Managerial Accounting System Design
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Assignment #1 (2 pages)
Managerial Accounting System Design
Managerial accounting systems are quite complex in reality and require consideration of a wide range of issues, including how they must integrate with enterprise resource planning systems and financial reporting systems, and how managers and employees are evaluated and compensated based on performance.
For this Discussion, you will focus on the core theoretical aspects of managerial accounting systems, which can be viewed in a relatively simple way: an optimal managerial accounting system captures, reports, and analyzes data in a way that allows users to identify the causes of deviations from expected plan outcomes. As you will see, this requires a close correspondence between the data and information used in planning, and that used in control.
To simplify this Discussion, it will be helpful to isolate components of plans, outcome measurements, and controls, and analyze them separately. For example, when discussing a planning-control feedback loop for revenues, you might examine revenue forecasting/budgeting, accounting measurements, and performance variance analysis individually.
Discussion—Week 6 (D-W6)
Participants:
By Day 5 of Week 6, respond to the following in precise, well-defined terms, and with reference to this week’s Learning Resources:
•Analyze how an organization’s forecasts, budgets, revenues, costs and cash flows correlate with one another. What additional data should be captured and reported in a managerial accounting system? Why?
•Analyze the role planning factors play in driving profits. Explain how data reported by the managerial accounting systems can be turned into information relevant for adjusting future plans. In other words, how is the data used in developing information required to operate an organization’s planning-control feedback loop?
Assignment #2 (2 pages)
Dynamic Adaptation of Managerial Accounting Systems
Organizations, their objectives, and their economic environment have been undergoing increasing rapid change in recent years and there is no theory or evidence to suggest that this trend will change. Accordingly, consider how such changes influence the optimal design of a managerial accounting system, and begin applying your qualitative and quantitative research skills conceptually to your knowledge of managerial accounting systems.
For this week’s Discussion, it is important that you maintain both a theoretical and managerial economic perspective on the topic. The research methods covered this week will allow you to explore factors normally considered outside the boundaries of managerial economics, so you can frame your Discussion without any meaningful loss of generality.
By Day 5 of Week 8, all students will respond to the following in precise, well-defined terms, and with reference to this week’s Learning Resources:
•Analyze at least two causal factors for changes in organizational objectives, revenues, costs, and cash flows, using managerial economic theory.
•Explain how qualitative research methods can be used for identifying causal factors driving revenues, costs, and cash flows.
•Explain how quantitative methods can be used for identifying causal factors driving revenues, costs, and cash flows.
•Describe how the causal factors driving revenues, costs, and cash flows affect the optimal managerial accounting system design.
Please complete both assignments individually / separately and also follow instructions
SAMPLE ANSWER
Managerial Accounting System Design
A Managerial Accounting System is a system used to gather the information that is necessary for the administration to evaluate the performance of various organizational resources while satisfying the organization’s strategies. An accounting system design involves the process of planning and implementation of an accounting system that is used to record, store and access the organization’s monetary resources to implement organization strategies.
This existence of such a system is meant for the better and efficient administration of the accounts of a business organization with the motive of attaining the objectives of the organization.A Managerial Accounting System provides financial reporting systems and enterprise resource planning systems of how employees and managers are evaluated and managed based on their performance.
The information in these systems is important to managers as well as the involved stakeholders since it is used for the effective decision-making process and accountability purposes. The accounting information available is essential in providing security information and predicting the economic growth(Ward, K. 2012). It is also used for performance evaluation based on quantifiable evidence.
Therefore, planning and control of Managerial Accounting Systems should predict contracts in the design process and provide a theoretical explanation of why such contracts are incomplete under property organizations. Management control is the process of assuring that the company’s resources are obtained effectively in the accomplishment of the organizational goals. Managerial accounting systems provide necessary material in which the outcome of the decisions are measured through managerial accounting. A cycle of data is then created through analysis of the reported results. The analyzed report is then developed for the purposes of strategic planning of the organization where factors such as finance, tax, and social contests are put into consideration.
Managerial accounting systems are used in the provision of relevant information. These results are reported and analyzed creating a cycle of information. The outcome of the decisions is then measured through supervisory accounting(Bedford, D., 2015). It is necessary for these decisions to be developed within the premeditated planning of the organization and take into account other factors.
A noteworthy subject of managerial accounting costs examination. Implementing such a system would prove to be quite costly. However, the debate of cost efficiency is in contention theory. A simplified example of an ideal managerial accounting system is revealed by the secondary school accounting system. Schools handle school fees by distinguishing between adjustable and stable costs(Cadez, S., & Guilding, C. 2012).They also reveal more details in their cost study. In an outdated costing model, there were single cost drivers, but this model is now considered inadequate for the current rapidly changing business environment.
Dynamic Adaptation of Managerial Accounting Systems
For the purposes of quality managerial accountability, Managerial Accounting systems have to be well adapted to the business entity to meet the user requirements. These systems need to have a credible functionality and well suited in their functionality.
A managerial accounting system must therefore adapt in the rapid changes of the organization. This is meant for the organization’s existence and survival in the nearby future and its continuous growth and expansion. The major causes for the dynamic adaptation of these systems include globalization, customer preference and the changes in technology. Due to these reasons, companies strive to make the existent systems adapt to their existing businesses(Becker, J., et al 2013) Organization which fail to adapt to these changes face extinction in the ever competitive market.
It is for these motives that businesses try to meet the needs of the stakeholders in their entities to be able to subsist in the long run. Therefore, this means that the goals of the employees and stakeholders must be met for credibility purposes and to ensure that the business meets the market needs. To elaborate this, the organization should attempt to counter the reasons highlighted previously to meet its goals.
Changes in technology must be realized and swiftly adapted to meet the ever growing customer needs. This entails strategies of changing or updating the existing systems with respect to technological advancement to cater for customer needs. The invention and application of the internet enables businesses to interact with the customers and other parties that are associated with the organization.
This is essential in creation of rapport between the organization and important individuals that contribute to the growth of the organization. Moreover, communication links should not only be existent but efficient in their functionality. It is vital that these systems support good communication especially within the organization to meet its objectives(Yigitbasioglu, O. M., & Velcu, O., 2012)
It is important to note that for the survival of any system, customer needs must be met. This is usually prompted by customer preference which is bound to change with time due to the diversification of user needs. Therefore the accounting system should be quite flexible to meet the changes for the organization to realize its goals and meet it objectives(DRURY, C. M., 2013). The system should be able to keep record of these changes and maintain its credibility with the organizational specifications.
Globalization tends to have an impact on such a system in society. Accounting plays a big role in the business which aims in achieving its priority goals. A Managerial Accounting System measures the events of an organization in monetary value and is essential in predicting the market trends .It is through this that business transparency is realize
References
Becker, J., Kugeler, M., & Rosemann, M. (Eds.). (2013). Process management: a guide for the design of business processes. Springer Science & Business Media.
Bedford, D. S. (2015). Management control systems across different modes of innovation: Implications for firm performance. Management Accounting Research, 28, 12-30.
Cadez, S., & Guilding, C. (2012). Strategy, strategic management accounting and performance: a configurational analysis. Industrial Management & Data Systems, 112(3), 484-501.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Ward, K. (2012). Strategic management accounting. Routledge.
Yigitbasioglu, O. M., & Velcu, O. (2012). A review of dashboards in performance management: Implications for design and research. International Journal of Accounting Information Systems,Managerial Accounting System Design
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