ACCTG 231 Exam # 1 Study Guide Lectures: 1 - 6Lecture 1 (August 26)Work of Management- Planningo Establish GoalsSpecify how goals will be achievedDevelop budgets- Controllingo The control function gathers feedback to ensure that plans are being followedo Feedback in the form of performance reports that compare actual results with the budget are an essential part of the control function- Decision Makingo Decision making involves making a selection among competing alternativesCertified Management Accountant- A Management accountant who has the necessary qualifications and who passes a rigorous professional exam earns the right to be known as a Certified Management Accountant (CMA)Strategic Management- A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors- The focal point of a company’s strategy should be its target customersCustomer Value Propositions- Customer intimacy strategyo Understand and respond to individual customer needs- Operational excellence strategyo Deliver products and services faster, more conveniently, and at lower prices- Product Leadership strategyo Offer higher quality productsEnterprise Risk Management- A process used by a company to proactively identify and manage risk- Once a company identifies its risks, perhaps the most common risk management tactic is to reduce risks by implementing specific controls- Process Managemento A business process is a series of steps that are followed in order to carry out some task in businesso Business functions making up the value chain R&D, Product Design, Manufacturing, Marketing, Distribution, CustomerService- Lean Productiono Customer places an orderCreate production ordergenerate component requirementsComponents orderedProduction begins as parts arrivegoodsdelivered when neededo This approach also results in fewer defects, less wasted effort, and quicker customer response times than traditional production methodsLecture 2 (August 28) - 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. - 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 data- 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 Making- 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 processes- 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 conflict- 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 recommendations- 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 obligations- 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 prices- 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