures users that the information is prepared in the same manner over multiple time periods
Deciding whether to fund competing organizations or programs demands Comparability
Assures that the information from all organizations is prepared according to the same set of principles

25. Consistent Combat Ship
periscope
landing gates
ballistic missiles
torpedo
tubes
flight deck
helicopter pad
16" guns
submersible hull
cruise missiles

26. LSA #1 Check on Learning
Q1. Which characteristic requires timely information?
A1.
Q2. Which characteristic requires verifiable information?
A2.
Q3. Why would users demand consistency?
A3.
Q1. Which characteristic requires timely information?
A1. Relevance
Q2. Which characteristic requires verifiable information?
A2. Reliability
Q3. Why would users demand consistency?
A3. To compare performance of an organization over multiple time periods.

27. LSA #1 Summary
During this lesson we discussed the different levels and various training of Cost Management that will in time transform DoD into a cost-managed enterprise. We also covered ACE Development and it’s purpose

28. Two Sides of the Same Coin
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

29. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

30. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

31. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

32. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

33. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

34. Two Sides of the Same Coin (Cont.)
external reporting managerial costing
required
compliance
structured
audit
stable
consistency &
comparability
purpose
goal
methodology
test
dynamics
user need
needed
learning
customized
use
responsive
continuous
improvement

35. Example External Report: Tax Return Internal Report: Checkbook Why?
How?
Test of success?
Dynamics?
Why?
How?
Test of success?
Dynamics?

36. Research: System Uses at 59 Federal Organizations

37. Research: System Uses at 59 Federal Organizations

38. Research: System Uses at 59 Federal Organizations

39. Research: System Uses at 59 Federal Organizations

40. Research: System Uses at 59 Federal Organizations

41. Research: System Uses at 59 Federal Organizations

42. Research: System Uses at 59 Federal Organizations

43. LSA #2 Check on Learning
Q1. What are the basic uses for Cost Accounting systems? A1. Q2. Should all cost systems be the same? A2. Q3. Why or why not? A3.
Q1. What are the basic uses for Cost Accounting systems?
A1. Required reporting (external), management control, overhead allocation, setting prices
Q2. Should all cost systems be the same?
A2. No
Q3. Why or why not?
A3. Because organizations differ greatly, and the needs of management in those organizations also differs.

44. LSA #2 Summary
During this lesson, we discussed the purpose, methodology, the test of success, the dynamics and user’s needed for both external reporting and internal reporting, also known as managerial costing. In addition, we covered the uses of cost systems at a few federal organizations that described themselves as having cost accounting systems.

45. What about GFEBS? General Fund Enterprise Business System
Used Army-wide
Permits real-time posting of financial transactions
Reports costs according to Budget-relevant and non-Budget-relevant Cost Objects
Are GFEBS reports internal or external?

46. Unit Cost Report

47. Unit Cost Report (Cont.)
This report shows the actual and planned quantities and actual and planned (average) unit cost for various SKFs (Statistical Key Figures) such as Headcount.

48. Discussion Questions Who would use this report? How might they use it?
If you were the Senior Leader of this organization, would you be surprised that your cost per headcount was $78,919.20?
What would you want to know about that number?
Would this be an internal or external report for you?

49. LSA #3 Check on Learning
Q1. What characteristics would identify a report as internal to an organization?
A1.
Q2. What characteristics would identify a report as external to an organization?
A2.
Q1. What characteristics would identify a report as internal to an organization?
A1. Because organizations differ greatly, and the needs of management in those organizations also differs.
Q2. What characteristics would identify a report as external to an organization?
A2. Elements of information that are designed for CONSISTENCY and COMPARABILITY for external users would be external.

50. LSA #3 Summary
During this discussion, we discussed internal vs. external Business Intelligence (BI) reports as it relates to GFEBS.

51. Conclusion
Needs for internal cost information are as varied as the organizations themselves
External cost reports:
Facilitate comparison of organizations by external users
Are unlikely to meet internal management information needs

52. TLO Summary
Action: Determine the Difference Between Internal and External Reporting
Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors
Standard: With at least 80% accuracy:
Define the 4 characteristics of accounting information
Identify key components of GFEBS output
Classify GFEBS reports as internal or external