Managerial Accounting

An Overview

Chapter One

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 What is managerial accounting

• Managerial accounting is concerned with

providing information to the managers for
use within the organization

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 Work of Management

Planning
Directing and
Motivating

Controlling

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 Exh.
1-1
Planning and Control Cycle

Formulating long-
Begin
and short-term plans
(Planning)

Comparing actual
Implementing
to planned Decision plans (Directing
performance Making and Motivating)
(Controlling)

Measuring
performance
(Controlling)

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 Comparison of Financial and Exh.
1-2

Managerial Accounting
Financial Accounting Managerial Accounting
1. Users External persons who Managers who plan for
make financial decisions and control an organization

2. Time focus Historical perspective Future emphasis

3. Verifiability Emphasis on Emphasis on relevance

versus relevance verifiability for planning and control

4. Precision versus Emphasis on Emphasis on

timeliness precision timeliness

5. Subject Primary focus is on Focuses on segments

the whole organization of an organization

6. GAAP Must follow GAAP Need not follow GAAP

and prescribed formats or any prescribed format
7. Requirement Mandatory for Not
external reports Mandatory

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 Total Quality Management (TQM)

TQM improves productivity by encouraging the use of fact

and analysis for decision making and if properly implemented,
avoids counter-productive organizational infighting.

Continuous
Improvement
Systematic
problem solving
using tools such is
as benchmarking

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 Theory of Constraints

A constraint (also called a bottleneck) is anything that

prevents you from getting more of what you want.

The constraint in a system is determined

by the step that has the smallest capacity.

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 Theory of Constraints

Only actions 2. Allow the

that strengthen weakest link to
the weakest link set the tempo.
in the “chain”
improve the
process.
3. Focus on
1. Identify the improving
weakest link. the weakest
link.

4. Recognize that
the weakest link
is no longer so.
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 . Code of Conduct for
Management Accountants
OR
Professional Certification- A Smart Investment

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 • 1. An Ethics Perspective
• 2. A Strategic Management Perspective
• 3. An Enterprise risk Management Perspective
• 4. A Corporate Social Responsibilities
Perspective
• 5. A Process Management Perspective
• 6. A leadership perspective.

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 An ethics perspective:

• Ethical behavior is the lubricant that keeps the

economy running. Without that lubricant the
economy would operate much less efficiently-
less would be available to consumers, quality
would be lower, and prices would be higher. In
other words without fundamental trust in the
integrity of business, the economy would
operate much less efficiently.

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 A strategic management perspective

• Companies need to develop a strategy that

defines how they intend to succeed in the
marketplace. A strategy is a game plan that
enables a company to attract customers by
distinguishing itself from competitors.

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 An enterprise risk management
perspective

• Every strategy, plan and decision involves risks.

Enterprise risk management is a process used
by a company to identify those risks and
develop responses to them that enable it to the
reasonably assured of meeting its goals.

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 A corporate social responsibility
perspective

• Companies have a CSR to serve other

stakeholders- such as customers, employees,
suppliers, communities, and environmental and
human rights advocates whose interest are tied
to the company's performance.
• CSR is a concept whereby organizations
consider the needs of all stakeholders when
making decisions.

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 A process management perspective

• Most companies organize themselves by

functional departments such as the marketing
department, R&D department, accounting
department and other departments. These
departments tends to have clearly defined chain
of command that specifies superior and
subordinate relationships.
• A business process is a series of steps that are
followed in order to carry out some tasks in a
business.

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 A leadership perspective

• An organization’s employees bring diverse

needs, beliefs, and goals to the workplace.
Therefore, an important role for organizational
leaders is to unite the behaviors of their fellow
employees around two common themes :
pursuing strategic goals, and making optimal
decisions.

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