Garrison18e_PPTPrologue_ppt.pptx

Managerial Accounting: 5-1 An Overview PROLOGUE Managerial Accounting Eighteenth edition ©McGraw-Hill Education. All rights reserved. Authori...

Managerial Accounting: 5-1 An Overview PROLOGUE Managerial Accounting Eighteenth edition ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or fur distribution permitted without the prior written consent of McGraw-Hill Education.  P-2 Financial and Managerial Accounting: Seven Key Differences ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-3 Work of Management Planning Planning Controlling Controlling Decision Decision Making Making ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-4 Planning Establish Establish Goals. Goals. Specify Specify How How Goals Goals Will Will Be Be Achieved. Achieved. Develop Develop Budgets. Budgets. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-5 Controlling The The control control function function gathers gathers feedback feedback to to ensure ensure that that plans plans are are being being followed. followed. Feedback Feedback inin the the form form ofof performance performance reports reports that that compare compare actual actual results results with with the the budget budget are are an an essential essential part part of of the the control control function. function. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-6 Decision Making Decision making making involves involves making making aa selection among competing alternatives. What What should should we we be be selling? selling? Who Who should should we we be be serving? serving? How How should should we we execute? execute? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-7 Planning: Marketing Majors Planning Planning How much should we budget for TV, print, and internet advertising? How many salespeople should we plan to hire to serve a new territory? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-8 Controlling: Marketing Majors Controlling Controlling Is the budgeted price cut increasing unit sales as expected? Are we accumulating too much inventory during the holiday shopping season? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Decision Making: Marketing P-9 Majors Decision Decision Making Making Should we sell our services as one bundle or sell them separately? Should we sell directly to customers or use a distributor? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-10 Planning: Supply Chain Management Majors Planning Planning How many units should we plan to produce next period? How much should we budget for next period’s utility expense? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-11 Controlling: Supply Chain Management Majors Controlling Controlling Did we spend more or less than expected for the units we actually produced? Are we achieving our goal of reducing the number of defective units produced? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-12 Decision Making: Supply Chain Management Majors Decision Decision Making Making Should we transfer production of a component part to an overseas supplier? Should we redesign our manufacturing process to lower inventory levels? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-13 Planning: Human Resource Management Majors Planning Planning How much should we plan to spend for occupational safety training? How much should we plan to spend on employee recruitment advertising? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-14 Controlling: Human Resource Management Majors Controlling Controlling Is our employee retention rate exceeding our goals? Are we meeting our goal of completing timely performance appraisals? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-15 Decision Making: Human Resource Management Majors Decision Decision Making Making Should we hire an on-site medical staff to lower our healthcare costs? Should we hire temporary workers or full-time employees? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-16 Accounting Majors A large portion of accounting majors will engage in nonpublic accounting employment at some point throughout their careers. Employers expect accounting majors to have strong financial accounting skills, but they also expect application of the planning, controlling, and decision making skills that are the foundation of managerial accounting. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-17 Certified Management Accountant (CMA) To To become become aa CMA CMA requires membership membership inin the the Institute Institute of of Management Management Accountants, Accountants, aa bachelor’s bachelor’s degree degree from from an an accredited accredited college, college, two two continuous continuous years years of of relevant relevant professional professional experience, experience, and and passage passage of of the the CMA CMA exam. exam. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  CMA Exam Content P-18 Specifications Part 1 Financial Reporting, Planning, Performance, and Control External financial reporting decisions Planning, budgeting, and forecasting Performance management Cost management Internal controls Technology and analytics Part 2 Financial Decision Making Financial statement analysis Corporate finance Decision analysis Risk management Investment decisions Professional ethics Information Information about about becoming becoming aa CMA CMA and and the the CMA CMA program program can can be be accessed accessed on on the the IMA’s IMA’s website website (www.imanet.org) (www.imanet.org) or or by by calling calling 1-800-638-4427. 1-800-638-4427. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-19 Chartered Global Management Accountant (CGMA) The CGMA designation is co-sponsored by the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA). One pathway to the CGMA requires a bachelor’s degree in accounting (accompanied by a total of 150 college credit-hours), passage of the Certified Public Accountant (CPA) exam, membership in the AICPA, three years of relevant management accounting work experience, and passage of the CGMA exam— which is a case-based exam that focuses on technical skills, business skills, leadership skills, people skills, and ethics, integrity, and professionalism. Information Information about about becoming becoming aa CGMA CGMA is is available available at at www.cgma.org. www.cgma.org. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-20 Managerial Accounting: Planning, Controlling, and Decision Making The primary purpose Planning Planning of this course is to teach measurement skills that managers Controlling Controlling use to support planning, controlling, and decision making Decision Decision activities. Making Making ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-21 Managerial Accounting: Measurement Skills Measurement How should I create a financial skills help plan for next year? managers answer important How well am I performing questions. relative to my plan? ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-22 Managerial Accounting: Understanding the Broader Context This book teaches measurement skills that managers use on the job every day. Managers need to apply these measurement skills in a broader business context to enable intelligent planning, control, and decision making. This context includes topics such as: 1. Big Data 2. Ethics 3. Strategic Management 4. Enterprise Risk Management 5. Environmental, Social, and Governance (ESG) Responsibility 6. Process Management 7. Leadership ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-23 Big Data Big Data refers to large collections of data that are gathered from inside or outside a company to provide opportunities for ongoing reporting and analysis. The The 55 ‘Vs’: ‘Vs’: Variety Variety refers refers to to the the data data formats formats inin which which information information is is stored. stored. Volume Volume refers refers to to the the continuously continuously expanding expanding quantity quantity of of data data that that companies companies must must gather, gather, cleanse, cleanse, organize. organize. Velocity Velocity speaks speaks to to the the rate rate at at which which data data is is received received and and acted acted on on by by organizations. organizations. Value Value implies implies that that the the time time and and money money organizations organizations expend expend to to analyze analyze Big Big Data. Data. Veracity Veracity refers refers to to the the fact fact that that users users expect expect their their data data to to be be accurate accurate and and trustworthy. trustworthy. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-24 Data Analytics Data analytics refers to the process of analyzing data with the aid of specialized systems and software to draw conclusions about the information they contain. Managers Managers often often communicate communicate thethe findings findings from from their their data data analysis analysis to to others others through through the the use use of of data data visualization visualization techniques, techniques, such such as as graphs, graphs, charts, charts, maps, maps, and and diagrams. diagrams. Data Data analytics analytics can can be be used used for for descriptive, descriptive, diagnostic, diagnostic, predictive, predictive, and and prescriptive prescriptive purposes. purposes. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-25 Ethics The Institute of Management Accountant’s (IMA) Statement of Ethical Professional Practice provides guidelines for ethical behavior. Recognize Recognize and and communicate communicate professional professional limitations limitations that that preclude preclude responsible responsible judgment. judgment. Maintain Maintain Follow Follow applicable applicable professional professional Competence laws, laws, regulations, regulations, competence. competence. and and standards. standards. Provide Provide accurate, accurate, clear, clear, concise, concise, and and timely timely decision decision support support information. information. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  IMA Guidelines: P-26 Confidentiality Do Do not not disclose disclose confidential confidential information information unless unless legally legally obligated obligated to to do do so. so. Do Do not not use use confidential confidential information information forfor Confidentiality Confidentiality unethical unethical or or illegal illegal advantage. advantage. Ensure Ensure that that all all relevant relevant parties parties do do not not disclose disclose confidential confidential information. information. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-27 IMA Guidelines: Integrity Mitigate Mitigate conflicts conflicts of of interest interest and and advise advise others others of of potential potential conflicts. conflicts. Refrain Refrain from from conduct conduct that that would would prejudice prejudice Integrity carrying carrying out out duties duties ethically, ethically, and and work work toto contribute Abstain Abstain from from activities activities that that contribute toto aa positive might might discredit discredit the the positive ethical ethical culture. profession. profession. culture. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-28 IMA Guidelines: Credibility Communicate Communicate information information fairly fairly and and objectively. objectively. Disclose Disclose delays delays or or deficiencies deficiencies inin Credibility information information timeliness, timeliness, Credibility processing, processing, oror internal internal controls. controls. Disclose Disclose all all relevant relevant information information that that could could influence influence aa user’s user’s understanding understanding of of reports reports and and recommendations, recommendations, and and communicate communicate any any professional professional limitations limitations that that would would preclude preclude successful successful performance performance ofof an an activity. activity. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-29 IMA Guidelines for Resolution of an Ethical Conflict – Part 1 Follow Follow employer’s employer’s established established policies. policies. If If this this does does not not work, work, consider consider the the following: following: ◦◦Discuss Discuss the the conflict conflict with with immediate immediate supervisor supervisor or or next next highest highest uninvolved uninvolved managerial managerial level. level. ◦◦If If immediate immediate supervisor supervisor isis the the CEO, CEO, consider consider the the board board ofof directors directors oror the the audit audit committee. committee. ◦◦Contact Contact with with levels levels above above thethe immediate immediate supervisor supervisor should should only only be be initiated initiated with with the the supervisor’s supervisor’s knowledge, knowledge, assuming assuming the the supervisor supervisor is is not not involved. involved. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-30 IMA Guidelines for Resolution of an Ethical Conflict – Part 2 If If following following employer’s employer’s established established policies policies forfor conflict conflict resolution resolution do do not not work, work, consider consider these these additional additional practices: practices: ◦◦Except Except where where legally legally prescribed, prescribed, maintain maintain confidentiality. confidentiality. ◦◦Clarify Clarify issues issues in in aa confidential confidential discussion discussion with with an an objective objective advisor. advisor. ◦◦Consult Consult anan attorney attorney as as to to legal legal obligations. obligations. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-31 Why Have Ethical Standards? Ethical Ethical standards standards in in business business are are essential essential for for aa smooth smooth functioning functioning economy. economy. Without ethical standards in business, the economy, and all of us who depend on it for jobs, goods, and services, would suffer. Abandoning ethical standards in business would lead to a lower quality of life with less desirable goods and services at higher prices. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-32 Strategy A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors. The The focal point of of aa company’s strategy should be be its its target target customers. customers. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-33 Customer Value Propositions Customer Understand and respond to Intimacy individual customer needs. Strategy Operational Deliver products and services Excellence faster, more conveniently, Strategy and at lower prices. Product Leadership Offer higher quality products. Strategy ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-34 Enterprise Risk Management A process used by a company to proactively identify and manage risk. This includes considering whether to avoid the risk, accept the risk, or reduce the risk? Once Once aa company company identifies identifies its its risks, risks, perhaps perhaps the the most common risk management tactic is to reduce risks risks by by implementing implementing specific specific controls. controls. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-35 Identifying and Controlling Business Risks ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-36 Types of Internal Controls for Financial Reporting Type of Classificati Description Control on Authorization Preventive Requiring management to formally approve s certain types of transactions. Reconciliatio Detective Relating data sets to one another to identify ns and resolve discrepancies. Segregation Preventive Separating responsibilities related to of authorizing transactions, recording duties transactions, and maintaining custody of the related assets. Physical Preventive Using cameras, locks, and physical barriers to safeguards protect assets. Performance Detective Comparing actual performance to various reviews benchmarks to identify unexpected results. Maintaining Detective Maintaining written and/or electronic evidence records to support transactions. Information Preventive Using controls such as passwords and access systems / logs to ensure appropriate data restrictions. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction security Detective or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-37 Environmental, Social, and Governance Responsibility Perspective Environmental, social, and governance responsibility (ESG) is a concept whereby organizations consider the needs of all stakeholders when making decisions. Environmental Customers Employees Suppliers Communities Investors & Human Rights Advocates ESG extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-38 Examples of Environmental, Social, and Governance Responsibility Many of the examples in Exhibit P–9 were drawn from PwC’s website. You can view more examples by visiting https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esg-reporting.html. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  A Process Management P-39 Perspective A business process is a series of steps that are followed in order to carry out some task in a business. Product Manufactur Market Distributi Customer R&D Design ing ing on Service Business functions making up the value chain ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-40 Lean Production Customer Create Generate places an Production component order Order requirements Goods Production delivered begins as Components when parts arrive are ordered needed Lean Production is often called Just-In-Time (JIT) production. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-41 Lean Production: Traditional Manufacturing Traditional Manufacturing Produce Make Sales goods in Store from Finished anticipation of Inventory Goods Sales Inventory ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-42 Lean Production: Benefits Because lean thinking only allows production in response to customer orders, the number of units produced tends to equal the number of units sold. The lean approach also results in fewer defects, less wasted effort, and quicker customer response times than traditional production methods. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-43 Leadership Organizational leaders unite the behavior of employees around two common themes—pursuing strategic goals and making optimal decisions. Factors that influence behavior: Intrinsic Motivation Extrinsic Incentives Cognitive Bias ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  P-44 End of Prologue ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.