AKUNTANSI MANAJEMEN OPENCOURSEWARE UNIVERSITAS PEMBANGUNAN JAYA Handout AKT202 ch 1

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An electronic presentation by

Douglas Cloud

Pepperdine University

An electronic presentation by

Douglas Cloud

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Task Force Clip Art

included in this electronic

presentation is used with

the permission of New

Vision Technology of

Nepean Ontario, Canada.

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Introduction:

The Role,

History, and

Direction of

Management

Accounting

CHAPTER

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1.

Discuss the need for management accounting

information.

2.

Differentiate between management accounting

and financial accounting.

3.

Provide a brief historical description of

management accounting.

4.

Identify the current focus of management

accounting.

Objectives

After studying this

chapter, you should

be able to:

After studying this

chapter, you should

be able to:

Continued

Continued Continued

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5.

Describe the role of management accountants in

an organization.

6.

Explain the importance of ethical behavior for

managers and management accountants.

7.

List three forms of certification available to

management accountants.

Objectives

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1.

To provide information for costing out

services, products, and other objects of

interest to management.

2.

To provide information for planning,

controlling, evaluating, and continuous

improvement.

3.

To provide information for decision

making.

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The

Management Process

is defined by the

following activities:

Planning

Controlling

Decision Making

Planning requires setting objectives and identifying

methods to achieve those objectives.

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The

Management Process

is defined by the

_{Controlling is}

the managerial activity of

monitoring a plan’s

implementation and taking

corrective action as needed.

Planning

Controlling

Decision Making

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The

Management Process

is defined by the

Planning

Controlling

Decision Making

Control is

usually achieved with the use of feedback.

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Feedback is information that can be used to

evaluate or correct the steps being taken to

implement a plan.

Feedback is information that can be used to

evaluate or correct the steps being taken to

implement a plan.

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The

Management Process

is defined by the

Decision making is the process of choosing among

competing alternatives.

Planning

Controlling

Decision Making

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Differentiate Between

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Management

accounting

focuses on

providing

information for

internal users.

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ABC Company

Annual Report

Financial

accounting focuses on provided

information for external users.

Financial

accounting focuses on provided

information for external users.

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1. Internally focused 1. Externally focused

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Restrictions on Inputs and Processes

Management accounting is not subject to the requirements of generally accepted accounting

principles.

Management accounting is not subject to the requirements of generally accepted accounting

principles.

Financial accounting reporting must follow the accounting procedures set

by the SEC and the FASB.

Financial accounting reporting must follow the accounting procedures set

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2. No mandatory rules 2. Must follow externally imposed rules

3. Financial and

nonfinancial informa-tion; subjective

information possible

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Types of Information

The restrictions imposed on financial accounting tend to produce objective and verifiable

financial information.

The restrictions imposed on financial accounting tend to produce objective and verifiable

financial information.

For management accounting, the financial or nonfinancial

information may be much more subjective in nature.

For management accounting, the financial or nonfinancial

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3. Financial and

3. Objective financial information

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Time

Orientation

Time

Orientation

Management

accounting strongly

emphasizes providing

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Financial

accounting records

and reports events

that have already

happened.

Time

Orientation

Time

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3. Financial and

4. Emphasis on the future 4. Historical orientation

5. Internal evaluation and decisions based on very detail information

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Management

accounting provides

measures and internal

reports used the

evaluate performance of

entities, product lines,

departments, and

managers.

Degree of Aggregation

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Financial

accounting focuses

on overall firm

performance.

Degree of Aggregation

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3. Financial and

4. Emphasis on the future 4. Historical orientation 5. Internal evaluation and

decisions based on very detail information

5. Information about the firm as a whole

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Management accounting is much broader than financial accounting. Management accounting is much broader than financial accounting. It includes aspects of managerial economics, industrial engineering,

and management science.

It includes aspects of managerial economics, industrial engineering,

and management science.

Breadth

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Management Accounting

1880 - 1925 Most of the product-costing and internal accounting procedures used in this century were developed

1925 Emphasis of inventory costing for external reporting

1950s/60s Effort to improve the managerial usefulness of traditional cost systems

1980s/90s Significant efforts have been made to

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Current Focus of Management Accounting

Activity-Based Management

Activity-Based Management Activity-Based Management

Activity-Based Management

Activity-based management is a system

wide, integrated approach that focuses

management’s attention on activities with the

objective of improving customer value and

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Current Focus of Management Accounting

Customer Orientation

Customer Orientation Customer Orientation

Customer Orientation

Customer value is the difference between

what the customer receives (customer

satisfaction) and what the customer gives up

(customer sacrifice).

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Strategic Positioning

Strategic Positioning Strategic Positioning

Strategic Positioning

Strategic cost management is the use of cost data

to develop and identify superior strategies that

will produce a sustainable competitive advantage.

Strategies:

1)

Cost leadership

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Value-Chain Framework

Value-Chain Framework Value-Chain Framework

Value-Chain Framework

The

internal value chain

is the set of activities

required to design, develop, produce, market,

and deliver products and services to customers.

The

industrial value chain

is the linked set of

value-creating activities from basic raw

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Managing the value chain means that a management accountant must understand many functions

of the business, from

manufacturing to marketing. Managing the value chain means

that a management accountant must understand many functions

of the business, from

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The philosophy of total quality management is to manufacture

perfect products.

The philosophy of total quality management is to manufacture

perfect products.

This emphasis on quality has created a demand for management

accounting systems that provide financial and nonfinancial information about quality.

This emphasis on quality has created a demand for management

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The role of

management

accountants in an

organization is one

of support.

The role of

management

accountants in an

organization is one

of support.

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Manufacturing Company

President President Production Production Vice President Vice President Line Function Financial Financial Vice President Vice President Staff Function Production Production Supervisor Supervisor Machining Machining Foreman Foreman Assembly Assembly Foreman Foreman Controller

Controller TreasurerTreasurer

Internal

Audit

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Ethical

Behavior

Ethical

Behavior

Michael Josephson’s* Ten Ethical Values: Honesty

Integrity

Promise keeping Fidelity

Fairness

Caring for others Respect for others Responsible

citizenship

Pursuit of excellence Accountability

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CMA: One of the main purposes of the CMA was to establish management accounting as a recognized, professional discipline, separate from the profession of public

accounting.

CPA: The responsibility of a CPA is to provide assurance concerning the reliability of financial statements.

CIA: The focus of the CIA is to recognize competency in

internal auditing rather than external auditing as with the CPA.

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The CMA

Four areas emphasized on the exam:

1) Economics, finance, and management

2) Financial accounting and reporting

3) Management report, analysis, and behavioral

issues

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The End

Chapter One

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