Managerial Accounting Chapter 1

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Managerial Accounting and the Business Environment
Chapter 1

© 2010 The McGraw-Hill Companies, Inc.

Learning Objective 1

Understand the role of management accountants in an organization.

McGraw-­‐Hill/Irwin
 

Slide 2

Organizational Structure
Decentralization is the delegation of decisionmaking authority throughout an organization.

Corporate Organization Chart
Board of Directors

President Purchasing Personnel Vice President Operations Chief Financial Officer Controller
Slide 3

Treasurer
McGraw-­‐Hill/Irwin
 

The Chief Financial Officer (CFO)
A member of the top management team responsible for:
   

Providing timely and relevant data to support planning and control activities. Preparing financial statements for external users.

McGraw-­‐Hill/Irwin
 

Slide 4

Line and Staff Relationships
Line positions 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.

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Slide 5

Work of Management Accountants
Management accountants work under Controller or directly under CFO  Considered staff position  Internal consultants or business analysts within the organization

 Less time on mechanical aspects of accounting  More time on analyzing and interpreting information for decision-making purposes  Cross-functional team and face-to-face communication within the organization

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Slide 6

Learning Objective 2

Understand the importance of upholding ethical standards.

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Slide 7

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 who depend 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. McGraw-­‐Hill/Irwin
 
Slide 8

Code of Conduct for Management Accountants
The Institute of Management Accountant’s (IMA) Statement of Ethical Professional Practice offers guidelines for ethical behavior.

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Slide 9

IMA Guidelines for Ethical Behavior
Recognize and communicate professional limitations that preclude responsible judgment.

Maintain professional competence.

Competence
Provide accurate, clear, concise, and timely decision support information.

Follow applicable laws, regulations and standards.

McGraw-­‐Hill/Irwin
 

Slide 10

IMA Guidelines for Ethical Behavior
Do not disclose confidential information unless legally obligated to do so. Do not use confidential information for unethical or illegal advantage.

Confidentiality
Ensure that subordinates do not disclose confidential information.

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Slide 11

IMA Guidelines for Ethical Behavior
Mitigate conflicts of interest and advise others of potential conflicts. Refrain from conduct that would prejudice carrying out duties ethically.

Integrity
Abstain from activities that might discredit the profession.

McGraw-­‐Hill/Irwin
 

Slide 12

IMA Guidelines for Ethical Behavior
Communicate information fairly and objectively. Disclose delays or deficiencies in information timeliness, processing, or internal controls.

Credibility
Disclose all relevant information that could influence a user’s understanding of reports and recommendations. McGraw-­‐Hill/Irwin
 

Slide 13

Analyzing an Ethical Dilemma
1. what is the ethical issue? 2. who are the stakeholders? 3. How would each of the stakeholders be affected? 4.What IMA Statement(s) of Ethical Professional Practice are violated? Why? 5. What decision options are available? 6. What is the proposed solution?...
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