Table of Contents

INTRODUCTION...........................................................................................................................................1
1. Background and Objectives............................................................................................................1
2. Structure.........................................................................................................................................1
3. Company’s Introduction.................................................................................................................1
INTERNAL ACCOUNTING ACTIVITIES..........................................................................................................2
1. Definition........................................................................................................................................2
Accounting..................................................................................................................................2
Fianancial accounting..................................................................................................................2
Management accounting............................................................................................................2
2. Objectives and responsibilities.......................................................................................................2
a. Financial Accounting...................................................................................................................2
b. Management Accounting............................................................................................................3
c. Management Accounting Systems.............................................................................................3
d. Management Accounting Reports..............................................................................................3
3. Evidences for identified roles and responsibilities.........................................................................4
4. Evaluation of how management accounting system and management accounting reporting is
integrated with organisation process.....................................................................................................4
FINANCIAL GOVERNANCE...........................................................................................................................4
1. Financial management....................................................................................................................4
2. Financial problems..........................................................................................................................4
3. Example of poor Financial Governance..........................................................................................4
4. Lessons............................................................................................................................................4
PERSONAL TRAITS AND SKILLS...................................................................................................................4
1. Characteristics.................................................................................................................................4
2. Skills................................................................................................................................................4
References...................................................................................................................................................5
INTRODUCTION
1. Background and Objectives
Management accounting reports are designed to provide internal information to organizations
or companies through financial accounting. As a member of the Financial Board in Tesco, the
analysis and evaluation of an organization's budget control system, its relationship to
performance management and decision-making is immeasurable necessary. It then responds to
the committee's concerns to innovate accounting, production processes, and the application of
accounting information in decision bases to improve efficiency and solve financial problems.

2. Structure: 3 parts
a. Describe the overall goals of internal accounting activities.
First, define accounting, financial accounting, and management accounting. Clarify the
functions and roles of management accountants and provide company accounting reports
as evidence of the identified roles and responsibilities. Secondly, define a management
accounting system and evaluate the differences and applications of diverse management
accounting systems. work and cost optimization systems) in the organization. Then, present
the different types of management accounting reports and explain why financial
information should be qualitative. The report will clarify the responsibilities of a
management accountant in the specific context of the organization.

b. Discuss the significance of competent financial management for the overall success of the
firm.
Show financial management definitions and the relevance of financial management to an
organization; identifying financial problems and how the company may handle economic
issues; and monitoring company strategy in terms of financial management. The real-life
example of companies that failed in the market due to poor financial management should
be pointed out to strengthen the argument. Next, some recommendations are proposed to
improve the company's financial management policy by applying planning tools.

c. Determine the personal attributes and abilities necessary for a management accountant
role while adapting to changes and enhancing the present financial governance
committee.

3. Company’s Introduction
Tesco company is an example that will be used in this article to describe and clarify the problem
of this case study. With sustainable financing, during the year, Tesco strengthened its
commitment to sustainability across all business areas through its sustainable financing strategy.
Tesco established a £2.5bn revolving credit facility linked to three ambitious environmental
targets, which the Committee endorsed (Tesco, 2021).
Therefore, monitoring financial performance creates more certainty and confidence in making
both short and long-term decisions. In turn, it leads to a healthier business and a faster growth
rate. It also allows the company to outperform and outmanoeuvre competitors who fail in this
regard.
INTERNAL ACCOUNTING ACTIVITIES
1. Definition:
Accounting: The American Institute of Certified Public Accountants (AICPA) defined
accounting as the art of recording, categorizing, and summarizing in a meaningful manner
and terms of money, transactions, and occurrences of at least a financial character and
evaluating the outcomes thereof in 1941. Accounting's function is to give quantitative
information about economic entities, particularly of a financial nature needed to make
economic decisions (Accounting Principle Board (APB), 1970).

Financial accounting is a field of accounting that involves documenting, analyzing, and

reporting a wide range of transactions deriving from business operations over time. These
activities are represented in financial statements such as the balance sheet, income
statement, and cash flow statement, which document the company's operating
performance through time. The main objectives of financial accounting are to produce
useful information outside of a company (Kenton, 2020).

Management accounting links management with accounting. All such information that is
useful to the direction is the subject matter of management accounting. Any information
required for decision making is the concern of management accounting. Management
accounting, unlike financial accounting, provides data for internal users, though the primary
data come from the same accounting system, i.e., financial accounting and cost accounting
systems. Management accounting organizes and distributes accounting, economic, and
statistical data to individuals at various managerial levels to assist them in performing
organizational duties and evaluating them (Pandey, 2017).
2. Objectives and responsibilities:
2.1.Financial Accounting:
The financial accounting process is designed to reflect business operations accurately,
helping companies meet legal, financial and regulatory requirements; present a financial
account to the business owner; enables in-depth financial analysis and facilitates efficient
resource allocation. The primary purpose of financial accounting is to allow third parties to
assess the value of a company.

Through financial accounting, companies have two basic ways to structure their business's
accounting policies. First, publicly traded companies must use the accrual method of
accounting standardized according to generally accepted accounting principles (GAAP).
(Investopedia, 2020)
Financial accounting is in charge of the staff recording and synthesizing data that reflect
the business situation of the enterprise through the numbers in the financial statements to
serve the information needs within the enterprise and also for other organizations.
interested parties outside the enterprise ensure consistency, objectivity, and compliance
with current accounting principles, standards and regimes prescribed in each country.
The tasks of finance and accounting are assigned tasks including:
- Provide information on revenue and cash flow related issues in the business activities of
the enterprise.
- Calculate taxes and income
- Implement and monitor internal finance, set up and handle all financial procedures in the
enterprise (Nguyễn, 2021).
2.2. Management Accounting

Management accounting, oriented mainly towards providing information to managers, being

considered "an informational tool necessary to the management for takingdecisions, to
maximize profitability" (Dumitru and Calu, 2008) is folded up the three critical functions of
management, as follows:

Planning: management accounting helps set future goals (strategic planning), supplying
information for deciding on the production methods to be used, the company's price
strategy, trade strategy, and the appreciation of the invested capital.

Decision making: the interaction of management accounting and the organizational

process is presented as follows: Determine information in an economic entity. It is
necessary to identify the organizational structure and have a clearer understanding of
the methods for determining authority and responsibility distribution. Instead, the
essential information defines the design of the collected data and processing activities
from the management accounting information system. (Oprea, 1994)

Controlling: Management accounting maintains the method's verification process and

the amount to which the stated objectives have/have not been accomplished, creating
reports that should reflect actual performance rather than projected goals. The control
as a primary function of the management in an economic organization involves
 monitoring the implementation of policies, evaluating performance, and correcting any
abnormalities. In contrast, management accounting, as a tool of management control,
provides data for studies and judgments that enable the analysis of any deviations from
the budget and the correct decision-making. Hence, management accounting assists the
control function of the management in identifying the activities with problems in a
company. (Oprea, 1994)

Core roles of management accounting include:

Participation in the strategic and operational planning processes, including the

formulation of policies and budgets; implementing and providing guidance for
management decisions, including the generation, analysis, presentation, and
interpretation of relevant information; contributing to performance monitoring and
control through providing reports that include actual and budgeted performance
comparisons, as well as their analysis and interpretation (Collier, 2003).

Coombs et al. (2005) contend that as a result, the management accountant's role is a
responsible one that directly impacts individuals both inside and outside the business.
As the provider of performance-monitoring information, the management accountant
acts as an essential and influential link between management and employees and
between shareholders and management. The principal-agent connection describes the
connection between individuals in 'power' positions and those who are managed or
employed. The principal-agent theory, also known as agency theory, is the
corresponding body of theory. We will examine such a theory in more detail later.
However, it's worth mentioning that the management accountant is in charge of two
things when it comes to the principal-agent relationship:

• Any information acquired to monitor the agent's performance is as accurate and

dependable as possible.

• Any system designed to enable such monitoring is impartial, either favouring the
principal or the agent.

Management Accounting Systems focus on following the costs associated with producing goods
and services in a company. Each management accounting system provides companies with a
different method for tracking expenses to deliver goods and services at the lowest price
possible. Failing to follow any procedure can result in overpriced goods and lower gross
margins. The basic types of Management Accounting Systems are:

Cost Accounting System is a framework that the company uses to approximate the cost of
its products for profitability analysis and cost control. Cost allocation is carried out in the
cost accounting system according to a performance-related cost system or a traditional cost
system. Approaching the actual cost of the product is crucial for practical functions (Blocher,
2010). There are two central cost accounting systems: job order costing and process costing.

- Job order costing is a cost accounting system that manufacturing expenses are

accumulated individually for each job. It is suitable for firms that are engaged in the
production of unique products and special orders. An event management company, a
 specialty furniture manufacturer, or a very high-cost air surveillance system, for
example, would benefit most from the costing accounting system.

- Process costing is a type of cost accounting that collects production expenses for each
process separately. It is appropriate for products whose production involves different
departments, and costs flow from one department to another.

Inventory Management System refers to controlling and overseeing the ordering, use, and
storage of components that the corporation applies in producing the goods it sells. To
streamline inventory management of consumables, commodities, stock, supplies, an
inventory management system integrates barcode scanners, desktop software, mobile
devices, and barcode printers (Drury, 2015). Inventory management's goal is to evaluate
current inventory levels precisely and to avoid overstock and understock problems.
Inventory control works by following two main functions of your stock room or warehouse
— receiving (incoming) and shipping (outgoing). Managers will know and make sufficient
inventory decisions if amounts are tracked efficiently across all stocking locations.

The inventory management system's functions are as follows: making purchase orders,
receiving, relocating, modifying, and disposing inventories (Drury, 2015). It also performs
cycle and physical inventory counts and creates, manages, schedules, and distributes
reports and printing barcode labels. As a result, the inventory management system has
several advantages for a business, including strengthening the bottom line, improving
inventory accuracy, and improving workflow.

Job-Costing is the process of allocating manufacturing costs to specific products or groups of

products. It's used when the goods being processed are not similar. It involves gathering
information on the expenses associated with a certain service or production job. Also, the
information is important for determining the accuracy of the company's estimating system
that must be capable of quoting prices that permit a reasonable income (Drury, 2015). The
information may be used to assign inventory costs to finished products. Direct labor, direct
materials, and overhead expenses are the three types of direct information required by the
project costing system. In practice, a job costing system will have to be customized to the
customer's needs. Particular expenses can only be charged to certain jobs, according to
some customers.

Price optimization refers to applying mathematical analysis to the corporation to determine

how consumers react to different prices for their goods and services via other channels
(Edmonds and Olds, 2013). It is also used to figure out what expenditures a corporation
should incur to achieve its objectives, such as maximizing operational profit. Discovering an
alternative that achieves the highest possible performance is cost-effective under the limits
by maximizing desired aspects and minimizing undesirable ones. (Edmonds and Olds, 2013).

Pricing strategy, the value of the product to both buyer and seller, and tactics that manage
all aspects affecting profitability should all be considered by a Price Optimization System
 (Edmonds and Olds, 2013). Price Optimization Systems help businesses determine: initial
pricing, pricing, and markdown pricing.

Management Accounting Reports can provide the information needed to cut costs, reward
high-performing employees, cut aging product lines, and invest in goods that deliver financial
returns that offer the best key for business. Depending on the type of financial information and
the management accounting systems, different types of reports have other purposes (Sullivan,
2019).

Budget reports

A company's budget distributes funds to and from various divisions of the organization
depending on projected performance. Forecasting revenues and expenditure provides the
raw data needed to develop a budget, which is frequently a significant component of a
business strategy. A budget report provides a moment-in-time snapshot of the financial
performance of a business compared to forecasts and may do so, depending on the detail
of the information, for aspects such as sales performance, production costs and overhead
expenses. Budget reports are also read by outsiders, such as stockholders and investors.
Stockholders and investors are interested in how a business is operating and doing
financially before making any big decisions (Shpak, 2019).

Performance reports involve collecting and disseminating project information,

communicating project progress, utilizing resources, and forecasting future progress and
status to various stakeholders, as decided in the communication management plan.

During performance reporting, the work results of other processes are also analyzed and
combined into performance reports. They are typically done in tabular or graphical formats
that may be text-based, visual-based (such as charts, graphs, or tables) or most often, a
combination of both (Simplilearn, 2021).

Fundamentally, performance reports are comparisons of project performance to the

project performance baseline and include:

- Status Reports give the current state of a project at any given time.
- Progress Report describes what has been accomplished since the last time/last report.
- Forecasting Report states what is expected to happen on a project, predicting the
project's future performance and anticipated status in various parameters.
- Trend Report compares the current version of the project and the last performance of
the task during the same time duration. This type of report examines project
performance over time to see if it is improving or degrading.

Inventory and Production Report

According to Elliot Walters, implementation manager at Stitch Labs, inventory reports are
critical for keeping track of the company's most valuable and expensive asset. Inventory
reporting may seem to be a pointless exercise or paper, yet it may save you a lot of money
and effort. Companies that produce physical products, especially those in manufacturing
with low fault tolerance, find these reports valuable. They help centralize data on inventory
costs, labour, and other forms of overhead involved in the production process, providing
 raw data to optimize assembly or machining. Accounting records may reflect the amount of
inventory on hand at all times in the perpetual inventory system. Each good in stock has its
account in the subsidiary ledger, and the report is updated whenever a quantity is added or
removed (Nicasio, 2021).

The Job-Cost report is a report that tracks the ongoing cost of a construction project. Some
Job-Cost reports only add up the charges after a job is completed, and that can help identify
problems to avoid in future employment. But it is a lot more helpful if the report tracks job
costs weekly to identify and correct issues before they get out of hand. An accurate Job-Cost
Report can help the company sort out a range of other problems. For example, it can tell
whether a low-profit month or quarter results from one terrible job or a general downward
trend in a market price. It can identify a crew that continually performs above or below
budget or a sales rep or estimator that needs to improve their performance. Determining
what a job costs and whether it was profitable are the essential skills that every construction
company manager needs to possess (Wilson, 2017).

FINANCIAL GOVERNANCE
1. Financial management refers to the responsibilities of financial managers of a business firm
who are responsible for the acquisition, financing, and management of financial resources to
optimize the firm's value for its owners. (Sana, 2017) Financial managers are in charge of the
financial affairs of all types of businesses, including financial and non-financial, private and
public, large and small, profit-seeking and non-profit organizations. They perform such varied
tasks as budgeting, financial forecasting, cash management, credit administration, investment
analysis, funds management, etc. The complexity and relevance of financial managers'
responsibilities have grown in recent years as legal and economic contexts have evolved, as has
the globalization of company activity. As a result, the role of financial management has grown
increasingly demanding and complicated. (Khan, 2012)

According to Kenton (2021), there are many stakeholders in a corporation, including trade
creditors, bondholders, investors, employees, and management. Every group has an interest in
tracking the financial performance of a company. Financial governance identifies how well a
company generates revenues and manages its assets, liabilities, and the economic claims of its
stake- and stockholders.
There are various ways to assess financial performance, but they should all be seen as a whole.
Total unit sales, as well as line items such as revenue from operations, operating income, or cash
flow from operations, can be used. In addition, the analyst or investor may want to go further
into the financial accounts to check for margin growth rates or lowering debt.

2. Financial problems

PERSONAL TRAITS AND SKILLS

1. Characteristics

2. Skills
 Analytical Skills
Accounting job necessitates a comprehensive, detail-oriented approach. Accountants must go
through extensive financial documents to verify that every information is appropriate and
sufficient. Otherwise, their analysis might produce contradictory results. According to Bob
Prather, Lucas Group's general manager of accounting and finance recruiting, the finest
accountants can quickly assess an analysis report and identify what remains whether or not the
facts and figures compute.

CONCLUSION
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