Intro to Strategic

Cost
Management
1 What is Strategic
Cost
Management?
Strategic Cost
Management
Involves the development of cost
management information to facilitate the
principal management function which is
strategic management.

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Strategic Management
Involves the development of a sustainable
competitive position

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Cost management
Practice of accounting in which the
accountant develops and uses cost
management information

Adds value by helping a business to be more

competitive

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Cost management
information
Information that the manager needs to
effectively manage the firm, profit-oriented
as well as not-for-profit organization.

Includes both financial information

about cost and revenues as well as
relevant non-financial information about
productivity, quality and other key
success factors.

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2 Users of Cost
Management
Information
Users of Cost Management
Information
￮ Strategic Management

￮ Planning and decision making

￮ Management and operational control

￮ Reportorial and Compliance to Legal

Requirements

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3 Uses of Cost
Management
Information
Uses of Cost Management
Information
￮ Business firms

￮ Governmental Units

￮ Non-profit organizations

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4
Management
Accountant’s Role
in Strategic Cost
￮ Cost Management
Practice of accounting in which the accountant
develops and uses cost management information

￮ Management accounting

Involves the application of appropriate techniques

and concepts to economic data so as to assist
management in establishing plans for reasonable
economic objectives and making rational
decisions

Process of identification, measurement, accumulation, analysis,

preparation, interpretation and communication of financial
information which is used in planning, evaluating and
controlling activities
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￮ Scorekeeping or data accumulation

￮ Interpreting and reporting of information

￮ Problem solving

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5 Administrative
functions
Administrative functions
￮ Planning
Involves setting of goals for the firm, evaluating various
ways to meet the goals and picking out what appears to be
the best way to meet the goals

￮ Controlling
Involves the evaluation of whether actual performance
conforms with planned goals

￮ Decision making
Involves determination of predictive information (e.g.
relevant costs) for making important business decisions

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6
Professional
Environment of
Cost Management
Line vs Staff Authority
Line Authority
authority to command
action r give orders to
subordinates
Line managers are directly
responsible for attaining the
objectives of the business.
Staff authority
Authority to advise but not
command others,it is exercised
upward.
Staff managers give support,
advise, and service to line
departments.
(personnel, purchasing,
engineering and accounting)
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7 Controller and
Controllership
Controller
(also called the chief accounting officer) is the financial
executive primarily responsible for management
accounting and financial accounting

Controllership is the practice of the established science of

control which is the process by which management assures
itself that the resources are procured and utilized according
to plans in order to achieve the company’s objectives.

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Basic functions of
Controllership
￮ Planning
Establish and maintain an integrated plan of
operation consistent with the company’s goals
and objectives

￮ Control
Develop and revise against standards against
which to measure performance and provide
guidance and assistance to other members of
management in ensuring conformance of actual
results to standards
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Basic functions of
Controllership
￮ Reporting
Prepare, analyze and interpret financial results for
utilization by management in the decision
making process

￮ Accounting
Design, establish and maintain general and cost
accounting systems at all company levels

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Basic functions of
Controllership
￮ Other Primary Responsibilities
Manage and supervise functions such as taxes,
maintain appropriate relationships with internal
and external auditors, develop and maintain
systems and procedures, develop accounting
policies

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Qualifications of the Controller
￮ Excellent technical foundation in accounting and
finance

￮ Understanding of the principles of planning, organizing

and control

￮ General understanding of the industry in which the

company competes and the social, economic and
political forces involved

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Qualifications of the Controller
￮ Thorough understanding of the company, its technologies, products,
policies, objectives, environment etc.

￮ Ability to communicate with all levels of management and basic

understanding of other functional problems

￮ Ability to express ideas clearly in writing or in making informative

presentations

￮ Ability to motivate others

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7 Treasurer and
Treasurership
Treasurer
Has custody of cash and funds invested in various
marketable securities. Generally responsible for
maintaining relationships with banks and other creditors.

Treasurership is concerned with the acquisition, financing

and management of assets of a business concern to
maximize the wealth of the firms for its owners

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Basic functions of Treasurership
￮ Funds procurement
Raising of funds in accordance with the firms
planned capital structure

￮ Banking and custody of funds

Direct management of cash and cash equivalents
and maintenance of good relations with banks
and other non-bank institution

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Basic functions of Treasurership
￮ Investment of funds
Management of the Company’s placements and
securities or purchase of debt or equity instruments

￮ Other functions
✗ Corporate pension and retirement fund

✗ Investor relations

✗ Compliance with legal and regulatory provisions relating to funds procurement, use and
distribution as well as coordination of finance function with accounting function

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Thanks!
Any questions?
You can find me at
￮ connieroset.rosaroso@antipolo.benilde.edu.ph
￮ 0927-003-6153

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