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Lecture Notes

Management involves planning, organizing, and controlling an organization's resources to achieve its goals. The controller is responsible for the accounting function and oversees planning and control methods. Cost accounting analyzes costs and issues performance reports to help managers control and improve operations. There are three types of accountants: financial accountants provide external information, managerial accountants provide internal information, and cost accountants provide information internally and externally. Ethical standards for management accountants include maintaining competence, confidentiality, integrity, and objectivity.

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32 views3 pages

Lecture Notes

Management involves planning, organizing, and controlling an organization's resources to achieve its goals. The controller is responsible for the accounting function and oversees planning and control methods. Cost accounting analyzes costs and issues performance reports to help managers control and improve operations. There are three types of accountants: financial accountants provide external information, managerial accountants provide internal information, and cost accountants provide information internally and externally. Ethical standards for management accountants include maintaining competence, confidentiality, integrity, and objectivity.

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Seulgi Moon
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Chapter 1: Management, the Controller, and Cost Accounting

Management

 Sets objectives, making decisions, giving orders, establishing policies, providing work and
rewards, and hiring people to carry out policies.
Notes: oversee the overall operation of an organization
 Planning and control.

Three groups:

 Operating management
 Middle management
 Executive management

Functions of Management

Planning

 Process of sensing external opportunities and threats; determining desirable objectives; and
employing resources to accomplish these objectives.
 Requires participation and coordination.
 Kinds of plans:
o Strategic plans
o Long-term plans
o Short-range plans

Organizing

 Establishment of the framework within which activities are to be performed.


 Requires bringing the many functional units of an enterprise into a coordinated structure and
assigning authority and responsibility to individuals.
 Involves establishment of functional divisions, department, sections, or branches.

Control

 Management’s systematic effort to achieve objectives.


 Comparing actual results with plans

Planning and Control

Authority: power to direct others

Responsibility: obligation

Accountability: reporting results to higher authority

The Controller
 Responsible for accounting function
 Responsible for observing methods of planning and control throughout the enterprise and for
proposing improvements in them.
 Issues performance reports
 Advices managers of activities requiring corrective actions (Management by exception)

Role of Cost Accounting

Cost department

 Under the supervision of the controller


 Analyzes costs and issues performance reports to managers for use in controlling and
improving operations

Benefits

 Creating and executing plans and budgets


 Establishing costing systems (control and reduce costs and improve quality)
 Controlling physical quantities of inventories
 Determining product cost and price
 Determining company costs and profit
 Choosing two or more alternatives that might alter revenues or costs

Types of Accountants

 Financial Accountants provide information to external parties


o Investors
o Creditors
o Regulators
 Managerial Accountants provide information to internal users
o Managers
 Cost Accountants provide information to both internal and external users
o Product cost information

Ethical standards and Management Accounting

1. Competence
2. Confidentiality
3. Integrity
4. Objectivity

Competence

 Maintain professional competence through ongoing development of their knowledge and skills;
 Perform duties in accordance to laws, regulations and standards;
 Prepare complete and clear reports.

Confidentiality
 Refrain from disclosing confidential information;
 Monitor the activities of the subordinations to maintain confidentiality;
 Refrain from using or appearing to use confidential information acquired.

Integrity

 Avoid conflict of interest;


 Refuse any gift, favor, or hospitality that would influence their actions;
 Refrain from either actively or passively subverting the attainment of the organization’s goal.

Objectivity

 Communicate information fairly;


 Disclose fully all relevant information that could reasonably influence an intended user’s
understanding of the reports, comments, and recommendations presented.

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