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Advanced Cost Management Professor William F. O’Brien, MBA, CPA Spring 2005.

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Presentation on theme: "Advanced Cost Management Professor William F. O’Brien, MBA, CPA Spring 2005."— Presentation transcript:

1 Advanced Cost Management Professor William F. O’Brien, MBA, CPA Spring 2005

2 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-2 Introduction n Cost Management n Financial n Non-Financial

3 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-3 Financial Management Evolution DATA INFORMATION ANALYSIS IMPLEMENTATION Today’s Corporate Focus is on Results!

4 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-4 Company F/S Users Economic Decisions Financial Impact (useful & relevant) Financial Accounting Model

5 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-5 Managerial Accounting Model Plan Implement Monitor Adjust Accounting Information Communication Environment

6 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-6 Managerial vs. Financial Accounting Managerial n Internally oriented n Prospective n Operational and financial focus n Timely n Not required n Non-GAAP n Relevant n Sub-unit orientation Financial n Externally oriented n Historical n Financial focus only n Accurate n Required n GAAP n Objective n Entire entity orientation

7 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-7 Four Management Functions …another Perspective n Strategic Management n Planning and Decision Making n Management and Operational Control n F/S Preparation n How is Cost Management Info Used?

8 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-8 Strategic Cost Management n Strategic cost management is the development of cost management information to facilitate the principal management function--strategic management.

9 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-9 Factors Influencing Today’s Business Environment n Global competition n Manufacturing and IT advances n Customer focus n Revised organizational structures n Social, political and cultural changes

10 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-10 Contemporary Mgt. Techniques n Benchmarking n Total Quality Management (TQM) n Continuous Improvement n Activity-Based Costing (ABC) and Mgt. (ABM) n Reengineering n Theory of Constraints (TOC) n Mass Customization n Target Costing n Life-cycle Costing n The Balanced Scorecard

11 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-11 Professional Organizations n Regulatory n IRS n SEC n FASB n IASB n PCAOB

12 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-12 Professional Organizations n Associations n IMA n SMA, Canada n AICPA n FEI n IIA

13 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-13 Ethics n Lack of ethics--everyone loses n South Florida Bermuda Triangle of Ethics n Tyco n W.R. Grace n Bausch and Lomb n Sunbeam n Enron, World-com, Adelphia

14 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-14 Ethics and You n You will face an ethical challenge n It could impact n Your job n Your family n Your relationships n Your financial stability n Your physical well-being n You have only ONE reputation...

15 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-15 Accounting Business Skills “The What” n Business Perspective n Organizational Focus n Bias for Action n Communication Excellence n People Proficiency

16 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-16 Financial Management Guidelines “The How” n Cc n KTT n MBWA n R ƒ R 3 n responsiveness n reliability n relevance

17 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-17 Just Say “No” to... A B C Things we do to ourselves!!!

18 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-18 Scarlet Letter of Accounting Lacks Reality Distraction Lacks Cost Mgt.

19 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-19 Ansari: SMA n Strategic Triangle (QCT) n Competition based on quality, cost & Time n Mgt. Acctg. Triangle (TBC) n Impacts technical, behavioral & cultural aspects n Mgt. Acctg. Links Strategy with Action n It is not an end unto itself n It is an integrating tool

20 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-20 SMA, cont. n The two triangles are dependent upon each other n This process is a framework to ensure that our management accounting tools possess the attributes necessary to achieve our strategic goals

21 STRATEGIC COST MANAGEMENT - BA122B - Spring 2005Slide 1-21 SMA, cont. n QCT Triangle n Self evident n TBC Triangle n Provides Technical insight n Encourages Behavioral changes n Supports Cultural beliefs


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