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Managerial Accounting

…using your skills and knowledge to create value for organizational stakeholders……they understand financial and operational sides of a business….they not only report and analyze financial measures, but also nonfinancial measures of process performance…

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Financial and Managerial Accounting: Seven Key Differences

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Work of Management

PlanningPlanning

Decision Making

Decision Making

ControllingControlling

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Planning

Establish Goals.Establish Goals.

Specify How Goals Will Be Achieved.

Specify How Goals Will Be Achieved.

Develop Budgets.Develop Budgets.

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ControllingThe control function gathers feedback to

ensure that plans are being followed. The control function gathers feedback to

ensure that 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.

Used to learn from excellence; eliminate more failure; reward employees….

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Decision Making

Decision making involves making a selection among

competing alternatives.

Decision making involves making a selection among

competing alternatives.

What should we be selling?

What should we be selling?

Who should we be serving?

Who should we be serving?

How should we execute?

How should we execute?

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Accounting Majors

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.

The IMA estimates that more than 80% of professional accountants in the U.S. work in non-public accounting environments.

80%

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Certified Management Accountant

A management accountantwho has the necessary qualifications

and who passes a rigorous professional exam earns the right to be known as a

Certified Management Accountant (CMA).

A management accountantwho has the necessary qualifications

and who passes a rigorous professional exam earns the right to be known as a

Certified Management Accountant (CMA).

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Managerial Accounting: Beyond the Numbers

ControllingControlling

PlanningPlanning

DecisionMaking

DecisionMaking

The primary purpose of this course is to teach measurement skills that managers

use to support planning, controlling, and decision making

activities.

The primary purpose of this course is to teach measurement skills that managers

use to support planning, controlling, and decision making

activities.

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An Enterprise Risk Management Perspective

A process usedA process usedby a company toby a company to

proactively identifyproactively identifyand manage risk.and manage risk.

Once a company identifies its risks, perhaps themost common risk management tactic is to reduce

risks by implementing specific controls.

Once a company identifies its risks, perhaps themost common risk management tactic is to reduce

risks by implementing specific controls.

Should I try to avoid the risk, accept the risk, or

reduce the risk?

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An Enterprise Risk Management Perspective

Examples of Controls toExamples of Business Risks Reduce Business Risks

● Intellectual assets stolen from ● Create firewalls that prohibit com- computer files puter hackers from corrupting or

stealing intellectual property● Products harming customers ● Develop a formal and rigorous

new product testing program● Losing market share due to the ● Develop an approach for legally unforeseen actions of competitors gathering information about

competitors' plans and practices● Poor weather conditions shutting ● Develop contingency plans for down operations overcoming weather-related

disruptions● Website malfunction ● Thoroughly test the website

before going "live" on the Internet● Financial statements unfairly ● Count the physical inventory on reporting the value of inventory hand to make sure that it agrees

with the accounting records● An employee accessing ● Create password-protected barriers unauthorized information that prohibit employees from

obtaining information not needed to do their jobs

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A Process Management Perspective

Business functions making up the value chainBusiness functions making up the value chain

Product Customer R&D Design Manufacturing Marketing Distribution Service

A businessprocess is a series of

steps that are followed in order tocarry out some task in

a business.

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Lean Production

Customer places an order

Create Production Order

Generate component requirements

Production begins as parts arrive

Goods delivered when needed

Components are ordered

Lean Production is often called Just-In-Time (JIT) production.Lean Production is often called Just-In-Time (JIT) production.

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Lean Production

Produce goods in anticipation of Sales

Make Sales from Finished Goods

Inventory

Traditional ManufacturingTraditional Manufacturing

StoreInventory

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Lean Production

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.