course introduction/ determine the difference between internal and external reporting © dale r....
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Course Introduction/Course Introduction/Determine the Difference Between Determine the Difference Between
Internal and External ReportingInternal and External Reporting
© Dale R. Geiger 2011 1
Terminal Learning ObjectiveTerminal Learning Objective• Task: 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
© Dale R. Geiger 2011 3
Cost Maturation ProcessCost Maturation Process
Single Use
EstimatedFuture Cost
Cost BenefitAnalysis
Cost InformedDecisions
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© Dale R. Geiger 2011 4
Transforming the Army:Transforming the Army:Four Requirements for SuccessFour 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
© Dale R. Geiger 2011 5
• Principles of Cost Analysis and Management• Targeted at entry level CP11 Personnel, Sergeants,
Lieutenants, Junior Captains• Course Length: Three Weeks• Pre-requisites: On Line Math Refresher
• Intermediate Cost Analysis and Management• Targeted at mid career CP11 Personnel, Staff Sergeants
and above, Senior Captains, Majors and above• Course Length: Three Weeks• Pre-requisites: On Line Math Refresher
ACE Development: PCAM & ICAMACE Development: PCAM & ICAM
© Dale R. Geiger 2011 6
All CEs will require basic, advanced, and master skills with a concentration in:Readiness – Capacity management and force cost analysisMateriel – Logistics and working capital funds cost analysisHuman Capital – Manpower cost analysisServices & Infrastructure – Services and capital asset costingFAs and CPs that are common to all CEs should train to become a master in any CE
Stackable CredentialsStackable Credentials
* 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.
Based on the Financial Management Career Field
© Dale R. Geiger 20117
ICAM ICAM
• Develop advanced cost management skills• Next step for those already fulfilling the role of
ACE or who wish to become and ACE
© Dale R. Geiger 2011 8
Purpose of CoursePurpose of 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.
© Dale R. Geiger 2011 9
Remember Valley ForgeRemember 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?
© Dale R. Geiger 2011 10
Program of Instruction Program of Instruction OverviewOverview
Understanding Cost Applying the ProcessLearning the Process
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
Week One Week ThreeWeek Two
© Dale R. Geiger 2011 11
What Do Accountants Do?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 2011 13
What Do Accountants Do?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 2011 14
What Do Accountants Do?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 2011 15
What Do Accountants Do?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 2011 16
What Do Accountants Do?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 2011 17
What Do Accountants Do?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 2011 18
Who are the Users?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 2011 19
Who are the Users?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 2011 20
Who are the Users?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 2011 21
Who are the Users?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 2011 22
External User NeedsExternal 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 2011 23
External User NeedsExternal 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 2011 24
External User NeedsExternal 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 2011 25
External User NeedsExternal 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 2011 26
External User NeedsExternal 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 2011 27
Consistent Combat Ship
16" guns
cruise missiles
landing gatesperiscope
ballistic missiles
flight deck
submersible hull
helicopter pad
torpedotubes
© Dale R. Geiger 2011 28
Learning CheckLearning Check
• Which characteristic requires timely information?
• Which characteristic requires verifiable information?
• Why would users demand consistency?
© Dale R. Geiger 2011 29
Two Sides of the Same CoinTwo Sides of the Same Coin
requiredcompliancestructuredauditstableconsistency &comparability
purposegoal
methodologytest
dynamicsuser need
neededlearning
customizeduse
responsivecontinuous
improvement
external reporting managerial costing
© Dale R. Geiger 2011 30
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 31
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 32
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 33
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 34
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 35
Two Sides of the Same CoinTwo Sides of the Same Coin
external reporting managerial costing
© Dale R. Geiger 2011 36
ExampleExample
External Report: Tax Return • Why?• How?• Test of success?• Dynamics?
Internal Report: Checkbook• Why?• How?• Test of success?• Dynamics?
© Dale R. Geiger 2011 37
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 38
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 39
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 40
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 41
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 42
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 43
Research: System Uses at 59 Federal Organizations
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16
17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 32
33 34 35 36 37 38 39 40
41 42 43 44 45 46 47 48
50 51 52 53 54 55 56 57
58 59
mgmt control
pricingOH allocation
reqr costing
BLM PBS
VMSS
WVA
FGIS
© Dale R. Geiger 2011 44
Learning CheckLearning Check
• What are the basic uses for Cost Accounting systems?
• Should all cost systems be the same?• Why or why not?
© Dale R. Geiger 2011 45
What about GFEBS?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 201146
Unit Cost ReportUnit 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 2011 48
Discussion QuestionsDiscussion 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 49
Learning CheckLearning Check
• 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 2011 50