Chapter 1
The Changing Role of Managerial Accounting in a Global Business Environment
McGraw-Hill/Irwin
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Define Managerial Accounting
Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information
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Managing Resources, Activities, and People
An organization . . .
Directing
Acquires Resources
Organized set of activities
Decision Making
Controlling
Planning
Hires People
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How Managerial Accounting Adds Value to the Organization
Providing information for decision making and planning. Assisting managers in directing and controlling activities. Motivating managers and other employees towards organizations goals. Measuring performance of subunits, activities, managers, and other employees. Assessing the organizations competitive position.
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Managerial versus Financial Accounting
Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making, planning, and controlling an organizations operations. Internal Users Financial Accounting Published financial statements and other financial reports.
External Users
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Managerial versus Financial Accounting
Managerial Accounting Users of Information Managers, within the organization. Regulation Not required and unregulated, since it is intended only for management. Financial Accounting
Interested parties, outside the organiz Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission. Source of Data The organization's basic Almost exclusively drawn from the accounting system, plus various organization's basic accounting other sources, such as rates of system, which accumulates effective products manufactured, financial information. physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delays Nature of Reports Reports often focus on subunits Reports focus on the enterprise in and Procedures within the organization, such as its entirety. Based almost departments, divisions, exclusively on historical geographical regions, or product transaction data. lines. Based on a combination of 1-6 historical data, estimates, and
Major Themes in Managerial Accounting
Behavioral Issues Costs and Benefits
Information and Incentives
Evolution and Adaptation
Managerial Accounting
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Evolution and Adaptation in Managerial Accounting
E-Business Service vs. Manufacturing Firms Product Life Cycles Time-Based Competition
Emergence of New Industries
Global Competition Focus on the Customer Cross-Functional Teams
Change
Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement
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Cost Management Systems
Objectives
Measure the cost of resources consumed. Identify and eliminate non-value-added costs.
Cost Management System
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Cost Management Systems
Objectives
Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance.
Cost Management System
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Ethical Climate of Business
The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting.
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Managerial Accounting as a Career
Professional Organizations
Institute of Management Accountants (IMA)
Publishes Management Accounting and research studies.
Administers Certified Management Accountant program
Develops Standards of Ethical Conduct for Management Accountants
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Professional Ethics
Competence Confidentiality Integrity Credibility
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End of Chapter 1
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