Organisational Architecture

Question 1

What is Organisational Architecture and what are the 3 key areas ?

Answer 1

OA relates to the structure of an organisation and the systems that underpin that structure

-decision rights (organisation)
-performance evaluation (how performance of managers is assesesd)
-performance rewards (how managers are rewarded)

Question 2

What is the Ultimate goal of the management accounting system?

Answer 2

To facilitate business strategy and increase firm value, by providing information and incentives to achieve corporate objectives.

Question 3

What are the key features of the MAS?

Answer 3

The MAS needs to produce timely and useful information and the key areas of OA.
Information creates incentives for managers to act in their own best interest hence it is important align incentives between owners (prinipals) and managers (agents), otherwise agency costs may destroy firm value.

Question 4

Provide examples of pressures on the MAS?

Answer 4

Pressures relate to technical innovations (e.g. automation, systems – such as cloud computing, big data, integrated systems), and market conditions – e.g. relating to the environment, competitors, ESG risks and opportunities). Internal pressures relate to the incentives created. Overall this means that the MAS may need to flex with changing conditions. There is no one MAS that is right for all firms in all situations

Question 5

Evaluate why firms may introduce an enterprise resource planning system?

Answer 5

ERP is an integrated system – integrating internal and external management
information across the whole firm (i.e. the different functions/units). Less time spent on data collection allows more time to business planning.

Question 6

What is firm Value?

Answer 6

Firms seek to maximise value and exert market power, the ability to manipulate supply/demand to earn abnormal profits.

Question 7

What are some features of the management accounting system (MAS)

Answer 7

• PRODUCES INFORMATION FOR PLANNING AND DECISION MAKING, CONTROL AND REMUNERATION
• INFO NEEDS TO BE TIMELY AND USEFUL
• INCENTIVES CREATED NEED TO ALIGNED TO MANAGERS AND OWNERS TO AVOID AGENCY COSTS

Question 8

How do Information Systems underpin the MAS?

Answer 8

• provide information needed to run the organisation
• good system can provide competitive advantage through QUICKER, more DETAILED and TIMELY information.