ACCT 2020 1st Edition Lecture 1 Outline of Last Lecture I Syllabus discussion Outline of Current Lecture I Managerial Accounting an Overview II Work of Management III Managerial Accounting Activities IV Strategic management skills V Customer value propositions VI Enterprise Risk management VII Process Management Skills VIII Theory of constraints IX Six skills of effective leaders X The Importance of Ethics in business XI Corporate social responsibility Current Lecture I Managerial Accounting an Overview Looking toward the future in managerial accounting o Need to be able to show and measure to verity to an auditor Managerial accounting has an emphasis on timeliness Instead of on a financial basis you can base it on whatever works best for us Financial accounting required to public companies while financial accounting is not required Lots of flexibility II Work of Management Planning o Establish goals specify how goals will be achieved Develop budget Controlling o How are things going 1000 dollar revenue goal 2 weeks into the month revenue only 200 Either they are doing something wrong or they have made an improper goal o The controlling function gathers feedback to ensure plans are being followed These 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 III IV V VI VII o Feedback in the form of performance reports that compare actual results to projected goals Decision Making o What should we be selling Who should we be serving How should we execute Managerial Accounting Activities Marketing Majors o Planning how much should we budget for TV print advertising o Controlling its he budget of price cut increasing unit sales as expected are we accumulating too much inventory during the holiday shopping season o Decision making should we sell our service in a bundle or separately Accounting majors o Many accounting graduates begin working for public accounting firms However most leave at some point to work in other organizations o The IMA estimates that 80 of accountants are in an accountant role Strategic management skills A strategy is a game plan that enables a company to attract customer by distinguishing itself from competitors The focal point of a company s strategy should be its target customers Customer value propositions Customer intimacy strategy o Understand and respond to individual customer needs o Ex luxury hotels and department stores Operational Excellence Strategy o Deliver products and services faster more conveniently and at lower prices o Ex Wal Mart o As fast as low cost as possible Maybe not best customer service but inventory always available Product Leadership Strategy o Offers High quality products not just standard THE BEST o Apple Bose Trying to offer innovative products to their customers Enterprise Risk management Evaluate all risks for company then mitigate and reduce risk by implementing controls o Ex harmful products more rigorous testing o Poor weather conditions to shut down develop contingency plans o Losing market share due to new products legally obtaining financial documents that will help to mitigate risk Process Management Skills A business process is a series of steps that are followed in order to carry out some task in business They must understand their value chain VIII IX 1 2 3 4 5 6 X o R D product design manufacture marketing distribution customer service Lean production the components are not bought until ordered the product not made until it was ordered Often called JIT just in time production Contrasted to traditional manufacturing o Produce goods in anticipation store inventory make sales from finished goods inventory Lean thinking allows production in response to customer s ONLY Has very little or no inventory balance Theory of constraints A constraint also called a bottleneck is anything that prevents you from getting what you want o The theory of constraints is based on the observation that effectively managing the constraint is the key to success A constrain in a system is determined by the step that has the smallest capacity o An example would be the constraint on doctors would be surgery Because they can only perform 15 a day so that would be the constraint ONLY ACTIONS THAT STRENGTHEN THE WEAKEST LINK IN THE CHAIN CAN IMPORVE THE PROCESS 1 Identify the weakest link 2 Allow the weakest link to set the tempo 3 Focus on improving the weakest link 4 Recognize that the weakest link is stronger Six skills of effective leaders Technical competence High integrity Understand how to implement organizational change Strong communication skills Capable of motivating and mentoring other people Effectively manage team based decision processes The Importance of Ethics in business Guidelines for Ethical behavior o Recognize and communicate professional limitations that preclude reasonable judgment o Maintain professional competence o Provide accurate clear concise and timely decision support information o Follow laws and regulations Confidentiality o Do not disclose confidential information unless legally obligated to do so XI o Do not use confidential information for unethical or illegal advantage o Ensure that subordinates do not disclose confidential information Integrity o Do the right thing in the right way Credibility o Communicate information fairly and objectively o Disclose delays or deficiencies in information in timeliness processing or internal controls Why ethics o Ethical standards are essential for a smooth functioning economy o Without ethical standard in business the economy and all of us who depend on it would suffer Corporate social responsibility Becoming more and more important especially when we talk about the environment Can t be ignored Not enough to just reduce cost Can t reduce cost in expense of other factors like society the environment or health