Student Name: Anas Khalid Abdeslalam

Student ID: 7E3A1579/17651563

Group: 3
Reflective Journal No. 02 Date: 22th August 2017

______________________________________________________________________________________________
Lecture Topic: OPERATIONAL ACCOUNTING
Presenter: DR. DHANUSKODI RENGASAMY
Organization: OPERATIONAL ACCOUNTING

About the presenter:

Dr. Dhanuskodi Rengasamy graduated with a bachelor in commerce and accounting from Madurai
Kamaraja University located in India in 1989. He received his Master in commerce and business
administration from Madurai university. He also has a mater in Philosophy from Annamalai University in
India. In 2009 Dr. Dhanuskodi Rengasamy received a doctor in Philosophy from Vinayaka Missions
University in India. He earned a certificate of Internal Auditor (CIA), Zero Defect Consultants and QA
consultancy in India. Dr. Dhanuskodi Rengasamy was employed in several universities and institutes such
as working as a lecture in the department of Commerce for CBM Collage and Vidyasagar Collage in India.
He was an Assistant Professor in Al-Ameen institute and Christ University. Dr. Dhanuskodi Rengasamy, is currently
working as a Postgraduate Program coordinator in Curtin University, Malaysia (Curtin University 2016).

1.0 Overview

Planning is a fundamental aspect in human’s life. According to oxford living dictionaries, a plan is defined as a detailed
proposal for doing or achieving a specific objective (English Oxford Living Dictionaries 2017). For an organization or an individual
to succeed in their work, they must have plan. Have you ever come across this phrase which says “Those who fail to plan, plan to
fail “ (Hartzell 2017).For example, in order to for me to achieve a high distinction in university I am required to have a solid plan
with clear and define objectives. Antoine de Saint once said, “A goal with a plan, is just a wish”. Despite the importance of planning
in our daily life, setting a plan and commit to it is a challenging task. As Dr DHANUSKODI RENGASAMY mentioned, students
make plans to wake up early morning and study. However, they will not be able to keep their plan running for a long time. People
usually tend to be more committed to particular plan according to how important the plan is. A final year student will be more
committed to attend the lectures compare to a second-year student for example. Usually individuals have a tendency to make shot-
term plans more than long-term plans in order to see immediate results. For instance, I prefer to plan for my next meal instead of
sitting in a chair for hours drawing my future campaigns.

Unlike individual planning, making a long-term plan for an organization or a company is a crucial aspect in the success of
the company. planning is considered to be one of the four main functions in management (Hartzell 2017). For example, in Curtin
university the management organize a five years plan to increase the number of international students. Without a proper plan, the
university will not be able to maintain its recognition as being one of the most international campuses in the region. Organizational
planning is defined as a process which demonstrate the organization’s immediate and long-term objectives as well as making the
possible strategies to achieve the desired goals. Allocating the required resources to obtain the company goals is also included in
the organizational planning. It is considered one of the most important responsibility of the management in each organization
(Business Dictionary 2017).

Organizational planning process branches into three main sections as represented in figure 1 below. Each of these sections
or types can be considered as a building stone when combined together the main objective of the organization can be attained.
Operational plan is necessary to attain the tactical plan, and without tactical plan the strategic plans will not be achieved, hence the
organization mission and vision won’t be fulfilled. However, in order to increase the success probability of the project, a contingency
plan is implemented. Contingency plan is a backup plan to cover any fails plans (Hartzell 2017).

1
 Student Name: Anas Khalid Abdelsalam
Student ID: 7E3A1579/17651563
Group: 3
Reflective Journal No. 02 Date: 22th August 2017

Figure 1

Strategic plan:
Strategic plan is the initial plan for any project, it demonstrates the foremost goals of the organization rather than the goals of each
division or department in the company (Cliff Notes 2016). it represents the organization mission and direction. For example, the
strategic plan for Curtin university is to “Transform lives and communities through education and research” (Curtin University
2016). Strategic plan is usually a long-term plan targeting to transform the organization from its current status to what is aiming to
be in the future. In each organization, the strategic plan is set by the owners of the company or the higher management for the
purpose of satisfying the stakeholder needs. For example, I am currently working in a project to design a chemical plant. The project
main objective is to successfully produce 10,000 kg/day of polyethylene material by maintain a low energy consumption. Therefore,
each step taken by the group member is for the purpose of achieving the main objective. For instance, I had to remove one the fired
heaters and replace it with two heat exchangers to lower the energy consumption of the process. Strategic plans are the framework
of the organization or a project which all the organization energy and resources are invested to accomplish (Cliff Notes 2016).

Tactical plan:
Tactical plans are set by the divisions or departments managers in order to achieve the goals assigned in the strategic plans. They
are considered a shot-term plans with a narrow scope compare to the strategic plans. The regular span of the tactical plan is not
more than one year. Tactical plans exist to support the strategic plans by interpreting them into specific plans relevant to certain
field in the organization (Hartzell 2017). For instance, after the group decided the main objective of our design project, each member
selected an objective to achieve within a small period of time. My attempt to replace the fired heater with two heat exchangers is
considered a tactical plan to attain the main aim of the process. From my personal experience, finding the suitable methods or ways
to achieve the main objective is relatively more challenging than setting the main objectives. For instance, my strategic plan while
studying in university is to graduate with first class honors. It is easy to say I want to do this, I want to achieve that, but in reality,
without a well-established tactical plan the main objective well not be reached.

Operational plan:
Operational plan is set by the organization frontline or low-level managers. It is a detailed plan aim to provide a clear picture of
the methods and ways used by the team, sections and departments to achieve the strategic plan of the organization. Operational
plan is concern about the strategies and tasks which need to be undertaken, how are these tasks executed and who is assigned to
do it as well how much of finical support is required to complete the task (Hartzell 2017). In addition to the timeline in which the
task will be completed is also part of the operational plan. Unlike strategic plan, operational plan is more specific and consist of
many details about to be undertaken to implement strategies. Operational plan is set in a daily or weekly basis and it is subjected
to change according to the situation. For example, during my internship period in Savola Edible oil Sudan, I worked for two
months under the quality control department. The tactical plan of the quality control department is to ensure that the products are
produced according to the global specification. Every day I had to run different types of test on the oil samples provide from the
refinery. After each test I had to record the results in excel file and call the refinery operators to keep them updated about the
condition of the oil. The operator will them take the required actions to add or reduce the chemicals in the process in order to
 Student Name: Anas Khalid Abdeslalam
Student ID: 7E3A1579/17651563
Group: 3
Reflective Journal No. 02 Date: 22th August 2017

maintain the desired quality of the oil. This example clearly states the procedures required, the person appointed and time
allocated for the department to achieve its desired objective.

Operational planning activities in an organization can involve for instance, scheduling employees time, stocking the
resources inventory and organizing the monthly budget. Operational plan can be categorized into two types, single-use plans and
ongoing plan. Single-use plans are those which desired to be utilized once, its contain tasks or activities which are not repeated and
have expiration date (Hartzell 2017). Single-use plans have a specific budget and limited time (Business Dictionary 2017). For
example, I have done a brief research about Unilever in my process and economic management unit. The company tend to make
several advertisements to promote their products. Each advertisement requires a specific budget and plan to be shown for a specific
amount of time. This is considered a single-use plan. On-going plans on the other hand are the total opposite, they represent the
plans which intended to be continues and in a long run. Those plans are designed ad prepared to withstand the pressure of time. For
instance, quality checking and process safety are on-going plans as each product needs to be checked constantly and each process
required to be monitored in a daily basis.

Operational Accounting:
Operational accounting is concern about the financial aspect required to operate the organization despite its size. Operational
accountants are responsible about planning, controlling and directing the company’s finance. The operational accountant works
together with the management to create and an actual revenue reports for the company in the past years. The company’s mangers
rely on the operational accountant data to set overtimes schedules and ordering raw materials. They are also responsible about
monitoring the actual business activities to ensure that is going according to the organization plan, the accountant will create reports
consist of many criteria such as budget, new customers required. These reports are then presented to the organization management
to check if the company is on track or not. Operational accountants are expected to have a wide knowledge in accounting laws and
regulation as well as being up to date with changes that might occur. I got really surprised when I found that, the annual median
salary of the operational accountant is about 71,000$ and it can reach up to 103,000$ in the advanced occupations according to the
Bureau of Labor Statistics (BLS) (Operational Accounting 2017). These statistics made me realize how important operational
accounting is.

Operating budget:
Operating budget is a combination of the organization expected future cost and known revenues. Operating budget requires further
expense and revenue estimation as it is completed prior the accounting period. The operation is started by the management and in
scheduled in a twelve-monthly basis (Bradford n.d.). Operating budgets are concern about facilitating the organization. Sales and
collection budget are considered to be the most important aspect in operating budget. income the Let’s take Savola oil refinery for
example, the major component of the refinery budget expenses consist of sunflower crude oil (raw material), the operators and
maintenance cost as well as the utilities fees. Forming a valid operating budget for an organization or a project is a tricky and
difficult task as it’s based on projected quarterly performance. For that an origination may decide to have two operating budget
plans for two expected seniors. One of the seniors is positive and the other is negative.

Capital budget:
Capital budgeting is planning process used to investigate the feasibility of an organization long-term investment such as installing
new production line in a chemical factory or introducing a new product to the market. Capital budgeting process intend to find if
these new investments are worth the funding or not. For example, few months ago I was planning to purchase a new smartphone
which cost about 3300 RM. I had a capital budget of 3500 RM which is enough to buy to phone. However, I had to conduct a minor
research to find out more about the phone and if investing this money will not go to waste. In a personal scale capital budgeting
might not be as critical as in organizational scale. Organizations tend to invest with a large amount of money without a proper
budgeting plan to assess the situation, the investment will automatically fail and cost the company a large amount of money.

3
 Student Name: Anas Khalid Abdelsalam
Student ID: 7E3A1579/17651563
Group: 3
Reflective Journal No. 02 Date: 22th August 2017

Shareholder Values:
Shareholder value is a crucial aspect in the success of the organization. It represents the values delivered by the company
to the shareholders because of the management ability to improve the sales and cash flow over time. Managements action is directly
responsible about any changes in the shareholder value (Shareholder Value 2017). The management wise investments or good
marketing strategies can increase the shareholders’ value. Business profitability, organization stability, social involvement and
economic conditions are all drivers of the shareholder value. For example, the higher the education quality and teaching environment
Curtin university can provide the more students will enroll in. therefore the university shareholders value will increase.

Economic profit:
It’s a method to measure the operation’s real profitability. The organization raises capital to produce a product and then
sell it at operating profit. After the cost of the capital is paid the shareholders will receive the balance. Dr. Dhanuskodi Rengasamy
presented an example during the lecture about which company is more likely to have an improving share price. Each of the two
companies started with a certain profit and has to pay a specific amount of money back. The example was not quite clear for me to
understand. I had to ask Dr. Dhanuskodi Rengasamy the explain the example one more time.

Cost management:
Cost management is an important and crucial of management accounting used to ensure that organization plan will not
exceed the allocated budget. Managing cost in our daily life in necessary and requires a good ability of self-control. For example,
during my study period in Curtin university I have gone through many challenges to maintain and control my spending. I used to
download apps in my smartphone to monitor my spending. after each purchase, I made I immediately recorded it in the app.
Despite the effort I put to manage my cost I always tend to over spend especially in food. Unlike me companies and organizations
needs to be very careful in there spending. Due to the large amount of people and processes involves in the organizations a bulk
amount of money can be lost without a trace in which Dr. Dhanuskodi Rengasamy called it “Hidden costs”. Poor quality, late
deliveries and turnovers can all lead to this hidden loses.

Conclusions:

Operational accosting is a crucial aspect in the success of the organization and without operational accountant the company
will not be able to sustain and flourish. I have learned that the organizational plan is consist of three section, strategic plan, tactical
plan and operational plan. Each of these sections is necessary to achieve the organizational plan. I have also found out that,
shareholders are important for the success of the company. Each organization is required to fulfill its shareholders requirements. I
have learned that in order to properly manage my spending I have to know all the hidden cost and try to eliminate or at least reduce
it effect. The fact that operational accountants earn a higher salary than an engineer made me think to change my major.
 Student Name: Anas Khalid Abdeslalam
Student ID: 7E3A1579/17651563
Group: 3
Reflective Journal No. 02 Date: 22th August 2017

References
Bradford, Chris. n.d. "What Is an Operating Budget." smallbusiness. Accessed September 22, 2017.
http://smallbusiness.chron.com/operating-budget-61475.html.
2017. Business Dictionary . Accessed September 21, 2017.
http://www.businessdictionary.com/definition/organizational-planning.html.
2016. Cliff Notes. Accessed September 21, 2017. https://www.cliffsnotes.com/study-guides/principles-of-
management/organizational-planning/detailing-types-of-plans.
2016. Curtin University. December 6. Accessed September 21, 2017. http://about.curtin.edu.au/who/vision-mission-
values/.
2017. English Oxford Living Dictionaries . Accessed September 21, 2017.
https://en.oxforddictionaries.com/definition/plan.
Hartzell, Sherri. 2017. "Types of Planning: Strategic, Tactical, Operational & Contingency Planning." Study.com.
Accessed September 21, 2017. http://study.com/academy/lesson/types-of-planning-strategic-tactical-
operational-contingency-planning.html.
2017. "Operational Accounting." AccountingDegree.com. Accessed September 22, 2017.
http://www.accountingdegree.com/operational-accounting/.
2017. "Shareholder Value ." investopedia.com. Accessed September 22, 2017.
http://www.investopedia.com/terms/s/shareholder-value.asp.