CHAPTER 1 The Changing Role of Managerial Accounting

CHAPTER 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment Copyright © 2015 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Define Managerial Accounting Managerial accounting is the process of ü Identifying ü Measuring ü Analyzing ü Interpreting ü Communicating information 1 -2

Managing Resources, Activities, and People An organization. . . Directing Acquires Resources Decision Making Organized set of activities Controlling Planning Hires People 1 -3

How Managerial Accounting Adds Value to the Organization Providing information for decision making and planning. Assisting managers in directing and controlling activities. Motivating managers and other employees towards organization’s goals. Measuring performance of subunits, activities, managers, and other employees. Assessing the organization’s competitive position. 1 -4

The Balanced Scorecard How do we look to owners? Financial Perspective Goals Measures Customer Perspective Goals Measures In which activities must we excel? Operations Perspective Goals Measures How do customers see us? Innovation Perspective Goals Measures How can we continue to improve? 1 -5

Managerial versus Financial Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making, planning, and controlling an organization’s operations. Internal Users Financial Accounting Published financial statements and other financial reports. External Users 1 -6

Managerial versus Financial Accounting 1 -7

Strategic Cost Management and the Value Chain Product Design Production Research and Development Securing raw materials and other resources Start Marketing Distribution Customer Service 1 -8

Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Management Accounting and research studies. Administers Certified Management Accountant program Develops Standards of Ethical Conduct for Management Accountants 1 -9

Ethical Climate of Business The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting. 1 -10

Professional Ethics 4 Competence 4 Confidentiality 4 Integrity 4 Credibility 1 -11

End of Chapter 1 1 -12