Learning Objectives. Explain the need for management accounting information. Explain the differences between management accounting and financial accounting. Provide a brief historical description of management accounting. Identify and explain the emerging themes of management accounting.
The Management Process is defined by the following activities:
Planning requires setting objectives and identifying methods to achieve those objectives.
Controlling is the managerial activity of monitoring a plan’s implementation and taking corrective action as needed.
Control is usually achieved with the use of feedback, which is information that can be used to evaluate or correct the steps being taken to implement a plan.
Decision makingis the process of choosing among competing alternatives.
Management Accounting Financial Accounting
1. External focus
2. Externally imposed rules
3. Objective financial information
4. Historical orientation
5. Information about the firm as a whole
6. More self-contained
1925 Emphasis of inventory costing for external reporting
1950s/60s Effort to improve the managerial usefulness of traditional cost systems
1980s/90s Significant efforts have been made to radically change the nature and practice of management accountingHistorical Description ofManagement Accounting
1. Collection of cash
2. Monitoring of cash
3. Monitors cash availability
4. Short-term investments
5. Short and long-term
6. Issuing of capital stock
1. Financial reports
2. Securities commission reporting
3. Tax planning and reporting
4. Performance reporting
5. Internal auditing
7. Accounting systems and
Avoid conflicts of interest.
Refrain from activity that would prejudice their ability to carry out their duties ethically.
Refuse gifts, favors, or hospitality that would influence their actions.
Refrain from subverting attainment of the organization’s legitimate and ethical objectives.Integrity
Recognize and communicate professional limitations that would preclude responsible judgment.
Communicate unfavourable as well as favourable information.
Refrain from engaging in or supporting any activity that would discredit the profession.Integrity (continued)
If the immediate superior is the chief executive officer, or equivalent, the acceptable reviewing authority may be the audit committee, board of trustees, or owners.
Clarify relevant concepts by confidential discussion with an objective advisor to obtain an understanding of possible courses of action.Resolution of Ethical Conflict
Courses of actions
Except where legally prescribed, communication of such problems with external parties is not appropriate.Resolution of Ethical Conflict (continued)
Courses of actions