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Folk/Garrison/Noreen. Introduction to Managerial Accounting. First Edition. Prologue. Managerial Accounting and the Business Environment. Business environment changes in the past twenty years . The Changing Business Environment. A more competitive environment emphasizing:
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Folk/Garrison/Noreen Introduction to Managerial Accounting First Edition
Prologue Managerial Accounting and the Business Environment
Business environment changes in the past twenty years The Changing Business Environment • A more competitive environment emphasizing: • Higher quality products • Lower prices and costs • Global competition • Meeting and anticipating customer needs
New tools for managers! The Changing Business Environment • Just-In-Time • Total Quality Management • Process Reengineering • Theory of Constraints
Complete productsjust in time toship customers. Scheduleproduction. Receive materialsjust in time forproduction. Complete partsjust in time forassembly into products. Just-in-Time (JIT) Systems Receivecustomerorders.
Higher qualityproducts Benefits of a JIT System Reducedinventorycosts Greatercustomersatisfaction More rapidresponse tocustomer orders Less warehousespace needed
Benchmarking ContinuousImprovement Total Quality Management Where are we? Where do we want to go? Plan Do we need to change the plan? How do we start? Act Do is Check How are we doing?
Every step inthe businessprocess mustbe justified. • The process isredesigned to includeonly those steps that makeour product more valuable. Process Reengineering • A business processis diagrammedin detail.
A business processis diagrammedin detail. • Every step inthe businessprocess mustbe justified. • The process isredesigned to includeonly those steps that makeour product more valuable. Process Reengineering • Anticipated results: • Process is simplified. • Process is completed in less time. • Costs are reduced. • Opportunities for errors are reduced.
Restrictions or barriers that impedeprogress toward an objective Theory of Constraints A sequential process of identifying and removing constraintsin a system.
International Competition Meeting world-class competition demands a world-class management accounting system.
Organizational Structure An organization is a group of peopleunited for a common purpose.
Decentralization Decentralization is the delegation of decision-making authority throughout an organization. Decentralizationdecision–making Decentralizationdecision–making
Line positionare directly related to achievement of the basic objectives of an organization. Example: Production supervisorsin a manufacturing plant. Staff positionssupport and assist line positions. Example: Cost accountantsin the manufacturing plant. Line and Staff Relationships
The Controller The chief accountant in an organization with responsibility for: • Financial planning and analysis. • Cost control. • Financial reporting. • Accounting information systems.
Importance of Ethicsin Business • Ethical practices in business build trust and promote productive relationships. They are necessary for the functioning of a market economy. • Many companies and professional organizations, such as the Instituteof Management Accountants (IMA),have written codes of ethics whichserve as guides for employees.
IMA Code of Ethics for Management Accountants Competence Confidentiality Integrity Objectivity Resolution of Ethical Conflict
Follow applicable laws, regulations and standards. Maintain professional competence. Prepare complete and clear reports after appropriate analysis. IMA Code of Ethics for Management Accountants Competence
Do not disclose confidential information unless legally obligated to do so. Do not use confidential information for personal advantage. Ensure that subordinates do not disclose confidential information. IMA Code of Ethics for Management Accountants Confidentiality
Avoid conflicts of interest and advise others of potential conflicts. Do not subvert organization’s legitimate objectives. Recognize and communicate personal and professional limitations. IMA Code of Ethics for Management Accountants Integrity
Avoid activities that could affect your ability to perform duties. Refrain from activities that could discredit the profession. Refuse gifts or favors that might influence behavior. Communicate unfavorable as well as favorable information. IMA Code of Ethics for Management Accountants Integrity
Communicate information fairly and objectively. Objectivity Disclose all information that might be useful to management. IMA Code of Ethics for Management Accountants
IMA Code of Ethics for Management Accountants Resolution of Ethical Conflict • Follow established policies. • For unresolved ethical conflicts: • Discuss the conflict with immediate superior. • If immediate superior is the CEO, consider the board of directors or the audit committee. • Except where legally prescribed, maintain confidentiality.
IMA Code of Ethics for Management Accountants Resolution of Ethical Conflict • Clarify issues in a confidential discussion withan objective advisor. • Consult an attorney as to legal obligations. • The last resort is to resign.
