TOPIC 1: Objectives, role, and scope of management accounting

1. Basic management functions and concepts

2. Distinction among management accounting, cost accounting and financial accounting
3. Roles and activities of controller and treasurer
4. International certifications in management accounting
5. Global trends in management accounting

TOPIC OUTLINE:

1. Management – organizes the different resources to achieve the organizational objectives.

a. Planning (Objectives, Environment, Strategy, Action Plan, Budget)
b. Execution (Directing and Motivating)
c. Controlling (Evaluation using Performance Report, and Corrective Actions)
d. Decision Making
2. Branches of Accounting
a. Management Accounting – providing information to managers (Internal Users)
b. Cost Accounting – focus on gathering and reporting cost data
c. Financial Accounting – generating general purpose financial statement for external
users.
3. The Finance Department
a. Chief Financial Officer
b. Controller/Accounting Head
c. Treasurer
4. Line versus Staff
a. Line – directly involve in the achievement of the organization’s objectives.
b. Staff – support the organization in achieving its objectives.
5. Internal Certifications in Management Accounting
a. IMA and the CMA Certification
b. Code of Ethics of IMA
c. Chartered Institute of Management Accountant (CIMA)
6. Global Trends in Management Accounting
a. Expansion from product to channel and customer profitability analysis
b. Management accounting’s expanding role with enterprise performance management
(EPM)
c. The shift to predictive accounting
d. Business analytics imbedded in EPM methods
e. Co-existing and improved management accounting methods
f. Managing Information Technology and Shared Services as a Business
g. The need for better skills and competency with behavioral cost management

PRACTICE PROBLEMS

Part 1: Management Function – Planning, Executing, and Controlling

1. It requires management to look ahead and establish objectives
2. Formulating the corporate strategy
3. The process of keeping the company's activities on track
4. Having a detailed look at the current external and internal business environment.
5. Involves mobilizing people to carry out the plans and overseeing day-to-day activities of the
company
6. Construction of a budget
7. Involves the regulation of business activities in accordance with a plan so that the objectives
of the company will be attained.
8. Obtaining feedback
9. Constantly reminding personnel about their self worth and the importance of their duties and
responsibilities
10. Construction of a performance-variance analysis report

Part 2: Financial versus Managerial Accounting;

 1. Reports are provided outside the organization – external reports
2. Does not follow GAAP and there are no reporting regulations
3. Reports past activities – based on a historical perspective
4. Prepares reports only for management’s internal use
5. Reliability of data is emphasized – reports take more time to provide
6. Relevance of data is emphasized over reliability
7. Provides information to make decisions regarding the future
8. Focus on precise information since they are used outside the company
9. Focuses on timeliness of information
10. Summarized data for entire company as a whole
11. Must follow GAAP which has specific required external reports
12. Nothing is required to be reported, reports what management needs to see
13. Reporting is focused on parts of the organization such as departments or divisions and not on
the organization as a whole.
14. Reliability and Precision is being emphasized.
15. Relevance and Timeliness is being emphasized.

Part 3: Treasurer versus Controller

1. Responsible for the maintenance of adequate internal control
2. Preparation of accounting records
3. Custody of the company funds
4. Planning and controlling the company cash position
5. Responsibility for relations with the company's financial institutions and major creditors
6. Responsible for the preparation of budget and performance evaluation report.
7. Responsible for record keeping, tracking, and controlling the financial effects of prior and
current operations.
8. Preparation of tax returns, the annual report, and Securities and Exchange Commission (SEC)
filing.
9. Obtains and manages the corporation`s capital
10. Responsible for managing corporate assets
11. Planning the finances and capital expenditures
12. Interpretation of financial data
13. Managing the investment portfolio
14. Appraisal of results of operation and making Recommendations
15. Formulating credit policy
16. Usually looks at what has occurred rather than what should or will happen.
17. Emphasizes cash flow
18. Investor relations
19. Conduct or coordinate audits of company accounts and financial transactions to ensure
compliance with state and government requirements and statutes
20. Receive and record requests for disbursements

Part 4: Line and Staff Position

1. Controller for a manufacturer
2. Corporate Legal Counsel of a Manufacturer
3. Product Manager of diversified company
4. Vice President for Plant Operation
5. Human Resource Manager of a Utility Company
6. Vice President for Sales of a Computer Manufacturer
7. Director for research and development of a technology-based corporation
8. Regional Manager of a Multinational Corporation