Copyright 2003 Pearson Education Canada Inc.

Slide 1-1
Chapter 1

The Accountants Role in the
Organization
Copyright 2003 Pearson Education Canada Inc. Slide 1-2
Management Accounting
Management accounting measures and reports
financial and non-financial information that helps
managers make decisions to fulfill the goals of an
organization
Managers use management accounting information to
choose, communicate and implement strategy
coordinate product design, production and
marketing decisions
Management accounting focuses on internal reporting
Management accounting is future oriented

Pages 2-3
Copyright 2003 Pearson Education Canada Inc. Slide 1-3
Financial Accounting
Financial accounting measures and records business
transactions and provides financial statements that
are based on generally accepted accounting
principles (GAAP)
Managers are responsible for the financial statements
issued to investors, government regulators, and other
parties outside the organization
Financial accounting focuses on external parties
Financial accounting reports on what happened in the
past
Pages 2-3
Copyright 2003 Pearson Education Canada Inc. Slide 1-4
Cost Accounting and Cost Management
Cost accounting measures and reports information
relating to the cost of acquiring and utilizing
resources
Cost accounting provides information for
management and financial accounting

Cost management describes the approaches and
activities of managers in short-run and long-run
planning and control decisions
These decisions increase value of customers and
lower costs of products and services
Cost management is an integral part of a companys
strategy
Pages 3-4
Copyright 2003 Pearson Education Canada Inc. Slide 1-5
Management Accountants and Strategy
Strategy specifies how an organization matches its
own capabilities with opportunities in the marketplace
to accomplish its objectives
Strategy examples
Quality products or services at low prices (WestJet)
Unique products or services at higher prices
(Clublink)
Management accountants provide information to
management such as
Who are our customers and suppliers
Sensitivity of market to price, quality and service
Industry characteristics (size, growth)
Pages 4-6
Copyright 2003 Pearson Education Canada Inc. Slide 1-6
Planning and Control
Management Management
Decisions Accounting System
Pages 6-8
PLANNING
increase advertising
rates
Budgets
pages sold, rates per
page, revenue
CONTROL
Action
implement rate
increase
Accounting System
invoices / receipts
recorded in ledger
Performance
Evaluation
comparison of actual
and budgeted revenues
Performance
Reports
pages sold, rate per
page, revenue
F
e
e
d
b
a
c
k

Financial
representation
of plans
Recording
transactions
in accounts
Comparing
budgeted and
actual results
Copyright 2003 Pearson Education Canada Inc. Slide 1-7
Key Management Accounting Guidelines
Cost-Benefit Approach
spend resources if they promote decision making that
better attains the organizations goals in relation to
the cost of these resources
Pages 8 - 9
Behavioural and Technical Considerations
systems are not confined exclusively to technical
matters
always consider the influences of human activity
Different Costs for Different Purposes
definecost depending on the situation under
consideration
Copyright 2003 Pearson Education Canada Inc. Slide 1-8
Line and Staff Relationships
Line management is directly responsible for attaining
the objectives of the organization
manager in a manufacturing division

Pages 9 - 10
Staff management exists to provide advice and
assistance to line management
management accountant
Chief financial officer (CFO) oversees
Controllership, Treasury, Tax, and Internal
Audit functions in the organization
Copyright 2003 Pearson Education Canada Inc. Slide 1-9
Functions of Management Accounting
Management accountants perform three functions

Attention-directing
make visible opportunities and problems on
which managers need to focus
Problem-solving
conduct comparative analysis to identify the best
alternatives in relation to the organizations goals
Page 11
Scorekeeping
accumulate data and report reliable results to all
levels of management
Copyright 2003 Pearson Education Canada Inc. Slide 1-10
Four Themes of Value Enhancement
3. Key success factors (KSFs)
keep attention focused on critical factors relative
to our competitors
4. Continuous improvement and benchmarking
never-ending search for higher levels of
performance

Page 12 - 15
2. Value-chain and supply-chain analysis
manage these critical functions
1. Customer Focus
attract and retain profitable customers
Copyright 2003 Pearson Education Canada Inc. Slide 1-11
Key Themes in Management Decision Making

Key Success Factors
Cost and Efficiency
Quality
Time
Innovation

Continuous
Improvement
And
Benchmarking
Page 13

Value-Chain
and
Supply-Chain
Analysis

Customer
Focus

Copyright 2003 Pearson Education Canada Inc. Slide 1-12
The Value Chain
Sequence of business functions in which utility
(usefulness) is added to the products or services of
an organization
Management accounting helps managers to
administer each of these business functions
Research
and
Development
Product,
Service
Process
Design
Production Marketing Distribution
Customer
Service

Management Accounting
Page 14
Copyright 2003 Pearson Education Canada Inc. Slide 1-13
E-Business Value Matrix
Business
Criticality
(Importance
of the
application to
the success
of the
business)
Page 16
High


Low

Operational
Excellence


Rational
Experimentation


New
Fundamentals


Breakthrough
Strategies

Low High
Practice Innovation
(Creating new markets or new
ways of doing business)
Copyright 2003 Pearson Education Canada Inc. Slide 1-14
Ethical Guidelines
Professional accounting organizations play an
important role in promoting high standards of ethics in
the accounting profession
Pages 15 - 20
Code of Professional Ethics
Society of Management Accountants of Canada (SMAC)
Act in a responsible manner
Maintain independence
Maintain confidentiality of information
Serve with courtesy and good faith
Maintain standards of competence