ACCTG 231 Lecture 2Managerial Accounting: An Overview Outline of Current Lecture I. Theory of ConstraintsII. Measurement SkillsIII. Leadership SkillsIV. Code of Conduct for Management AccountantsV. IMA Guidelines for Ethical BehaviorVI. IMA Guidelines for Resolution of an Ethical ConflictVII. Why Have Ethical Standards?VIII. Corporate Social ResponsibilityCurrent LectureI. Theory of Constraints- A constraint (also called a bottleneck) is anything that prevents you from getting more of what you want.- The Theory of Constraints (TOC) is based on the observation that effectively managing the constraint is the key to success.o The constraint in a system is determined by the step that has the smallest capacity.o The goal is to manage the constraint with the intent of generating morebusiness rather than cutting the workforce.- Identify the weakest linkAllow the weakest link to set the tempo-(only actions that strengthen the weakest link in the “chain” improve the process)Focus on improvingRecognize that the weakest link is strongerstart the process all over again. II. Measurement Skills- A good manager complements an understanding of strategy, risks, and business processes with data-driven analysis- The key to effective analysis is to understand that the question you are addressing defines what you measure and how you analyze the data- What net income should my company report to its stockholders?o Measure and report historical data that complies with applicable rules- How will my company serve its customers?o Measure and analyze mostly nonfinancial, process-oriented dataThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Will my company need to borrow money?o Measure and analyze estimated future cash flows.- The primary purpose of this course is to teach measurement skills that managers use to support planning, controlling, and decision-making activitieso Planning, Controlling, Decision MakingIII. Leadership Skills- Six Skills of an Effective Leadero Technical competenceo High integrityo Understand how to implement organizational changeo Strong communication skillso Capable of motivating and mentoring other peopleo Effectively manage team-based decision processesIV. Code of Conduct for Management Accountants- The Institute of Management Accountant’s (IMA) Statement of Ethical Professional Practice consists of two parts that offer guidelines for:o Ethical behavioro Resolution for an ethical conflictV. IMA Guidelines for Ethical Behavior- Competence consists of:o Recognize and communicate professional limitations that preclude responsible judgmento Follow applicable laws, regulations, and standardso Provide accurate, clear, concise, and timely decision-support informationo Maintain professional competence- Confidentiality consists of:o Do not disclose confidential information unless legally obligated to do soo Do not use confidential information for unethical or illegal advantageo Ensure that subordinates do not disclose confidential information- Integrity consists of:o Mitigate conflicts of interest and advise others of potential conflictso Refrain from conduct that would prejudice carrying out duties ethicallyo Abstain from activities that might discredit the profession- Credibility consists of:o Communicate information fairly and objectivelyo Disclose delays or deficiencies in information timeliness, processing, or internal controlso Disclose all relevant information that could influence a user’s understanding of reports and recommendationsVI. IMA Guidelines for Resolution of an Ethical Conflict- Follow employer’s established policies- For an unresolved ethical conflict:o Discuss the conflict with immediate supervisor or next highest uninvolved managerial levelo If immediate supervisor is the CEO, consider the board of directors or the audit committeeo Contact with levels above the immediate supervisor should only be initiated with the supervisor’s knowledge, assuming the supervisor is not involvedo Except where legally prescribed, maintain confidentialityo Clarify issues in a confidential discussion with an objective advisoro Consult an attorney as to legal obligationsVII. Why Have Ethical Standards?- Ethical standards in business are essential for a smooth functioning economyWithout ethical standards in business, the economy, and all of us whodepend on it for jobs, goods, and services, would sufferAbandoning ethical standards in business would lead to a lower quality of life with less desirable goods and services at higher pricesVIII. Corporate Social Responsibility- Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisionso Customerso Employeeso Supplierso Communitieso Stockholderso Environmental and Human Rights Advocates- CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectationsExamples of Corporate Social ResponsibilityCompanies should provide customers with:- Safe, high quality products that are fairly priced- Competent, courteous, and rapid delivery of products and services- Full disclosure of product-related risks- Easy to use information systems forCompanies and their suppliers should provide employees with:- Safe and humane working conditions- Non-discriminatory treatment and the right to organize and file grievances- Fair compensation- Opportunities for training,shopping and tracking orders promotion, and personal developmentCompanies should provide suppliers with:- Fair contract terms and prompt payments- Reasonable time to prepare orders- Hassle-free acceptance of timely and complete deliveries- Cooperative rather than unilateral actionsCompanies should provide communities with:- Payment of fair taxes- Honest information about plans such as plant closings- Resources that support charities, schools, and civic activities- Reasonable access to media sourcesCompanies should provide stockholders with:- Competent management- Easy access to complete and accurate financial information- Full disclosure of enterprise risks- Hone st answers to knowledgeable questionsCompanies should provide environmental and human rights advocates with:- Greenhouse gas emissions data- Recycling and resource conservation data- Child labor transparency- Full