Case Analysis: HSBC Bank
Date of Submission:
Management accounting over the years has really emerged very significantly in the field of banking and finance. There are numerous objectives and significance that has been reflected in numerous literatures mentioning the primary strategic and management significance management accounting has brought to the table in the field of international finance. As mentioned by many academic and financial scholars, management accounting has today emerged as the most important financial tool which helps them attain a strong position in the market by making sound and strong strategic decisions. This report would look into the theoretical concept of Management accounting, with a special mention of the relevance of management accounting in the banking sector with case study approach for HSBC bank.
Table of Contents
1.Exploring the concept of Management Accounting3
1.1Comparing Management accounting with Financial Accounting5
1.2Exploring the role of management accounting in an organisation6
1.3Key techniques employed in management accounting6
2.Management Accounting in Banking Sector- HSBC case analysis8
2.1Management accounting and Banking9
2.2HSBC a brief introduction9
2.3Recommendations to HSBC9
3.Strength and weakness10
5.3Cost-Volume-Profit (CVP) analysis14
5.4Activity Based Costing15
5.5Enterprise Cost Management (ECM)16
1. Exploring the concept of Management Accounting
As defined by Atkinson et al, (1997) Management Accounting may be defined and identified as strategically sound financial measurement process which involves the process of identification, measurement, reporting and carrying out analysis of information that have economic significance for an organisation, further to this add that that this process of management accounting for an organisation is primarily driven by the need of information that is internal to an organisation, and thus bring the management in a position where that can make sound, strategically profitable operational and investment decision. The table below reflects the primary objectives/ functions of bring and implementing management accounting into practice in internal finance today.
Functions of management accounting information
Operational control| This function aims to facilitate the management with the necessary information that would advice about both the efficiency and quality of the end result of the numerous tasks performed by the business.| Product and customer costing| This functions aims to measure the cost, utilisation of resources in production and the distribution of the produced goods or services, thus giving a better picture of the associated profit or loss. | Management control| This function reviews the efficiency of the management and their respective operating units, in-terms of profitability and future growth.| Strategic control| This is the most significant function of management accounting, it helps the entrepreneurs gauge the financial health and feasibility of the business on a long run, its competitive performance, technological needs and development and exploring the span of the customer base, thus helping them make strong and strategic decisions of growth and expansion. |
As Johnson and Kaplan (2001) mention management accounting was traditionally dominated and characterised by quantitative financial information and analysis, however the inception of modern management accounting functions have transformed and revolutionised the way management accounting is viewed and applied in modern finance today, adopting a more management decision making role, with latest techniques and methods employed to analyse the businesses performance in...