1. Traditions and Innovations
Cost Accounting
Traditions and Innovations
Barfield, Raiborn, Kinney
Chapter 1
Introduction to Cost and Management Accounting in a Global Business Environment

2. Learning Objectives (1 of 3)
Explain the relationship between financial and management accounting
Describe the relationships among cost, financial, and management accounting
Describe the role of ethics in guiding workforce behavior
Identify the factors that influence the globalization of business

3. Learning Objectives (2 of 3)
List the primary factors and constraints that influence an organization’s strategy
Explain the impact of the competitive environment on an organization’s strategy
Clarify the impact of the accounting function on achievement of strategic goals and objectives

4. Learning Objectives (3 of 3)
Explain the effect of the product life cycle on the company segment’s mission
Describe the importance of the value chain

5. Accounting
The
Language of
Business

6. Accounting Provides information to external parties
Stockholders, creditors, regulators
Estimates the cost of products produced and services provided
Provides information to internal decision makers
To plan, control, and evaluate performance

7. Two Types of Accounting
Financial
Meet external information needs
Comply with GAAP
Management
Meet internal information needs
Provide product costing information

8. Financial Accounting Should
Provide information to
stockholders, creditors, and
various regulatory bodies
Comply with GAAP

9. Management Accounting Should
Provide product costing information
for external financial statements
Provide information
useful for
making decisions
and controlling
operations

10. Accounting Differences
Financial
External
Aggregated
Historical
Quantitative
Monetary
Verifiable
GAAP
Managerial
Internal
Segmented
Current/Forecasted
Quantitative/Qualitative
Monetary/Nonmonetary
Timely/Reasonable estimate
Benefits exceed costs

11. Relationship of Financial, Management, and Cost Accounting

12. Accounting Standards Financial Management
Financial Accounting Standards Board (FASB)
Private-sector body
Management
Cost Accounting Standards Board (CASB)
Public-sector board

13. Accounting Organizations
Institute of Management Accountants (IMA)
Statements on Management Accounting (not legally binding)
Certified Management Accountant (CMA)
Certified in Financial Management (CFM)
Society of Management Accountants of Canada
Management Accounting Guidelines (not legally binding)

14. Ethics & Management Accountants
Standards of Ethical Conduct for Management Accountants
Competence
Confidentiality
Integrity
Objectivity
Competence
Confidentiality
Integrity
Objectivity

15. Global Business Environment
International trade of goods and services
International movement of labor
International flows of capital and information

16. Global Business Challenges
Understand the factors influencing international business markets
Devise a long-term plan to achieve organizational goals
Develop information systems that keep the company’s operations consistent with its plans and goals

17. Global Business Environment
Electronic Commerce
Trade Agreements
North American Free Trade Agreement (NAFTA)
General Agreement on Tariffs and Trade (GATT)

18. North American Free Trade Agreement (NAFTA)
Members agreed to allow duty-free transfer of goods under certain conditions

19. General Agreement on Tariffs and Trade (GATT)
To provide a “level playing field” for
trade among the 100+ signatory nations

20. Global Business Environment
Risks
Strategic
Environment and Organization
Operating
Financial
Information

21. Global Business Environment
Ethical Considerations
Is it legal?
Does it comply with our values?
How will it look in the newspaper?
If you do it, will you feel bad?
If it’s wrong, don’t do it.
If you’re not sure, ask.

22. Organizational Strategy Mission Statement Goals and Objectives
Strategic
Planning
Tactical
Planning
Organizational
Strategy

23. Organizational Strategy
Organizational Structure
Core Competencies
Organizational Constraints
Organizational Culture
Environmental Constraints

24. Organizational Strategy
Organizational Structure
Centralization
Decentralization

25. Organizational Strategy
Organizational Structure
Core Competencies
A higher proficiency than the competitors
Technological innovation
Engineering
Product development
After-sale service

26. Organizational Strategy
Organizational Structure
Core Competencies
Organizational Constraints
Monetary Capital
Intellectual Capital
Human Capital
Structural Capital
Relationship Capital

27. Organizational Strategy
Organizational Structure
Core Competencies
Organizational Constraints
Organizational Culture
An organization’s norms
internal and external
formal and informal

28. Organizational Strategy
Organizational Structure
Core Competencies
Organizational Constraints
Organizational Culture
Environmental Constraints
Limitations on strategy caused by external differences in culture, competitive market structures, fiscal policy, laws, or political situations

29. Business Intelligence System
Formal process for gathering and analyzing information and producing intelligence to meet decision-making needs
Information about internal processes
Knowledge of markets, technologies, and competitors

30. Levels of Intelligence Gathering
Business Intelligence
Competitive Intelligence
Competitor
Analysis
Levels of Intelligence Gathering

31. Business Segments Segment Mission relates to Product Life Cycle Build
Hold
Harvest

32. Accounting Information
Strategic Resource Management
Planning for deployment of resources to create value for customers and shareholders
Value Chain—Foundation of SRM
Set of processes that convert inputs into products and services
Use accounting information to evaluate the value chain to improve strategic resource management

33. The Accountant’s Role Accountants provide information that is used to
make strategic decisions
measure and evaluate management
provide appropriate incentives
provide information about the value chain

34. Questions
What is the relationship among cost, financial, and management accounting?
How do ethics guide workforce behavior?
What is the impact of the accounting function on achievement of strategic goals and objectives?