Bài giảng môn Kế toán, kiểm toán - Chapter fourteen: Management accounting in a changing environment

Management Accounting in a Changing EnvironmentChapter FourteenCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinConnection to Other ChaptersChapter 14 summarizes the concepts developed in the previous chapters and applies them to recent internal accounting system innovations.Every chapter mentions the trade-offs between decision management (decision making) and decision control.Internal accounting systems continue to evolve in response to changing needs and environments.14-2History of Management AccountingAs firms evolve, internal accounting systems evolve.Early 1800s: Multi-process textile mills develop absorption costing.1850 - 1910: Multi-location firms create cost controls.1915 - 1925: Large corporations decentralize in operating divisions.1925 - 1975: External reporting dictates internal accounting design.Recent: Automation induces redesign of product costing.Recent: TQM requires more non-financial measuresRecent: JIT producers want to identify non-value-adding activities.Recent: The Balanced Scorecard links strategy to key performance indicators to help determine if the organization is moving in the right direction.14-3Organizational ArchitectureSee Figure 14-1.Decision rights partitioningSeparating decision management and controlPerformance evaluation systemManagement accounting systemNonfinancial measuresPerformance reward and punishment system14-46 Sigma and Lean ProductionSix SigmaExtension of TQMStructured approachProject teamsLean ManufacturingExtension of JITEliminate all non-value activities from value chain14-5Business StrategyAsset structure influences performance measurement.Some firms can use historical financial accounting.Publicly-traded firms may use stock market value.Customer base influences distribution of specialized knowledge.May decentralize into many responsibility centersKnowledge creation influences partitioning of decision rights.If knowledge is easy to acquire, more centralization is possible.14-6Environmental and Competitive Forces Technological changeChanges relative value of investment projectsChanges performance measures and controlsGlobal market conditions changeProduction sources dispersed internationallyCompetitors from other countries14-7Quality’s Multiple MeaningsDifferent meanings of quality can conflict.High meanLow varianceLarger number of optionsMeeting customer expectationsPartitioning decision rightsWho determines quality goals?Who measures quality?14-8TQM Program ElementsA firmwide processcommunicate up, down, and laterallyQuality is defined by customerspecialized knowledge of customer needsRequires organizational changespush decision rights down to operating and marketingDesigned into the productReduce defects by redesigning production14-9ISO 9000Issued by International Standards Organization, a European community body that sets quality standards.Requires written policies, procedures, and quality methods.Certifies that policies exist that allow quality products to be manufactured.14-10TQM Quality CostsBenefitsReduce internal failures (before sold)Reduce external failures (after sold)CostsPrevention (reengineering and training)Appraisal (inspection and testing before delivery)Find optimal balance between benefits and costs. See Self-Study Problem 1.14-11JIT GoalsJust-in-time (JIT) production:Production does not start until order is received.JIT aims to minimize throughput time.Throughput time = Processing time + Non-value-added timeNon-value-added time = Waiting + Transit + InspectionManufacturing cycle efficiency (MCE) (not mentioned in textbook) MCE = (Processing time) = (Throughput time)14-12JIT TechniquesIncrease quality of material and processesReduce setup timesBalance flow rates across manufacturing cellsCoordinate deliveries from suppliersImprove factory layout to reduce transit timeChange performance measurement and reward system to focus on reducing throughput time of entire production process rather than individual departments14-13JIT LimitationsAdvantages:Simpler because no work-in-process accountingFocus attention on throughput timeDisadvantages:Become dependent on suppliers for on-time deliveryStill need periodic physical count of materials inventoryReorganizing production can be expensive.14-14Balanced ScorecardTranslates the strategy into a plan of actionIdentifies specific objectives and performance drivers (key performance indicators)Helps determine if the organization is moving in the right directionAttempts to achieve a balance between:short and long-term objectivesoutcome and performance measures for cause and effect objectivesfinancial and non-financial performance measuresall of the stakeholders of the organization14-15Balanced ScorecardFor each objective there are: Driver performance indicatorsMeasure input activities to achieve the objectiveOutcome performance indicatorsMeasure if the objective has been realizedDriver and outcome performance indicators reflect the cause and effect nature of the balanced scorecard.14-16The Balanced Scorecard’s Four PerspectivesInnovation and Learning PerspectiveCustomer PerspectiveSTRATEGYFinancialPerspectiveInternal Business ProcessesPerspective14-17What Makes the Balance Scorecard a Success or a Failure?Example 1: Philips Electronics (a success)Example 2: The U. S. retail banking operations of a leading international financial services provider (a failure)Summarize what is needed to achieve success and avoid failure.14-18When Should the Internal Accounting System be Changed? Continual evolution (Economic Darwinism)No single ideal management accounting systemRespond to changes in technology and marketsTrade-offsDecision making vs. Decision controlOpportunity cost vs. Historical costSimplicity vs. ComprehensivenessInternal users vs. External usersFinancial measures vs. Nonfinancial measures14-19