1. Managerial Accounting
Brewer/Garrison/Noreen
Introduction to
Managerial Accounting
Second Edition

2. Managerial Accounting and the Business Environment
Prologue
Managerial Accounting and the Business Environment

3. 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

4. The Changing Business Environment
New tools for managers!
Just-In-Time
Total Quality Management
Process Reengineering
Theory of Constraints

5. 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.

6. 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

7. 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?

8. 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.

9. 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.

10. Theory of Constraints (TOC)
A sequential process of identifying and removing constraints in a system.
Restrictions or barriers that impede progress toward an objective

11. International Competition
Meeting world-class competition demands a world-class management accounting system.

12. Organizational Structure
An organization is a group of people united for a common purpose.

13. Decentralization
Delegation of decision-making authority throughout an organization.
Decentralization decision–making
Decentralization decision–making

14. 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.

15. 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.

16. 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.

17. IMA’s Standard of Ethical Conduct
Competence
Confidentiality
Integrity
Objectivity
Resolution of Ethical Conflict

18. IMA’s Standard of Ethical Conduct
Follow applicable laws, regulations and standards.
Maintain professional competence.
Competence
Prepare complete and clear reports after appropriate analysis.

19. 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.

20. 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.

21. IMA’s Standard of Ethical Conduct
Communicate information fairly and objectively.
Objectivity
Disclose all information that might be useful to management.

22. 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.

23. 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.

24. 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.

25. Certified Management Accountant (CMA)
Rigorous Professional Exam
Greater Responsibilities
Higher Compensation

26. End of Prologue