Behavioral Aspects of

Responsibility
Accounting
Chapter 7

Dian Indri, SE., M.Si

 Responsibility Accounting

 Is the term used to describe an accounting system

that plans, measures and evaluates organizational
performance along lines of responsibilities
• Revenue and cost
 Is management accounting’s answer to the common
sense knowledge that business affairs can be most
effectively controlled by controlling the people
responsible for carrying out the operations
 Is an essential component of the overall control
system of an enterprise

Dian Indri, SE., M.Si

 Responsibility Conventional
 Does not involve any  Planned, classified
deviations from GAAP and accumulated
 Individual responsible  Nature of function
 Relevance of the  Doesn’t allocate joint
accounting cost to the segment
information

Dian Indri, SE., M.Si

 Responsibility accounting
• Reports both who spent the money and what the
money purchased
• Human dimension to planning, data accumulation,
and reporting
• Budgeting
• Performance evaluation
• Reward allocation

Dian Indri, SE., M.Si

 The Responsibility Network
 To create an efficient responsibility
network structure, responsibilities and
scopes of authority for every individual,
from the top executive down to the lowest
level employees, must be logical and
clearly defined
 To create a well functioning responsibility
network, there must be a perfect matching
of responsibility and authority at all levels

Dian Indri, SE., M.Si

Types of Responsibility Centers
• Cost Centers
• Revenue Centers
• Profit Centers
• Investment Centers
 Correlation with Organizational Structure
• Vertical Structure
• Horizontal Structure
• Choice of Structure
 Fixing Responsibility

Dian Indri, SE., M.Si

 Planning, Data Accumulation, and
Reporting by Responsibility Centers
 Responsibility Budgets
• The budgetary process is most effectively started
at the lowest organizational or network level for
which budgets are to be prepared and then passed
upward through the chain of command in a
pyramid fashion
 Data Accumulation
 Responsibility Reporting
• To enhance efficiency, responsibility reporting
systems should be based on the so-called
“pyramid reporting” or “telescoping” principle

Dian Indri, SE., M.Si

 Behavioral Assumptions of
Responsibility Accounting
 Management by Exception (MBE)
• Assumes that to most effectively manage and
control organizational activities, managers should
concentrate their attention on areas where the
actual results deviate substantially from budgeted
or standard goals
 Management by Objective (MBO)
• This is a management approach designed to
overcome the numerous dysfunctional human
responses triggered by attempts to control
operations by dominance

Dian Indri, SE., M.Si

 Coincidence between Responsibility
Network and Organizational Structure
• Responsibility accounting assumes that
organizational control is enhanced by creating a
network of responsibility centers that coincide with
the formal organizational structure
• The responsibility center network is as effective for
controlling an organization as the underlying
organizational structure is rational

Dian Indri, SE., M.Si

 Acceptance of Responsibility
• Research has only been able to demonstrate a definite
correlation between the willingness of disclosure (or the
capability of subjective cognitions and evaluation of oneself)
and attitudes toward responsibility acceptance
 Capacity of Inducing Cooperation
• Responsibility accounting improves organizational
cooperation by showing managers where their activities fit
into the overall picture and that everybody is working toward
common goals
 Company loyalty
 Self esteem

Dian Indri, SE., M.Si