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Prologue. Managerial Accounting and the Business Environment. PowerPoint Authors: Jon A. Booker, Ph.D., CPA, CIA Charles W. Caldwell, D.B.A., CMA Susan Coomer Galbreath, Ph.D., CPA. P- 2. Globalization. Reduction in tariffs and quotas. Improvements in global transportation systems.

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prologue

Prologue

Managerial Accounting and the Business Environment

PowerPoint Authors:

Jon A. Booker, Ph.D., CPA, CIA

Charles W. Caldwell, D.B.A., CMA

Susan Coomer Galbreath, Ph.D., CPA

globalization

P-2

Globalization

Reduction in tariffs and quotas

Improvements in global transportation systems

Expansion of Internet usage

Increasing sophistication in international markets

the global marketplace

P-3

The Global Marketplace

Companies that have been successful in their local markets may suddenly find themselves facing competition from halfway around the globe.

the global marketplace4

P-4

The Global Marketplace

New Markets

New Customers

New Workers

strategy

P-5

Strategy

A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.

Customer Intimacy

Operational Excellence

Product Leadership

organizational structure

P-6

Decentralizationdecision–making

Decentralizationdecision–making

Organizational Structure

An organization is a group of people united for a common purpose.

the functional view of organizations
Line positions are directly related to the achievement of the basic objectives of an organization.

Example: Production supervisors in a manufacturing plant.

Staff positions support and assist line positions.

Example: Cost accountants in the manufacturing plant.

P-7

The Functional View of Organizations
the chief financial officer cfo

P-8

The Chief Financial Officer (CFO)

A member of the top management team which is responsible for:

  • Providing timely and relevant data to support planning and control activities.
  • Preparing financial statements for external users.
process management

P-9

Process Management

A business process is a series of steps that are followed in order to carry out some task in a business.

value chain

P-10

Value Chain

Business Functions Making Up the Value Chain

ResearchandProduction

ProductDesign

Manufacturing

Marketing

Distribution

CustomerService

Avalue chain consists of the major business functions that add value to a company’s products and services.

lean production

P-11

Lean Production
  • Traditional Thinking
  • Minimize unit costs by maximizing output.
  • Keep everyone busy. Idleness wastes money.
  • Push products through the system even if unsold inventory piles up in warehouses.
lean production12

P-12

Lean Production

Step 1 Identify value in specific products and services

Step 5 Continuously pursue perfection in the business process

Step 2 Identify the business process that delivers value

Step 3 Organize work arrangements around the flow of the business process

Step 4 Create a pull system that responds to customer orders

supply chain management

P-13

Supply Chain Management

The term supply chain management is commonly used to refer to the coordination of business processes across companies to better serve end consumers.

theory of constraints toc
A sequential process of identifying and removing constraints in a system.

P-14

Restrictions or barriers that impedeprogress toward an objective

Theory of Constraints (TOC)
theory of constraints toc15

P-15

Theory of Constraints (TOC)

Step 1 Identify the weakest link in the chain, which is the constraint

Step 4 If improvement efforts are successful, the weakest link will improve

Step 2 Do not place a greater strain on the system than the weakest link can handle

Step 3 Concentrate improvement efforts on strengthening the weakest link

six sigma

P-16

Six Sigma

A process improvement method that relies on customer feedback and fact-based data gathering and analysis techniques to drive process improvements.

Six Sigma is sometimes associated with the slogan zero defects.

six sigma17

P-17

Six Sigma

TheDMAICframework is the most common framework used to guide Six Sigma process improvement efforts.

Define

Measure

Analyze

Improve

Control

six sigma18

P-18

Six Sigma
  • Six Sigma improvements can only increase profits in two ways:
  • Decrease costs
  • Increase sales
the importance of ethics in business

P-19

The Importance of Ethics in Business

Ethical practices in business build trust and promote productive relationships. They are necessary for the functioning of a market economy.

code of conduct for management accountants ima s statement of ethical professional practice
Part One

Competence

Confidentiality

Integrity

Credibility

P-20

Code of Conduct for Management Accountants – IMA’s Statement of Ethical Professional Practice

Part Two

Resolution of Ethical Conflict

standards of ethical conduct

P-21

Follow applicable laws, regulations, and standards.

Maintain professional competence.

Recognize and communicate professional limitations that preclude responsible judgment.

Prepare accurate, clear, concise, and timely decision support information.

Standards of Ethical Conduct

Competence

standards of ethical conduct22

P-22

Do not disclose confidential information unless legally obligated to do so.

Do not use confidential information for unethical or illegal advantage.

Ensure that subordinates do not disclose confidential information.

Standards of Ethical Conduct

Confidentiality

standards of ethical conduct23

P-23

Abstain from activities that might discredit the profession.

Refrain from conduct that would prejudice carrying out duties ethically.

Integrity

Mitigate conflicts of interest and advise others of potential conflicts.

Standards of Ethical Conduct
standards of ethical conduct24

P-24

Communicate information fairly and objectively.

Disclose delays or deficiencies in information timeliness, processing, or internal controls.

Disclose all relevant information that could influence a user’s understanding of reports or recommendations.

Standards of Ethical Conduct

Credibility

guidelines for resolution of an ethical conflict

P-25

Guidelines for Resolution of an Ethical Conflict

Resolution of Ethical Conflict

  • Follow the established policies of the organization.
  • For unresolved ethical conflicts:
    • Discuss the conflict with immediate superior.
    • Initiate discussion with levels above immediate supervisor only with the supervisor’s knowledge (assuming the supervisor is not involved).
standards of ethical conduct26
Resolution of Ethical Conflict (Continued)

Maintain confidentiality.

Clarify relevant ethical issues by confidential discussion with an objective advisor.

Consult your own attorney.

P-26

Standards of Ethical Conduct
company codes of conduct

P-27

Company Codes of Conduct

Many companies have adopted formal ethics codes of conducts that provide broad guidelines for proper behavior.

codes of conduct on the international level

P-28

Codes of Conduct on the International Level

The International Federation of Accountants’ (IFAC) Guidelines on Ethics for Professional Accountants governs the activities of all accountants throughout the world.

corporate governance

P-29

Corporate Governance

Corporate governance is the system by which a company is directed and controlled.

If properly implemented, it should provide incentives for the board of directors and top management to pursue objectives that are in the interests of the company’s owners and it should provide for effective monitoring of performance.

the sarbanes oxley act of 2002

P-30

The Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 is intended to protect the interests of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures.

the sarbanes oxley act of 200231

P-31

The Sarbanes-Oxley Act of 2002
  • Requires CEO/CFO certification.
  • Establishes the PCAOB.
  • Places power to hire, compensate, and terminate auditors with the audit committee.
the sarbanes oxley act of 200232

P-32

The Sarbanes-Oxley Act of 2002
  • Prohibits a variety of non-audit services for audit clients.
  • Requires annual report on internal control.
  • Establishes severe penalties for criminal acts.
enterprise risk management

P-33

Enterprise Risk Management

A process used by a company to proactively identify the business risks that it faces and to develop responses to those risks that enable the company to be reasonably assured of satisfying stakeholder expectations.

enterprise risk management34

P-34

Enterprise Risk Management

Companies should identify foreseeable risks before they occur. Once a risk has been identified, a company can respond in various ways such as accepting, avoiding, sharing, or reducing the risk.

slide35

P-35

Identifying and Controlling Business Risks

corporate social responsibility

P-36

Corporate Social Responsibility

Corporate social responsibility (CSR) is a concept whereby organizations consider the needs

of all stakeholders when making decisions.

Customers

Employees

Suppliers

Communities

Stockholders

Environmental & Human RightsAdvocates

CSR extends beyond legal complianceto include voluntary actions that satisfy stakeholder expectations.

the certified management accountant cma

P-38

The Certified Management Accountant (CMA)

Rigorous ProfessionalExam

Greater Responsibilities

Higher Compensation

Information about becoming a CMA and the CMA program can be accessed on the IMA’s website atwww.imanet.orgor by calling 1-800-638-4427.