Who is usually responsible for general financial accounting managerial accounting and tax reporting?

1. What is Managerial accounting
   1. Managers’ Three Primary Responsibilities

i.      Financial accounting focuses on providing stockholders and creditors with the information they need to make investment and lending decisions, in the form of financial statements: the balance sheet, income statement, statement of shareholders’ equity, and statement of cash flows.

ii.      Managerial accounting focuses on providing internal management with the information it needs to run the company efficiently and effectively.

iii.      Manager’s Three Primary Responsibilities

1. Planning – involves setting goals and objectives for the company and determining how to achieve them.
2. Directing – means overseeing the company’s day to day operations. Management uses product cost reports, product sales information, and other managerial accounting reports to run daily business operations.
3. Controlling – means evaluating the results of the business operations against the plan and making adjustments to keep the company pressing toward its goals.
4. A Road Map: How Managerial Accounting Fits In

i.      Managerial Accounting Building Blocks – the management accounting profession and language that is commonly used

ii.      Determining Unit Cost (Product Costing) – Identify the costs associated with manufacturing its products or delivering its services.

iii.      Making Decisions – identify different types of cost behavior and determine the profitability of each unit sold as well as the company’s breakeven point. Also common business decisions such as outsourcing and pricing decisions, and decisions of investing in new equipment, new projects, or new locations

iv.      Planning – All the components of the master budget and the way companies use the budgeting process to implement their business goals and strategies.

v.      Controlling and Evaluating – Performance evaluation tools, and environmental management accounting systems to measure and minimize the negative impact of their operations on the environment.

1. Differences Between Managerial Accounting and Financial Accounting

1. What Role do Management Accountants Play
   1. Organizational Structure

i.      Board of directors oversee the company.

ii.      Chief executive officer manages the company on a daily basis

iii.      Chief operating officer manages company’s operations, such as research and development

iv.      Chief financial officer responsible for all of the company’s financial concerns

1. Treasurer reports to the CFO, responsible for raising capital (through issuing stock and bonds) and investing funds.
2. Controller reports to the CFO, responsible for general financial accounting, managerial accounting, and tax reporting.

v.      Internal Audit Function – NY Stock Exchange requires that listed companies have internal audit function, which ensures that the company’s internal controls and risk management policies are functioning properly.

vi.      The Internal Audit Department reports directly to a subcommittee of the board of directors called the audit committee.

vii.      The Audit Committee oversees the internal audit function as well as the annual audit of the financial statements by independent CPAs.

viii.      Both Internal Audit Department and the independent CPAs report directly to the audit committee to ensure that management will not intimidate them or bias their work. The internal audit function also reports to a senior executive (CFO or CEO), for administrative matters.

ix.      Cross-functional teams consist of employees representing various functions of the company. They are effective because each member can address business decisions from a different viewpoint.

1. The Changing Roles of Management Accountants

i.      No longer bean counters, views as internal consultants or business advisors.

ii.      Must also ensure that the company’s financial records adequately capture economic events.

iii.      Help design information systems that capture and record transaction and make sure that the information system generates accurate data.

iv.      Use professional judgment to record nonroutine transactions and make adjustments to the financial records as needed.

v.      Plan, analyze, and interpret accounting data and prove decision support.

1. The Skills Required of management Accountants

i.      Solid knowledge of both financial and managerial accounting

ii.      Analytical skills

iii.      Knowledge of how a business functions

iv.      Ability to work on a team

v.      Oral and written communication skills.

1. Professional Association

i.      Institute of Management Accountants (IMA) – the professional association for management accountants. They provide a forum for research, practice development, education, knowledge sharing, and advocacy of the highest ethical and best practices in management accounting and finance.

ii.      Certified Management Accountant (CMA) – certification issued by IMA.

1. Average Salaries of Management Accountants

i.      Average with 1 – 5 years’ experience in 2010: 76,228

ii.      Average of all IMA members: 109,265

iii.      Those with CMA certification earned salaries that were 16% higher

1. Ethics

i.      Maintain their professional competence

ii.      Preserve the confidentiality of the information they handle

iii.      Uphold their integrity

iv.      Perform  their duties with credibility

1. Examples of Ethical Dilemmas
2. What Regulatory Issues Affect Management Accounting?
   1. a.       Sarbanes-Oxley Act of 2002 (SOX)

i.      Purpose is to restore trust in publicly traded corporations, their management, their financial statements, and the auditors.

ii.      Enhances internal control and financial reporting requirements and establishes new regulatory requirements for publicly traded companies and their independent auditors.

iii.      SOX requires the company’s CEO and CFO to assume responsibility for the financial statements and disclosures. They must certify that the financial statements and disclosures fairly present in all material respects the operations and financial condition of the company. Also, they must accept responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reporting.

iv.      SOX also required audit committee members to be independent, meaning that they may not receive any consulting or advisory fees from the company other than for their service on the board of directors.

v.      CPA firms may not provide certain non-audit services, such as bookkeeping and financial information systems design to companies during the same period in which they are providing audit services.

vi.      The audit partner must rotate off the audit engagement every five years, and the audit firm must undergo quality reviews every one to three years.

vii.      SOX increases penalties for white-collar crimes such as corporate fraud.

1. b.      International Financial Reporting Standards (IFRS)
2. c.       Extensible Business Reporting Language (XBRL)

i.      Enables companies to release financial and business information in a format that can be quickly, efficiently, and cost-effectively accessed, sorted, and analyzed over the internet.

ii.      Advantages:

1. It decreases the need for laborious, manual searches through corporate reports for specific pieces of information.
2. It decreases the time companies will spend converting their financial information into various government prescribed formats.
3. It will allow managers to easily compare their results to other companies and to industry averages.
4. Investors and managers can slice and dice financial information however they want, to suit their decision making needs.
5. It should promote the more consistent use of financial terminology since all data must be tagged using a preset, yet extensible, classification system.
6. What Business Trends Affect Management Accounting?
   1. Sustainability, Social Responsibility, and the Triple Bottom Line

i.      Sustainability is most often defined as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

1. Also defined as an expansion on the golden rule: “Do unto others, including future generations, as you would have them do unto you.”
2. Either environmental or social responsibility focus.

ii.      Triple Bottom Line recognizes that a company’s performance should not only be viewed in terms of its ability to generate economic profits for its owners, as traditionally been the case, but also by its impact on people and the planet.

1. Shifting Economy

i.      Shift away from manufacturing and toward service.

1. Global Marketplace
2. Advanced Information Systems

i.      Enterprise Resource Planning (ERP) – systems that can integrate all of a company’s worldwide functions, departments, and data.

ii.      Cost benefit analysis weighs the expected costs of taking an action against the expected benefits of the action.

1. Lean Operations

i.      Lean thinking is both a philosophy and a business strategy of operating without waste. The more waste that is eliminated, the lower the company’s costs will be.

ii.      Just-in-time (JIT) inventory philosophy first pioneered by Toyota. By manufacturing product just in time to fill customer orders, and no sooner, companies are able to substantially reduce the quantity of raw materials and finished product kept on hand. This in turn reduces storage costs (warehousing and associated security, utilities, and shrinkage costs) and handling costs (labor costs associated with storing and un-storing inventory).

iii.      Lean companies focus on reducing throughput time, the time between buying raw materials and selling finished products, while still maintaining high quality.

1. Total Quality Management

i.      Total quality management (TQM) is to delight customers by providing them with superior products and services. Each business function examines its own activities and works to improve performance by continually setting higher goals.

ii.      ISO 9001:2008 certification by the International Organization for Standardization (ISO). Must comply with the quality management standards set forth by the ISO and undergo extensive audits of their quality management process. Prestigious certification gives forms a competitive edge in the global marketplace.

Who is responsible for financial accounting managerial accounting and tax reporting?

What position is typically responsible for general financial accounting?

Who is ultimately responsible for applying GAAP?

Who is responsible for managing accounting and auditing?