Managerial Accounting and the Business Environment

Class One

Comparison of Financial and Managerial Accounting

Strategy

A strategyis a “game plan”

that enables a companyto attract customers

by distinguishing itselffrom competitors.

The focal point of acompany’s strategy should

be its target customers.

The focal point of acompany’s strategy should

be its target customers.

Customer Value Propositions

Understand and respond toindividual customer needs.

Understand and respond toindividual customer needs.

CustomerIntimacy

Proposition

OperationalExcellence Proposition

Deliver products and servicesfaster, more conveniently,

and at lower prices.

Deliver products and servicesfaster, more conveniently,

and at lower prices.

ProductLeadership Proposition

Offer higher quality products.Offer higher quality products.

Work of Management

PlanningPlanning

ControllingControlling

Directing and Motivating

Directing and Motivating

Planning

Identifyalternatives.

Identifyalternatives.

Select alternative that does the best job of furtheringorganization’s objectives.

Select alternative that does the best job of furtheringorganization’s objectives.

Develop budgets to guideprogress toward theselected alternative.

Develop budgets to guideprogress toward theselected alternative.

Directing and Motivating

Directing and motivating involves managing day-to-day activities to keep the organization running smoothly. Employee work assignments. Routine problem solving. Conflict resolution. Effective communications.

Controlling

The control function ensuresthat plans are being followed. The control function ensuresthat plans are being followed.

Feedback in the form of performance reportsthat compare actual results with the budgetare an essential part of the control function.

Feedback in the form of performance reportsthat compare actual results with the budgetare an essential part of the control function.

Planning and Control Cycle

DecisionMaking

Formulating long-and short-term plans

(Planning)

Formulating long-and short-term plans

(Planning)

Measuringperformance (Controlling)

Measuringperformance (Controlling)

Implementing plans (Directing and Motivating)

Implementing plans (Directing and Motivating)

Comparing actualto planned

performance (Controlling)

Comparing actualto planned

performance (Controlling)

Begin

Organizational Structure

Board of Directors

President

Sales PersonnelVice President

OperationsChief Financial

Officer

Treasurer Controller

Corporate Organization Chart

Code of Conduct forManagement Accountants

The Institute of Management Accountant’s (IMA) Standards of Ethical Conduct for Practitioners

of Management Accounting and Financial Management have two major parts offering

guidelines for:

Ethical behavior.

Resolution for an ethical conflict.

Ethical Behavior

Four broad areas of responsibility:

• Maintain a high level of professional competence

• Treat sensitive matters with confidentiality• Maintain personal integrity• Be objective in all disclosures

• Follow established policies.

• For unresolved ethical conflicts:

Discuss the conflict with immediate superior.

Make reference to the Sarbanes-Oxley Act passed by Congress in 2002 in part to give legal protection to those reporting corporate misconduct.

Consider the board of directors orthe audit committee.

The last resort is to resign.

Resolution of an Ethical Conflict