Professional Documents
Culture Documents
Accounting
Based from
1. Cost Accounting : Foundation and Evolution 9e Kinney and Raiborn
Presented by
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Page 1
Learning Objectives
• What are the relationships among financial, management, and cost
accounting?
• What are the sources of authoritative pronouncements for the practice of
cost accounting?
• What are the sources of ethical standards for cost accountants?
• What is a mission statement, and why is it important to organizational
strategy?
• What must accountants understand about an organization’s structure and
business environment in order to perform effectively in that organization?
• What is a value chain, and what are the major value chain functions?
• How is a balanced scorecard used to implement an organization’s strategy?
• What are the sources of ethical standards for cost accountants?
• Why is ethical behavior so important in organizations?
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Accountants
• Financial accountants provide information to external
parties
– Investors
– Creditors
– Regulators
– Donors
• Managerial accountants provide information to internal
users
– Managers
• Cost accountants provide information to both internal and
external users
– Product cost information
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Types of Accounting
Financial Management
• Meet external • Meet internal
information needs information needs
• Comply with GAAP • Does not have to
comply with GAAP
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Financial versus Managerial
Financial Managerial
• External focus • Internal focus
• Whole organization • Segments or divisions
• Historical • Current/projected
• Quantitative • Quantitative/qualitative
• Monetary • Monetary and nonmonetary
• Verifiable • Timely/reasonable estimate
• GAAP • Benefits exceed costs
• Formal recordkeeping • Formal and informal
recordkeeping
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Product Cost Information
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Management Accounting
Organizations
IMA
– Statements on Management Accounting
– (not legally binding)
Society of Management Accountants of
Canada
– Management Accounting Guidelines
– (not legally binding)
Cost Accounting Standards Board (CASB)
– Government contracting standards
– (legally binding)
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Organizational Strategy
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Organizational Strategy
1. Develop mission statement
2. Implement strategy
Develop,
Establish implement, and
appropriate monitor
measures of necessary
accomplishment information
systems
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Five Factors in Organizational
Strategy
• Core competencies
• Organizational structure
• Management style and organizational
culture
• Organizational constraints
• Environmental constraints
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Organizational Strategies
Core competency—critical function or
activity providing a competitive advantage
Cost leadership strategy—undercut
competitor prices
Product differentiation strategy—superior
quality products or unique services sold at
a premium
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Strategy Questions
• What are the most important factors • Does your organization have the
in your organization’s operating appropriate resources (financial,
environment? personnel, and technological) to
– Economy, population demographics, fulfill its vision?
competitors, suppliers, resource
availability, innovation, environment • Have appropriate performance
• What are your organization’s core measurements been established to
competencies? determine if progress is being made
• Have you organization’s core towards your organization’s mission
competencies become competitive and vision?
advantages? • Are operating conditions
• What is your organizations current continuously monitored to detect
position relative to your competitors? changes so that your organization
• What are your customers’ purchase can adapt with flexibility and
or selection criteria? sensitivity, especially to new trends
• What is the organizational vision in technology?
identified by your management,
shareholders, and other internal and
external stakeholders?
– Is the vision supported by identifiable
goals and objectives?
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Organizational Structure
• Distribution of authority and responsibility in an
organization
– Authority—right to use resources to
accomplish a task or achieve an objective
– Responsibility—obligation to accomplish a
task or achieve an objective
• Line manager works directly toward attaining
organizational goals
• Staff employees give assistance and advice to line
managers
– Treasurer and Controller
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Organizational Constraints
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Value Chain
A set of value-adding functions and
processes that converts inputs into
products or services
– Research and – Marketing
Development – Distribution
– Product Design – Customer Service
– Supply
– Production
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Balanced Scorecard
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Balanced Scorecard
Perspectives
• Learning and Growth
– Use the organization’s intellectual capital to adapt to changing
customer needs or to influence new customers’ needs and
expectations through product or service innovations
• Internal Business
– Things to do well to meet customer needs and expectations
• Customer Value
– How well the organization is doing relative to important
customer criteria
• Financial
– Address stockholders/stakeholders concerns about
profitability and organizational growth
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Balanced Scorecard Measures
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Professional Ethics
• Earnings management—deliberate
accounting adjustments to “hit” profit
targets
• Often adjustments involve cost accounting
– Product costs
– Inventory valuations
• Stretching legitimate accounting
techniques
• Outright fraud
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Potential Ethical Issues
• Earnings management
• Low cost production at any cost
• Whistle-blower retaliation
• Fixing prices
• Bribery and other corruption
• Hiding managerial acts
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Ethics and Legislation
• Sarbanes-Oxley Act—CEOs and CFOs
personally accountable for the accuracy of
their organization’s financial reporting
• False Claims Act—whistle-blower
protection and penalties for failure to blow
the whistle (disclose known financial
frauds)
• Dodd-Frank Act—encourages whistle-
blowing with awards from 10 to 30 percent
of amount recouped
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Ethics and Management Accounting
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Ethics in Multinationals
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Questions
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Any Questions
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Thank You
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