msc ma lecture 1 overview

8/3/2019 MSc MA Lecture 1 Overview

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ACC 6620LECTURE ONE

Development and Changing Role of MA


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Managerial accounting is the process ofIdentifyingMeasuringAnalyzing

InterpretingCommunicating information

Define Managerial Accounting

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The Changing Business

Environment

A more competitiveenvironment emphasizing:

Higher quality products

Lower prices and costs

Global competition

Meeting and anticipatingcustomer needs

Business environmentchanges in the past

twenty years


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Manufacturing

Single-production facilityStandard costing

Maximum volume & variance reporting

High volume, standard Inventory mgt

production

Inventory as buffers Scrap & rework expected

Ex post control

Traditional World View

Product Concept, Design & Development

Design for engineering features

Mechanisation (machine-paced)

Post-Sales Service & Disposal

Financial

information

Profitability

(External fin.

Reporting)

Domestic competition

Mass production using

same technology in

stable labour-intensive

production environment Long product life

cycle

Cost recovered via

pricing Standard products

Management Organisation Mechanistic form

Hierarchical structure

Individual-productivity focused Short-term emphasis


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ManufacturingFlexible mfg system ABC & ABM Automation Kaizen costing Mass customization Low volume, high variety

production JIT Elimination of waste, TQM

inventory & unevenness Theory of constraints Employee empowerment Individually & team-paced Visual control

Contemporary World View

Product Concept, Design & Development

Design for manufacturability

Reverse engineering Target costing

Value engineering Life cycle costing

Reengineering Benchmarking

Post-Sales Service & Disposal Back-end costs Disposal of harmful wastes

Strategic

cost &non-financial

information

(CSF)

Global competition

Innovative technology

&advanced production

techniques

shortened product lifecycle

CSF:

Cost

Quality

Time

Variety (Diversity)

Management Organisation Organic form Flatter structure Cross-functional team

Strategic focus


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The Balanced Scorecard

Financial PerspectiveGoals Measures

Customer Perspective

Goals Measures

Operations Perspective

Goals Measures

Innovation Perspective

Goals Measures

How do welook to

owners?

How docustomers

see us?How can wecontinue to

improve?

In whichactivities

must we

excel?

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Evolution and Adaptation inManagerial Accounting

Service Vs. ManufacturingFirms

Emergence of NewIndustries

Global Competition

Focus on the Customer

Cross-Functional Teams

Computer-IntegratedManufacturing

Product Life Cycles

Time-Based Competition

Information andCommunicationTechnology

Just-in-Time Inventory

Total QualityManagement

Continuous Improvement

Change


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Major Themes in ManagerialAccounting

Managerial

Accounting

Informationand Incentives

Costs andBenefits

Evolution andAdaptation

BehavioralIssues

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ProductDesign

Research

andDevelopment

Strategic Cost Management andthe Value Chain

Securing raw

materials andother resources

Production

Marketing

Distribution

CustomerServiceStart

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IN SEARCH OF ANSWERS

What impact will changes in processes/product designs have on thebottom line?

Improved profitabilityHow can support costs be reduced?

Better tracing of support costs to activities that cause costs tobe incurred.

How can waste be eliminated? Better resource utilizationWhat are the key success factors?

Time, Quality and Price (Cost) What are the key performance indicators for measuring how wellthe organization is performing?

Time, Quality and Price (Cost)


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Operations of a WCM

A world-class manufacturer can best be distinguishedfrom other manufacturers through the way he

conducts his business. A world-class manufacturer hasthe following components in his business.

International Business: A world-class manufacturerconducts his business in more than one country.Usually, world-class manufacturer would have

businesses in many parts of the world. For example,Toyota would havebusinesses such as manufacturing

plants and marketing in Asia, North America, Europeand Latin America.


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International Financing:

A world-class manufacturer finances his operations not just

from its country of residence but from other places as well.

Financing maybe secured from places where he conducts hisbusiness, or from places where it has no operations at all.

Thus, Toyota may secure funding from Switzerland even if it

does not have any plant or manufacturing or even sales outletsthere.


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International Employer

A world-class manufacturer would employ

people from across the globe. Employees may

come from the country where it has operationsor they may be recruited from other countries

to serve in other parts of the world where the

company has operations. For example, aGhanaian may be working for Toyota

Company in The United States.


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International Customers

Whiles most companies have their productspatronized by customers from other parts of theworld; this is usually the case for all WCM; Dueto the high quality of their products as well as itscompetitive prices, the products of world-class

manufacturers are wellsought by global

customers. Thus one can find such products asGillette Shaving Blades in every corner of theglobe: From New Zealand to Chad in West

Africa


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International Raw MaterialProcurement

World-class manufacturers source their raw

material and other supplies from different parts

of the world. Usually, they look for quality andcompetitive prices. Thus, Toyota may source

some of its parts from Malaysia, Thailand,

Brazil, Togo or Indonesia.


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Advantages and Challenges ofWorld

Class manufacturing

1. Better Quality2. Reducing Inventoriesas a result of JIT

3. Reduced floor space

4. High Inventory Turnovers

5. Shorter setup and lead-times

6. General Reduction in production cost


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The effect of WCM on management

accounting and finance

WCM changes the way companies manage their accounts andfinances. changes the way goods are produced, stored anddelivered. changes in the nature and components of expenses

such as increase in research and development and capital(technology) expenses poses a challenge to accountants

With the complex financing of these expenditures, WCM greatly

affects the nature of finance. Hence the prominence of suchaccounting/finance topics as bond valuation, leasing and MRP.

WCM also affects the way WIP, Direct labour, stock valuationand overheads are being accounted for


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The management accountants role:

Provide cost-management information at a

rigorous pace to keep up with the ever-changingenvironment

The information provided should include as manynonfinancial measures as possible a variety of

operating and financial measures The reports should be applicable to cross-

functional teams and conducive with a flexiblemanagement structure

How do these changes affect

management accounting?


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IFACs Phases for Developing Cost

Management Information Systems

Stage One

(Prior to1950)

MA focused on cost determination and

financial control (via budgeting and costaccounting technologies)

Stage Two(By 1965)

Provision of info. for mgt planning andcontrol via techniques such as decisionanalysis and responsibility accounting

Stage Three

(By 1985)

Focus on reduction of waste in in biz

processes via the use of processanalysis and cost management.

Stage Four

(By 1995)

Focus on creation of value via effectiveuse of resources which examine main

stakeholders value and orgn innovation.


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Managing Resources, Activities,and People

An organization . . .

Acquires Resources

Hires People

Organized setof activities

DecisionMaking

Planning

Directing

Controlling

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Ethical Climate of Business

The corporate scandals experienced over the lastfew years have shown us that unethical behaviorin business is wrong in a moral sense and can be

disastrous in the economy. In addition to

Sarbanes-Oxley, there will likely be more reformsin corporate governance and accounting.

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Importance of Ethicsin Accounting

Ethical accounting practices build trust and promoteloyal, productive relationships with users ofaccounting information.

Many companies and professional organizations,such as the Instituteof Management Accountants (IMA),have written codes of ethics whichserve as guides for employees.

Code of Conduct for Management Accountants


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Managerial Accounting as aCareer

Professional Organizations

Institute of Management Accountants (IMA)

PublishesManagementAccounting

and researchstudies.

AdministersCertified

ManagementAccountant

program

DevelopsStandards of

EthicalConduct forManagementAccountants

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IMA Code of Ethics forManagement Accountants

Four broad areas ofresponsibility:

Maintain a high level ofprofessional competence

treat sensitive matters withconfidentiality

Maintain personal integrity

Be objective in all disclosures

msc ma lecture 1 overview

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