01 Basic Considerations in MAS Flashcards
Refer to the function of professional advisory (consulting services), the primary purpose of which is to improve the client’s use of its capabilities and resources to achieve the objectives of the organization.
What do capabilities and resources refer to?
labor force and assets
Encompasses long-range objectives and policies or organization and is concerned with corporate results rather than sectional objectives
Top level planning or overall/strategic planning
Differentiate consultant and controller.
Consultant - independent
Controller - employee
Focuses on how to attain and satisfy customers, offer goods and services that meet their needsm and increase operating profits
Business-level strategy
Concerned about market position
Business-level strategy
Differentiate market leader vs challenger vs follower vs nicher
Market leader - head of the industry
Challenger - competes directly with market leader
Follower - happy with current market, not compete directly with market leader and challenger
Nicher - cater to special field
Is when a business makes a decision that affects the whole company
Corporate-level strategy
Focus on different departments and divisions
Corporate-level strategy
Set of decisions an organization makes regarding the production and delivery of its goods
Operational strategies
Refers to methods companies use to reach their objectives
Operational strategies
[What function?]
Preparation of budget
Planning
Basic Functions of Management
Planning - foresee what will happen in the future
Organizing - gather needed resources and capabilities
Staffing - hiring
Directing - telling employees what to do
Controlling - ensuring company achieves goals
[What function?]
Performance evaluation
Controlling
Directing functions
- Supervision - observing
- Leadership - show employees how it is done
- Motivation - may be negative and positive, giving incentives
- Communications -
Differentiate financial accounting and management accounting:
Users
Time frame
Quality of data
Focus
Financial reporting
Standards
Required?
Users: external - internal
Time frame: summarizes past transactions - strong emphasis on future
Quality of data: objective and verifiable - relevant
Focus: precision - timeliness
Financial reporting: company as whole - segments of a company
Standards: conform with reporting standard - does not conform
Required?: mandatory - optional
Assists external users with business decisions centering on a variety of issues
Financial Accounting
Identifies, collects, measures, classifies and reports information that is used by managers for costing purposes, planning, controlling and decision-making
Cost Accounting
Concerned specifically with how cost information and other financial and non-financial information should be used for planning, controlling and decision-making
Management Accounting
Attempts to satisfy costing objectives for both financial and management accounting
Cost Accounting
[Controllership or treasurership?]
Planning for control
Controllership
[Controllership or treasurership?]
Reporting & interpreting
Controllership
[Controllership or treasurership?]
Tax administration
Controllership
[Controllership or treasurership?]
Government reporting
Controllership
[Controllership or treasurership?]
Evaluating & consulting
Controllership
[Controllership or treasurership?]
Economic appraisal
Controllership
[Controllership or treasurership?]
Protection of assets
Controllership
[Controllership or treasurership?]
Provision of capital
Treasurership
[Controllership or treasurership?]
Investor relations
Treasurership
[Controllership or treasurership?]
Short-term financing
Treasurership
[Controllership or treasurership?]
Banking & custody
Treasurership
[Controllership or treasurership?]
Credits & collections
Treasurership
[Controllership or treasurership?]
Investments
Treasurership
[Controllership or treasurership?]
Insurance
Treasurership
[Line or Staff]
Vested with the authority to decide
Line
[Line or Staff]
Directly responsible in attaining corporate objectives
Line
[Line or Staff]
Downward authority
Line
[Line or Staff]
Manufacturing, operations, production, sales
Line
[Line or Staff]
Front-line
Line
[Line or Staff]
Upward support
Staff
[Line or Staff]
Provides support services
Staff
[Line or Staff]
Provides consultancy functions
Staff
[Line or Staff]
CFO
Line
[Line or Staff]
Back-end support
Staff
[Line or Staff]
Finance and Accounting functions
Staff
[Line or Staff]
Controller
Staff
3 main roles and activities of Management Accountants
- Strategic decisions
- Identifying and building resources and capabilities
- Implementing strategies
[Line or Staff]
HR
Staff
[Line or Staff]
Treasurer
Line
[Line or Staff]
CEO
Line
Five stages of strategic decisions
- Clarify your vision
- Gather and analyze information
- Formulate a strategy
- Implement your strategy
- Evaluate and control
[Mission/Vision/Goals/Values]
Defines the company’s business, its objectives and its approach to reach those objectives.
Mission
[Mission/Vision/Goals/Values]
Describes the desired future position of the company
Vision
[Mission/Vision/Goals/Values]
Tangible ways you’ll carry out your mission and progress towards your vision
Goals
[Mission/Vision/Goals/Values]
What you stand for and beliefs through which you create and carry out your goals
Values
Goals should be SMART.
What is SMART?
Specific
Measurable
Attainable
Realistic
Time-bound
Michael Porter’s Three Generic Strategies
- Cost leadership
- Differentiation
- Focus
Porter’s Five Forces
- Threat of new entrants
- Bargaining power of buyers
- Bargaining power of suppliers
- Threat of substitutes
- Intensity of competitive rivalry
Blue ocean vs Red ocean in marketing
Blue ocean - few competitors
Red ocean - saturated market
Four Market Structures
- Pure competition - anyone can enter the market
- Monopoly - sole seller
- Oligopoly - few sellers
- Monopolistic competition - offer unique product but many sellers
Describe market share and market growth of each quadrant in the BCG-Growth Share Matrix
Stars - high growth potential and high market share
Question mark - high growth potential but low market share
Cash cow - low growth potential but high market share
Dog - low growth potential and low market share
What is the management accountant’s role in implementing strategy?
- Implementing startegy
- Supporting managers by providing information to improve strategic, planning and control decisions
- Enhancing the value of management accounting systems by guiding managers to focus on challenges
The full lifecycle of a product or process, including material sourcing, production, consumption and disposal/recycling processes.
Value Chain
The full lifecycle of a product or process, including material sourcing, production, consumption and disposal/recycling processes.
Supply Chain
Bodies that offer CMA certification
- Institute of Management Accounts
- Chartered Professional Accountants of Canada
- The Institute of Certified Management Accountants
- Chartered Institute of Management Accountants
- Certified Global Management Accountant - granted not applied for
Code of Ethics that govern CPAs in the Philippines
IESBA - International Ethics Standards Board of Accountants
Code of Ethics that govern CMAs
IMA Code of Ethics
4 overarching principles of IMA Code of Ethics
Honesty
Fairness
Objectivity
Responsibility
IMA Personal Standards
Competence
Confidentiality
Integrity
Credibility
[IMA Personal Standards]
Maintaining an appropriate level of professional leadership and expertise by enhancing knowledge and skills
Competence
[IMA Personal Standards]
Performing professional duties in accordance with relevant laws, regulations and technical standards
Competence
[IMA Personal Standards]
Provide decision support information and recommendations that are accurate, clear, concidse and timely
Competence
[IMA Personal Standards]
Refrain from using information for illegal or unethical advantage.
Confidentiality
[IMA Personal Standards]
Abstain from engaging in or supporting any activity tha might discredit the profession.
Integrity
[IMA Personal Standards]
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest.
Integrity
[IMA Personal Standards]
Inform relevant parties regarding appropriate use of confidential information.
Confidentiality
Keep information confidential except when disclosure is _____________.
authorized or legally required
[IMA Personal Standards]
Communicate information fairly and objectively.
Credibility
[IMA Personal Standards]
Provide all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses or recommendations.
Credibility
[Global Trends]
Focus management reports on what is expected to happen rather than on what happened in the past.
Predictive accounting
[IMA Personal Standards]
Communicate professional limitations or other constraints that would preclude responsible judgment.
Credibility
[IMA Personal Standards]
Report any delays or deficiencies in information, timeliness, processing or internal controls.
Credibility
[Global Trends]
From this general information, computers will look for trends.
Big data/business analytics
Benefits of big data analytics
- descriptive
- diagnostic
- predictive
- prescriptive
Benefits of business analytics
- more informed decision-making
- greater revenue
- improved operational efficiency
5 Roles of Management in times of change
- communicator
- advocate
- coach for employees
- liaison to project team
- resistance manager
[Global Trends]
Gathering information on customers and subsequently developing a product.
Customer-driven environment
[Global Trends]
Process and methodology designed to enhance the company’s performance and enable management to better respond to presented challenges as well as opportunities on a product.
Enterprise Performance Management
[Global Trends]
Consolidation of business operations that are used by multiple parts of the same organization and a common operational strategy designed to reduce costs by eliminating repetition of efforts.
Shared Services
