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ADVANCED MANAGEMENT
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ACCOUNTING
CIA I
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Introduction
Management Accounting:
The process of preparing management reports and accounts that provide accurate and timely
financial and statistical information required by managers to make day-to-day and short-term
decisions.These reports typically show the amount of available cash, sales revenue generated,
amount of orders in hand, state of accounts payable and accounts receivable, outstanding
debts, raw material and inventory, and may also include trend charts, variance analysis, and
other statistics.
Management Accountant:

Management accountants are key figures in determining the status and success of a
company.Some choose to become a Certified Management Accountant (CMA), a similar
credential to CPA, but with a greater focus on cost accounting, financial planning,
and management issues. Job responsibilities can range widely. Management accountants are
risk managers, budgeters, planners, strategists and decision makers. A management
accountant will analyse these basic data and make forecasts, budgets, performance
measurements and plans, then present them to senior management to assist in its operational
decision making.

Role of Management Accountant in todays modern Business Environment

Management accountants are key figures in determining the status and success of a company.
Some choose to become a Certified Management Accountant (CMA), a similar credential to
CPA, but with a greater focus on cost accounting, financial planning, and management issues.
Job responsibilities can range widely. Depending on the company, your level of experience,
the time of year and the type of industry, you could find yourself doing any of the following
tasks:

Budgeting
Handling taxes
Managing assets to helping determine compensation and benefits packages

In this rapidly changing Business Environment the following are the services provided by an
Management Accountant:
Financial Report Preparation:
One of the most important task of a management accountant tis to prepare financial
statements and to update it on a regular basis to make its storage and retrieval easier.
Accountants typically prepare financial statements that may include monthly and annual
accounts based upon the financial information that is compiled and analysed. These reports
can be then used in controlling function by the managers or to make forecasts and targets for
the future in a much more scientific manner.
With technological advancements, managers can take the help of special accounting
programmes to make it easier for them to record and analyse data in real time and to increase
their overall efficiency.
External Business Affiliations:
Often, accountants must work with financial professionals from the four major fields of the
industry: public, management, internal auditing and government accounting. Accountants
may provide data to a public accountant, who acts as a consultant, auditor and tax service
professional. Corporations, nonprofits, organizations and governments use management
accountants to record and analyse financial information of the businesses in which they are
employed. They usually advise company executives, creditors, stockholders, regulatory
agencies and tax personnel. Accountants may also work with government officials who are
examining and maintaining the financial records of the private business for whom an
accountant is employed, in connection with taxation and government regulations.
Financial Data Management:
Accounting structure has a very important role to play in the success of the organisation. One
of the primary roles of an accountant involves the collection and maintenance of financial
data relating to the firm. It is the duty of the management accountant to ensure that the
accounts maintained by the company are prepared by keeping in mind the relevant
accounting procedures and more importantly that the accounting information is passed on to
the ecision making authorities in an easy to understand manner. Management of the financial

data also includes activities such as developing, implementing and maintaining financial data
bases, as well as establishing and monitoring control procedures.
Employ Financial Data
The sole purpose of management accounting is to understand the working of an organisation
and how the available resources can be used to achieve regular growth. The manager use
techniques like budgeting, financial statement projections and balanced scorecards to try to
measure the company performance. By focusing on this data, managers can make decisions
that aim for continuous improvement and are justifiable based on intelligent analysis of the
company data, as opposed to gut feelings.
Compliance:
An accountant may also be responsible for ensuring that all financial reporting deadlines are
met, internally and externally. For example, quarterly, semi-annual and annual reports all
have specific deadlines, as well as some tax implications. Monitoring and supporting taxation
issues and filings can also be a responsibility of an accountant. The accountant also usually
coordinates the audit process by assisting with financial data preparation.
Data Analysis and Advice:
As analysts, management accountants may perform certain types of analysis using financial
data that is used to assist in making business decisions. From deciding which kinds of
supplies to order, payment of bills to payroll, the accountant handles many intricate financial
details on a daily basis. Advising on business operations can include issues, such as revenue
and expenditure trends, financial commitments and future revenue expectations. The
accountant also analyses financial data to resolve certain discrepancies and irregularities that
may arise. Recommendations may also involve developing efficient resources and
procedures, while providing strategic recommendations for specific financial problems or
situations.
Some of the Tools which managers use in this changing business environment are:

Just-in-time
Total Quality Management
Process Reengineering
Theory of Constraints

Balance Scorecard at Tolko Industries Inc.

About Tolko Industries Inc.
Tolko Industries Ltd. is a family-owned leading manufacturer and marketer of a broad range
of forest products to customers around the world. Founded in 1956, Tolko has grown from a
small sawmill in Lavington, British Columbia, to become a company diversified by
geography and product. Tolko manufactures lumber, unbleached kraft papers, panel products,
co-products, biomass power, and a growing number of specialty wood products in its
operations across Western Canada. Tolko is committed to the well-being of future generations
through responsible operational and environmental performance. This commitment applies to
all aspects of Tolkos business. The Companys Woodlands departments hold third-party
certification on the forestland they sustainably manage in British Columbia, Alberta,
Saskatchewan, and Manitoba. Tolko strives to play an active and constructive role in the
communities in which we operate and where our employees live.
The Situation
Emerging out of the worst economic downturn in its 65-year history, Tolko Industries Ltd.
was facing serious challenges. Tolkos prior strategy relied almost exclusively on sales to the
U.S., resulting in a serious drop in revenue when the bottom fell out of the U.S. housing
market in 2007. The 3,500 employees were disheartened by layoffs, and the company was
challenged to retain good people.
Tolkos challenges also had personal significance to Brad and his team. Tolko is a familyowned business where average tenure is 30 years. The leadership team has deep personal ties
to the company, their fellow employees, and the communities in which Tolko operates. So as
the economy slowly improved in 2010, Brad and his team redrew Tolkos strategy. The
resultant strategic plan document was thorough, but very complex. And it was clear that the
documented plan was not adequately aligning the organizations capabilities, business lines,
and leadership with the strategy. So in an attempt to align strategy to business lines and
leadership, Brad asked the VP of Human Resources to update Tolkos incentive plan to link
executive performance to strategic performance.

The Decision
Tolkos VP of Human Resources reached out to the Institute for assistance in determining
how to measure strategic performance on Tolkos new strategic plan. While VP of Human
Resources and Brad had heard of balanced scorecard, neither had thought of it as an
integrated strategic planning and management framework. After learning more about The
Institute Way, Brad realized that simply aligning incentives to a complex strategic plan was
not going to re-energize the company. The employees needed to understand the big-picture
strategy, be excited about it, and enthusiastically contribute to both its development and
execution. After several months of research, Brad and his team determined that The Institute
Way was the right framework, a complete toolkit, to define, execute and measure strategic
performanceand to engage the hearts and minds of Tolko employees at all levels.
Program Launch: Sponsorship and Engaged Leadership
Program Launch: Communication and Change Management
Program Launch: Plan the Project

Tolko Implementation Timeline

Step 1: Assessment
Step 2: Strategy
Step 3: Strategic Objectives
Step 4: Strategy Mapping
Step 5: Performance Measures
Step 6: Strategic Initiatives
Step 7: Performance Analysis
Step 8: Alignment
Step 9: Evaluation

Sustaining and Managing with the Balanced Scorecard

To manage the on-going system, a new job position was created which reports directly to the
CEO. The person selected for the role is an experienced project manager who had been
involved in the Theme Team, Objective Owner, and Cascading workshops. In addition, Tolko
has assigned 6 people to be balanced scorecard champions, integrating the role into their
daily job responsibilities. What
Gain from Such Decision:
The Institute asked Brad what benefits Tolko realized from their investment in implementing
The Institute Way. For an organization involved in four distinct product areas, with 22
locations across a vast area, the biggest benefit he reported was the way that the process
helped identify gaps in alignment across the organization. And, as a communication tool, the
strategy map was a breakthrough that the organization could embrace to move everyone
forward with the corporate vision.