HO-1 Management

Accounting

MARIAPPAN.M
SCHOOL OF HEALTH SYSTEMS
TATA INSTITUTE OF SOCIAL SCIENCES
 SYLLABUS
I Financial Statements Analysis
Horizontal and Vertical Analysis; Comparative Financial
Statement Analysis - Trend Analysis; Ratio Analysis

II Funds Flow Statement and Cash Flow Statement

III Cost Accounting

Cost Concepts: Cost Terms; Elements of Cost: Costing of
material, labour and overheads; Cost Sheet; Costing systems

IV Cost-Volume-Profit-Analysis
Marginal Costing; Absorption Costing; Contribution Analysis;
Profit Planning; Relevant Cost Concept.
V Pricing of Services in Hospitals and Community
Health Agencies

VI Cost Control and Responsibility Accounting

Standard Costing; Variance Analysis; Responsibility
Center Accounting; Cost Reduction Programmes; Value
Analysis

VII The Budget Process and Budgetary Control

Classification of Budgets; Budget Preparation;
Appropriation Budgeting; Performance Budgeting; Zero-
Based Budgeting

VIII Managerial Reporting

Fundamental principles of managerial reports; Modes and
types of reporting.
 Activities of Business
Managers
 Managers require both financial and non-financial information in
the operations of a business.
 1) Decision Making
 choosing among alternatives
 2) Planning
 anticipating operations
 3) Directing Operational Activities
 day to day operations
 4) Controlling
 ensuring operation in achieving goals
Management Accounting is the
process of identifying,
measuring, analyzing,
interpreting and
communicating information
in pursuit of an
organization’s goals.
Managerial accounting
provides some of the
information organizations
need to make decisions and
meet their goals.
Value Added by Managerial
Accounting
(Objectives)
 Providing information for decision making and
planning
 Assisting in directing and controlling operations
 Motivating managers and employees
 Measuring performance
 Assessing the organization’s competitive
position
 Financial Vs Management
Accounting
 Using the same basic accounting system:
 Financial accounting
 emphasizes the preparation of reports of an organization
for external users
 is highly regulated
 historic in nature
 Management accounting
 emphasizes the preparation of reports of an
organization for its internal users
 is adopted based on costs/benefits
 is future oriented
 Management
Accounting’s Focus
 Cost-Benefit  Behavioral
 achieving goals in  effect on decisions of
relation to their costs the managers using the
 economics of accounting system
information - its value  impact on motivation
must exceed its cost
 Information
 facilitate and influence
decisions
Evolution of Managerial
Accounting
 Growth of e-business
 Growth of the service sector
 Emergence of new industries
 Global environment
 Focus on the “Consumer”
 Cross functional teams
 Technology (manufacturing and information)
 Just-in-time inventory
 Total Quality Management (“TQM”)
The Management
Accountant
 Managerial accountants serve as crucial and central
business consultants no longer isolated in separate
accounting departments.
 Professional organizations such as the CMA administer
professional educational programs and designations.
 Professional ethics require high standards of conduct
from management accountants in the areas of
competence, confidentiality, integrity and objectivity.
 Installing Management
Accounting
 Organisational manual
 defines authorities & responsibilities of executives
 prevents overlapping of functions, power & responsibilities
 Line of communication
 Personal management
 Appropriate MIS
 Classification & codification of accounts
 Suitable system for the integration of costs & financial data
 Suitable system of budgetary control
 Setting up standards, introducing standard costing techniques
 Setting up cost, budget & profit centres & introduction of OR
techniques
Limitations of
Management
Accounting
 Limitations of basic records
 Persistent efforts
 Management accounting only a tool
 Wide scope
 Top - heavy structure
 Opposition to change
 Evolutionary stage