Section 1

Question 1

Sarbanes-Oxley Act following Enron (2002):

Answer 1

CEO and CFO to certify the financial statements (law enforcement)
Audit committee in charge of dealing with auditors
Restriction of non-auditing services provided by auditors

Question 2

Managerial Accountants prepare a variety of reports to:

Answer 2

Compare actual results to plans and to benchmark
Provide timely updates on key indicators (orders received, capacity utilisation, product costs, costumer satisfaction, sales)
Help investigate specific issues (decline in profitability, consequences of outsourcing some of business operations)

Question 3

Financial Accounting VS Managerial Accounting

Answer 3

FA: reports prepared to external stakeholders
MA: reports prepared for managers inside the organization

Question 4

About The Controller:

Answer 4

He/She reports to the chief financial officer.
The controller is responsible for the more technical details of accounting and finance, and analyses new and evolving situations (planning, budgeting, internal reporting, cost-benefit analyses)
An effective controller is able to work effectively with top and lower level managers from other functions and communicate in clear manner.

Question 5

Some questions a management accountant should be able to answer to:

Answer 5

How much does it cost to provide this service?
How can operating costs be reduced in order to increase profitability?
How many product units do need to be sold to reach the break-even point?

Question 6

Decentralization:

Answer 6

is the delegation of decision making rights throughout an organization by providing managers at various operating levels with the authority to make decisions relating to their areas of responsibility. Some organizations are more decentralized than others.

Question 7

Code of Ethics (Or Code of Conduct):

Answer 7

Maintain a level of competence appropriate to their designation.
Respect confidentiality.
Maintain integrity by avoiding conflicts of interest with employers or clients
Objectivity must be present in communications, so that recipients can receive both favourable and unfavourable information.

Question 8

Companies are paying increasing attention to CSR because:

Answer 8

Many costumers seek to purchase products and services from responsible companies.
Non government organisations and activists are more capable than ever of tarnishing a company’s reputation by publicising its environmental or human rights missteps.

Question 9

Companies are paying increasing attention to CSR because:

Answer 9

Socially responsible investors control trillions of investment capital dollars.
A growing number of employees want to work for a company that recognises and responds to its social responsibilities.

Question 10

Limitations of Financial Accounting

Answer 10

No information directly usable to help managers address managerial issues such as:
Pricing
Costing
Profitability of a specific activity, product/service line, geographical market

Question 11

Managers are asked to perform:

Answer 11

Planning
Decision making
Directing and motivating (involving guiding, assigning responsibility…)
Controlling (performance evaluation)

Question 12

Tasks performed by management accountants:

Answer 12

To prepare detailed reports to support managers make day-to-day, short term and long term decisions.
To prepare budgets and forecasts to help allocate resources towards the organisations goals.
To compare actual costs and revenues with budgeted figures and prepare reports to inform management about any significant variances.