Chapter 1

1. Chapter 1 Management accounting: information for contemporary managers

2. What is management accounting? • A process of producing financial and non-financial information for managers • Managers’ needs include information for planning and control, and short and long term decisions • Management accounting covers all levels of management from senior managers to shop-floor supervisors

3. Management accounting systems • Information for costing of goods, services and organisational units • Budgeting systems • Performance measurement • Ad hoc information for short and long term decision making

4. Organisations and objectives • Organisations • collections of people, assets and capital which come together to satisfy a common purpose • Goals or objectives • what the organisation wants to achieve • general or specific • short term or long term

5. Strategies • Strategies • means by which organisations plan to achieve objectives • Corporate strategy • what area to operate in? • what businesses to acquire? • how to finance and structure the organisation?

6. Strategies • Business or competitive strategy • how to compete in the market - product innovation, low cost, product differentiation, quality • identify critical success factors - factors vital to ensuring success • Management accounting systems should be designed to support strategies

7. Management accounting information for planning and control • Planning - setting objectives and formulating plans for future operations • Planning can be: • long term - eg strategic planning • short term - eg annual budgets • ineffective unless there are control systems

8. Management accounting information for planning and control • Control - when operations proceed to plan and objectives are achieved • Control systems - provide regular, relevant information to assist in the control function

9. Management accounting information for decision making • Management accounting systems are designed to produce: • regular, or frequently required information • budgets, performance reports, product costs • non-routine information for infrequent or one-off decisions • should a new plant be built? should we employ more staff?

10. The role of management accountants in organisations • Depends on • how organisations are structured • where the management accounting function is located • Financial controllers • responsible for both management and financial accounting activities • may influence planning and decision making across all management levels and functions

11. Major influences onmanagement accounting • Changes in the business environment • reduction in import tariffs • deregulation of the finance sector • new employment practices • increased importance of service sector

12. Major influences on management accounting • New systems, structures and practices • evolving organisational structures • the importance of quality • changes in manufacturing technology • information technology • customer service, productivity and continuous improvement

13. Major influence on management accounting • New management accounting techniques • activity-based costing (ABC) • value chain approach • activity-based management (ABM) • target costing • business process re-engineering • new performance measurement systems and benchmarking

14. Important considerations in management accounting • Behavioural and cultural issues • organisational culture • power relationships • Motivating managers and other employees • individual goals do not always match organisational goals

15. Important considerations in management accounting • Costs and benefits of information • Evolution and adaptation of management accounting to meet the changing needs of today’s managers

16. Management accounting as a career • Australian professional accounting bodies • Australian Society of Certified Practising Accountants (ASCPA) • Institute of Chartered Accountants (ICAA) • Professional ethics • Code of Professional Conduct - details ethical standards of conduct required by members of professional accounting bodies

17. Exhibit 1.1

18. Exhibit 1.2

19. Exhibit 1.4

20. Exhibit 1.6