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Management Accounting and
the Business Environment
Topic One
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Work of Management
Planning
Controlling
Directing and
Motivating
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Planning
Identify
alternatives.
Select alternative that does
the best job of furthering
organizations objectives.
Develop budgets to guide
progress toward the
selected alternative.
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Directing and Motivating
Directing and motivating involves managing day-
to-day activities to keep the organization
running smoothly. Employee work assignments.
Routine problem solving.
Conflict resolution.
Effective communications.
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Controlling
The control function ensures
that plans are being followed.
Feedback in the form of performance reports
that compare actual results with the budget
are an essential part of the control function.
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Planning to Control Cycle
Decision
Making
Formulating long-
and short-term plans
(Planning)
Measuring
performance
(Controlling)
Implementing
plans (Directing
and Motivating)
Comparing actual
to planned
performance
(Controlling)
Begin
Exh.
1-1
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Comparison of Financial andManagerial Accounting
Financial Accounting Managerial Accounting
1. Users xternal persons o Managers o plan for
ma e financial decisions and control an organization
2. ime focus Historical perspecti e Future emp asis
3. Verifia ilit mp asis on mp asis on rele anceersus rele ance erifia ilit for planning and control
4. recision ersus mp asis on mp asis on
timeliness precision timeliness
5. Su ject rimar focus is on Focuses on segments
t e ole organization of an organization
6. GAA Must follo GAA Need not follo GAA
and prescri ed formats or an prescri ed format
7. Requirement Mandator for Not
external reports Mandator
Exh.
1-2
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Code of Conduct forManagement Accountants
The Institute of Management Accountants (IMA)
Standards of Ethical Conduct for Practitioners
of Management Accounting and Financial
Management have two major parts offeringguidelines for:
Ethical behavior.
Resolution for an ethical conflict.
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Competence
Follow applicable laws,
regulations and
standards.
Maintain
professional
competence.
Prepare complete and clear
reports after appropriate
analysis.
IMA uidelines for Ethical Behavior
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Confidentiality
Do not disclose confidential
information unless legally
obligated to do so.
Ensure that subordinates do
not disclose confidential
information.
Do not use
confidential
information for
personal
advantage.
IMA uidelines for Ethical Behavior
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Avoid conflicts of interest
and advise others of
potential conflicts.
ecogni e and
communicate personal and
professional limitations.
Do not subvert
organi ations
legitimate
objectives.
Integrity
IMA uidelines for Ethical Behavior
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Integrity
Avoid activities that could
affect your ability to
perform duties.
Communicate
unfavorable as well as
favorable information.
efrain from
activities
that could
discredit the
profession.
efuse gifts
or favors
that might
influence
behavior.
IMA uidelines for Ethical Behavior
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Communicate information
fairly and objectively.
Communicate information
fairly and objectively.
Disclose all information
that might be useful to
management.
Disclose all information
that might be useful to
management.
CredibilityCredibility
IMA uidelines for Ethical Behavior
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Follow established policies.
For unresolved ethical conflicts:
Discuss the conflict with immediate superior
or next highest uninvolved manager.
If immediate superior is the CEO,consider the board ofdirectors orthe audit committee.
Except where legally prescribed, maintainconfidentiality.
IMA uidelines for esolutionof an Ethical Conflict
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Clarify issues in a confidential discussionwith an objective advisor.
Consult an attorney as to legal obligations.
The last resort is to resign.
IMA uidelines for esolutionof an Ethical Conflict (cont)
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Abandoning ethical standards in business would
lead to a lower quality of life with less
desireable goods and services at higher prices.
Why ave Ethical tandards?
Without ethical standards in business, the
economy, and all of us who depend on it for
jobs, goods, and services, would suffer.
Ethical standards in business are essential for a
smooth functioning advanced market economy.
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