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The Accountant's Role in The Organization

Managerial accounting provides internal managers with financial and non-financial information to help them make decisions to achieve organizational goals. It focuses on the future and does not need to follow GAAP. Financial accounting focuses on communicating a company's financial position to external users like investors and follows GAAP. Managerial accountants are part of the planning and control functions that help companies set goals, evaluate performance, and provide feedback to improve. They use tools like budgets, cost analysis, and performance reports.

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Laraib Taj
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109 views13 pages

The Accountant's Role in The Organization

Managerial accounting provides internal managers with financial and non-financial information to help them make decisions to achieve organizational goals. It focuses on the future and does not need to follow GAAP. Financial accounting focuses on communicating a company's financial position to external users like investors and follows GAAP. Managerial accountants are part of the planning and control functions that help companies set goals, evaluate performance, and provide feedback to improve. They use tools like budgets, cost analysis, and performance reports.

Uploaded by

Laraib Taj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CHAPTER 1

The Accountant’s Role in the Organization

Readings:
Chapter 1: Cost Accounting : The Managerial Emphasis 14 th Edition By Horngren
Chapter 1: Managerial Accounting 12th Edition By Garrison et.al
Accounting Discipline Overview
Managerial Accounting – measures, analyzes and
reports financial and nonfinancial information to help
managers make decisions to fulfill organizational
goals. Managerial accounting need not be GAAP
compliant.

Financial Accounting – focus on reporting to external


users including investors, creditors, and governmental
agencies. Financial statements must be based on
GAAP.
Major Differences Between
Financial & Managerial Accounting
Managerial Accounting Financial Accounting

Purpose Decision making Communicate financial


position to outsiders

Primary Users Internal managers External users

Focus/Emphasis Future-oriented Past-oriented

Rules Do not have to follow GAAP; GAAP compliant;


cost vs. benefit CPA audited
Behavioral Designed to influence Indirect effects on
Issues employee behavior employee behavior
Management Accounting and Value
Value Chain is the sequence of business functions
in which customer usefulness is added to products
or services
The Value-Chain consists of:
1. Research & Development
2. Design
3. Production
4. Marketing
5. Distribution
6. Customer Service
The Value Chain Illustrated
Key Success Factors
The dimensions of performance that customers
expect, and that are key to the success of a company
include:
Cost and efficiency
Quality
Time
Innovation
Planning & Control Systems
Planning selects goals, predicts results, decides how to
attain goals, and communicates this to the
organization
Budget – the most important planning tool
Control takes actions that implement the planning
decision, decides how to evaluate performance, and
provides feedback to the organization
A Five-Step Decision Making Process in
Planning & Control

1. Identify the problem and uncertainties


2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing between alternatives
5. Implement the decision, evaluate performance, and
learn
Management Accounting Guidelines
Cost – Benefit approach is commonly used: benefits
generally must exceed costs as a basic decision rule
Behavioral & Technical Considerations – people are
involved in decisions, not just dollars and cents
Different definitions of cost may be used for different
applications
A Typical Organizational Structure and the
Management Accountant
Accountants
 Financial accountants provide information to external
parties
 Investors
 Creditors
 Regulators
 Donors
 Managerial accountants provide information to internal
users
 Managers
 Cost accountants provide information to both internal
and external users
 Product cost information
Accounting Differences
Financial Managerial
 External focus  Internal focus
 Whole organization  Segments or divisions
 Historical  Current/projected
 Quantitative  Quantitative/qualitative
 Monetary  Monetary and nonmonetary
 Verifiable  Timely/reasonable estimate
 GAAP  Benefits exceed costs
 Formal  Formal and informal
recordkeeping recordkeeping
Accounting Bodies
Financial Management
 Public Company  Institute of Management

Accounting Oversight Accountants (IMA)


Board (PCAOB)  Society of Management
 Securities and Accountants of Canada
Exchange Commission  Cost Accounting
(SEC) Standards Board (CASB)
 Financial Accounting

Standards Board
(FASB)

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