1. Determine the Difference Between Internal and External Reporting © Dale R. Geiger 20111

2. What Do Accountants Do? © Dale R. Geiger 20112

3. Terminal Learning Objective Task: Determine the Difference Between Internal and External Reporting Condition: You are a cost advisor technician with access to PCAM 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 the difference between internal and external reporting Classify GFEBS reports as internal or external © Dale R. Geiger 20113

4. What Do Accountants Do? 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 © Dale R. Geiger 20114

5. What Do Accountants Do? 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 © Dale R. Geiger 20115

6. What Do Accountants Do? 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 © Dale R. Geiger 20116

7. What Do Accountants Do? 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 © Dale R. Geiger 20117

8. What Do Accountants Do? 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 © Dale R. Geiger 20118

9. What Do Accountants Do? 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 © Dale R. Geiger 20119

10. 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 What types of Decisions might they make? What information might they need? © Dale R. Geiger 201110

11. 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 What types of Decisions might they make? What information might they need? © Dale R. Geiger 201111

12. 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 What types of Decisions might they make? What information might they need? © Dale R. Geiger 201112

13. 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, legislators and citizens What types of decisions might they make? What information might they need? © Dale R. Geiger 201113

14. External User Needs 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 © Dale R. Geiger 201114

15. External User Needs 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 © Dale R. Geiger 201115

16. External User Needs 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 © Dale R. Geiger 201116

17. External User Needs 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 © Dale R. Geiger 201117

18. External User Needs 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 © Dale R. Geiger 201118

19. Consistent Combat Ship 16" guns cruise missiles landing gates periscope ballistic missiles flight deck submersible hull helicopter pad torpedo tubes © Dale R. Geiger 201119

20. Check on Learning Which characteristic requires timely information? Which characteristic requires verifiable information? Why would users demand consistency? © Dale R. Geiger 201120

21. Two Sides of the Same Coin required compliance structured audit stable consistency & comparability purpose goal methodology test dynamics user need needed learning customized use responsive continuous improvement external reporting managerial costing © Dale R. Geiger 201121

22. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201122

23. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201123

24. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201124

25. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201125

26. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201126

27. Two Sides of the Same Coin external reporting managerial costing © Dale R. Geiger 201127

28. Example External Report: Tax Return Why? How? Test of success? Dynamics? Internal Report: Checkbook Why? How? Test of success? Dynamics? © Dale R. Geiger 201128

29. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201129

30. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201130

31. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201131

32. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201132

33. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201133

34. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201134

35. Research: System Uses at 59 Federal Organizations © Dale R. Geiger 201135

36. Check on Learning What are the basic uses for Cost Accounting systems? Should all cost systems be the same? Why or why not? © Dale R. Geiger 201136

37. 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? © Dale R. Geiger 2011 37

38. Unit Cost Report © Dale R. Geiger 201138

39. Unit Cost Report This report shows the actual and planned quantities and actual and planned (average) unit cost for various SKFs (Statistical Key Figures) such as Headcount. © Dale R. Geiger 201139

40. 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? © Dale R. Geiger 2011 40

41. Check on Learning What characteristics would identify a report as internal to an organization? What characteristics would identify a report as external to an organization? © Dale R. Geiger 201141

42. 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 © Dale R. Geiger 201142