1 Planning involves setting goals and objectives for a company and determining how to achieve them Managerial accountants translate these plans into budgets budgets The quantitive expression of a planEx Generate more sales via opening new stores Reduce labor costs by reducing store hours 2 Directing overseeing a companies day to day operations Managment uses product cost reporsts product sales information and other managerial accounting reports to run daily business operations Ex Using daily weekly sales reports to adjust marketing strategies Using product cost reports to adjust raw material usage Adjusting work force levels 3 Controlling evaluating the results of business operations against the plan and making adjustments to keep the company pressing towards its goals Ex Comparing the budgeted sales with the actual sales to take corrective actions Comparing budgeted product costs against actual product costs to take corrective actions Managerial accounting provides information to internal users this will help managers direct plan control and make decisions that impact the company Financial accounting addresses external users and is geared toward making investment and lending decisions To address decision making needs managerial accounting provides internal reports useful to management while financial accounting provides general purpose financial statements as determined by GAAP Financial report data initially based on historical transactions must be reliable and objective Stockholders elect a board of directors to oversee the company The board meets only periodically so it hires a chief executive officer CEO to manage the company on a daily basis The CEO hires other executives to run various aspects of the organization including the chief operating officer COO and the chief financial officer CFO The COO is responsible for the company s operations such as research and development R D production and distribution The CFO is responsible for all of the company s financial concerns The treasurer and the controller report directly to the CFO The treasurer is primarily responsible for raising capital through issuing stocks and bonds and investing funds The controller is usually responsible for general financial accounting managerial accounting and tax reporting The New York Stock Exchange requires that listed companies have an internal audit function The role of the internal audit function is to ensure that the company s internal controls and risk management policies are functioning properly The internal audit department reports directly to a subcommittee of the board of directors called the audit committee The audit committee oversees the internal audit function as well as the annual audit of the financial statements by independent CPAs Cross functional teams employees representing various functions work on R D design production marketing distribution and customer service simultaneously Required managerial accounting knowledge Both financial and managerial accounting Knowledge of how a business functions the ability to work on a team analytical skills strong Microsoft excel skills and oral and written communication skills The Institute of Management Accountants IMA is the professional association for management accountants in the United States The goal of the IMA is to advance the management accounting profession primarily through certification research practice development education and knowledge sharing Issues CMA s Unethical behavior Not all unethical behavior is illegal but all illegal behavior is unethic unethicbeh includes dishonesty unfairness lack of objectivity irresponsibility Sarbanes Oxely Act of 2002 purpose is to restore trust in publically traded companies their management their financial statements and their auditors SOX enhances internal control and financial reporting requirements and establishes new regulatory requirements for publically traded companies and their independent auditors CEO and DFO assume responsibility for f statements and internal control Requires independent audit committee Increase white collar crime penalties International Financial Reporting Standards IFRS Results of globalization Consistent reporting standards needed SEC is studying IFRS the transition to IFRS may be time consuming and expensive in the long run it should actually save companies money and make the markets more efficient Extensible Business Reporting Language enables companies to release financial and business information in a format that can be quickly efficiently and cost effectively accessed sorted and analyzed over the Internet XBRL uses a standardized coding system to tag each piece of reported financial and business data so that it can be read by computer programs rather than human eyes Decreases retrieval and conversion time facilitates comparisons customizes information Sustainability the ability to meet the needs of the present without compromising the future generations to meet their own needs Triple bottom line profit people planet Shifting Economy Shift away from manufacturing towards service Managerial accounting has expand to meet the needs of service and merchandising firms Global Marketplace barriers to international trade have fallen Managers need more accurate and timely information Advanced Information Systems Enterprise resource planning ERP systems that can integrate all of a companies worldwide functions departments and data are a tool for time based competition Advantages Streamline operations Respond quickly to changes replace separate software systems Disadvantage Expensive Just In Time Inventory JIT manufacturing product just in time to fill orders companies are able to substantially reduce raw material and finished goods inventory storage and handling costs Total Quality Management goal is to provide customers with superior products and services Continuously sets higher goals for quality International Organization for Stadardization ISO ISO 9001 2008 Developed international quality development standards and guidelines Made up of 163 countries and offers certification Lean Operations a philosophy and business strategy of manufacturing without waste Lowers cost and increases competitive position Service Companies in business to sell intangible services Provide a service only no inventory Ex Advertising agency Banks Law firms Insurance companies Merchandisers C Resell products purchased from suppliers One inventory account Retailers sell to consumers