Managerial Accounting & the Business Environment Pertemuan 01 Matakuliah: F0254 / Akuntansi Manajemen Tahun: 2007

Bina Nusantara

Managerial Accounting and Financial Accounting Managerial inside Managerial accounting provides information for managers inside an organization who direct and control its operations. Financial outside Financial accounting provides information to stockholders, creditors and others who are outside the organization.

Bina Nusantara Work of Management Planning Controlling Directing and Motivating

Bina Nusantara Planning and Control Cycle Decision Making Formulating long- and short-term plans (Planning) Measuring performance (Controlling) Implementing plans (Directing and Motivating) Comparing actual to planned performance (Controlling) Begin Exh. 1-1

Bina Nusantara Differences Between Financial and Managerial Accounting

Bina Nusantara Organizational Structure Decentralization is the delegation of decision-making authority throughout an organization.

Bina Nusantara Line and Staff Relationships Line position are directly related to achievement of the basic objectives of an organization. –Example: Production supervisors in a manufacturing plant. Staff positions support and assist line positions. –Example: Cost accountants in the manufacturing plant.

Bina Nusantara Growth of the internet Just-in-Time production Total Quality Management International competition Growth of the internet Just-in-Time production Total Quality Management International competition Business environment changes in the past twenty years The Changing Business Environment

Bina Nusantara The Changing Business Environment Just-In-Time Total Quality Management Process Reengineering Theory of Constraints New tools for managers!

Bina Nusantara Complete products just in time to ship customers. Complete parts just in time for assembly into products. Schedule production. Receive materials just in time for production. Receive customer orders. Just-in-Time (JIT) Systems

Bina Nusantara Flexible workforce Reduced setup time Zero production defects JIT Consequences Improved plant layout JIT purchasing Fewer, but more ultrareliable suppliers. Frequent JIT deliveries in small lots. Defect-free supplier deliveries. JIT purchasing Fewer, but more ultrareliable suppliers. Frequent JIT deliveries in small lots. Defect-free supplier deliveries.

Bina Nusantara More rapid response to customer orders Freed-up funds Reduced inventory costs Greater customer satisfaction Higher quality products Benefits of a JIT System Increased throughput

Bina Nusantara Do we need to change the plan? Where are we? Where do we want to go? How do we start? How are we doing? Check Plan ActDo is Total Quality Management Benchmarking Continuous Improvement

Bina Nusantara Process Reengineering The process is redesigned to include only those steps that make our product more valuable. Every step in the business process must be justified. A business process is diagrammed in detail. Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced. Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced.

Bina Nusantara A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective Theory of Constraints

Bina Nusantara 4. Coordinate processes 1. Measure process capacity 2. Identify process constraints 3. Use bottlenecks effectively. Only actions that strengthen the weakest link in the “chain” improve the process. Theory of Constraints

Bina Nusantara Theory of Constraints Process Capacity A measure of a process’s ability to transform resources into value products and services. System Constraint The point in a system that limits the overall output of the system. Often called the “bottleneck.”

Bina Nusantara International Competition Meeting world-class competition demands a world- class management accounting system. Managers must make decisions to plan, direct, and control a world-class organization.

Bina Nusantara E-Commerce During 2001, many dot.com businesses failed that might have benefited from the application of managerial accounting tools: –cost concepts (Chap. 2) –cost estimation (Chap. 5) –cost-volume-profit (Chap. 6) –activity-based costing (Chap. 8) –budgeting (Chap. 9) –decision-making (Chap. 13) –capital budgeting (Chap. 14)

Bina Nusantara Importance of Ethics in Accounting Ethical accounting practices build trust and promote loyal, productive relationships with users of accounting information. Many companies and professional organizations, such as the Institute of Management Accountants (IMA), have written codes of ethics which serve as guides for employees. –Code of Conduct for Management Accountants

Bina Nusantara IMA Code of Ethics for Management Accountants Four broad areas of responsibility: Maintain a high level of professional competence treat sensitive matters with confidentiality Maintain personal integrity Be objective in all disclosures

Bina Nusantara Competence IMA Code of Ethics for Management Accountants Follow applicable laws, regulations and standards. Maintain professional competence. Prepare complete and clear reports after appropriate analysis.

Bina Nusantara Confidentiality IMA Code of Ethics for Management Accountants Do not disclose confidential information unless legally obligated to do so. Ensure that subordinates do not disclose confidential information. Do not use confidential information for personal advantage.

Bina Nusantara IMA Code of Ethics for Management Accountants Avoid conflicts of interest and advise others of potential conflicts. Recognize and communicate personal and professional limitations. Do not subvert organization’s legitimate objectives. Integrity

Bina Nusantara IMA Code of Ethics for Management Accountants Integrity Avoid activities that could affect your ability to perform duties. Communicate unfavorable as well as favorable information. Refrain from activities that could discredit the profession. Refuse gifts or favors that might influence behavior.

Bina Nusantara IMA Code of Ethics for Management Accountants Communicate information fairly and objectively. Disclose all information that might be useful to management. Objectivity

Bina Nusantara Resolution of Ethical Conflict Follow established policies. For unresolved ethical conflicts: –Discuss the conflict with immediate superior. –If immediate superior is the CEO, consider the board of directors or the audit committee. –Except where legally prescribed, maintain confidentiality. IMA Code of Ethics for Management Accountants

Bina Nusantara Resolution of Ethical Conflict Clarify issues in a confidential discussion with an objective advisor. Consult an attorney as to legal obligations. The last resort is to resign. IMA Code of Ethics for Management Accountants

Bina Nusantara End of Chapter 1