Chapter 1 - The Manager and Management Accounting Flashcards
Financial Accounting
1) Focus on external reporting
2) Measures and records business transactions
3) Provides financial statements that are based on GAAP
4) Executive compensation and other contracts are often affected by these financial statements
5) Managers are responsible for the financial statements - you can go to Jail!
Managerial Accounting
1) Focuses on internal reporting
2) Measures and reports financial and nonfinancial information that helps managers make decisions
3) Used to determine, communicate and implement strategy
4) Used to make production and other decisions
5) Future Oriented (just rule of logic!)
Cost Accounting
1) Provides information for managerial and financial accounting
2) Measures and reports information relating to the cost of acquiring or utilizing resources
3) Includes those parts of both managerial and financial accounting in which cost information is collected and analyzed
Management Accountant’s Role in Implementing Strategy - Planning
1) Selecting organization goals, identifying the problem and uncertainties
2) Obtaining information
3) Predicting results under various alternatives
4) Making decisions by choosing among alternatives (communicating to the entire organization)
Management Accountant’s Role in Implementing Strategy - Control
1) Implementing the planning decisions
2) Identifying and collecting important data for the performance evaluation (How actual compares to planned)
3) Deciding what feedback to provide that will help in future decision making
Positives of Linking Rewards to Performance Measures
- Motivates people
- Aligns incentives (between investors, managers, and employees)
> Intrinsic rewards - self-satisfaction
> Extrinsic rewards - salaries, bonuses, promotions
Negatives of Linking Rewards to Performance Measures
- Strategic choice of performance measures
- Focus on performance measures at the expense of other things
Standard of Ethical Conduct - Competence
- Maintain an appropriate level of knowledge and skills
- Perform professional duties in accordance with laws, regulations, and technical standards
- Provide info and recommendations that are accurate, clear, concise, and timely
- Recognize and communicate professional limitations or other constraints that would preclude responsible judgement or successful performance of an activity
Standard of Ethical Conduct - Confidentiality
- Keep info confidential except when disclosure is authorized or legally requested
- Inform all relevant parties regarding appropriate use of confidential info
- Refrain from using confidential info for unethical or illegal advantage
Standard of Ethical Conduct - Integrity
- Mitigate actual contracts of interest; Regularly communicate with business associates to avoid apparent conflicts of interest
- Refrain from engaging in any conduct that would prejudice carrying out duties ethically
- Abstain from engaging in or supporting any activity that might discredit the profession
Standard of Ethical Conduct - Credibility
- Communicate info fairly and objectively
- Disclose fully all relevant info that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendation
- Disclose delays or deficiencies in info, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law
Standards of Ethical Conduct - Resolution
- Follow established procedures of the org if possible
- Discuss with immediate supervisor or the next level up if immediate supervisor is involved
- If satisfactory resolution cannot be achieved, go to the next level
> Contact above the immediate supervisor should be initiated only with the supervisor’s knowledge - Communication to outside persons is not appropriate (unless legally prescribed)
Standards of Ethical Conduct - Resolution (Con.)
- Clarify relevant ethical issues by confidential discussion with an objective advisor
- Consult an attorney as to legal obligations and rights
- If all else fails, resign and report
