MAcc_Lecture 1_2022-2023

Module Details
Every Teaching Week will involve:
Lecture 1 hour: cover main points of the topic
Seminar 2 hours: MCQs, exercises and mini-cases
Workshop 1 hour: group exercises and discussions, workings in Excel
Management Accounting Module Team:
Feruza Yodgorova
Module Leader
Abdulaziz Buriev
Lecturer
Abdulaziz Djalilov
Lecturer

MODULE DETAILS
[e-mail]
Office hours: Friday, 3pm-5pm
MAccWIUT2022-2023
(Telegram channel)
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MODULE LEARNING OUTCOMES:
Upon completion of the module, successful students will be able to:

ASSESSMENT METHODS AND WEIGHTINGS

TOTAL STUDENTS’ LEARNING AND TEACHING HOURS

FLIPPED CLASSROOM
(PRIOR PREPARATION BEFORE THE SEMINAR)

LECTURE 1
INTRODUCTION TO MANAGEMENT ACCOUNTING

LECTURE 1. LEARNING OUTCOMES:
Identify the purpose and role of management accounting within an organization.
Distinguish financial accounting from management accounting.
Differentiate the managerial processes of planning, decision making and control.
Demonstrate the difference between strategic, tactical and operational planning.
Illustrate and explain the five-step decision-making process and its role in management accounting.
Outline three guidelines management accountants follow in supporting managers.
Distinguish between data and information.
Summarize and explain the attributes of good information.
Analyze sources of information from within and outside the organization (including government statistics, financial press, professional or trade associations, quotations and price list).
Examine sampling techniques (random, systematic, stratified, multistage, cluster and quota).
Present information using tables, charts and graphs (bar charts, line graphs, pie charts and scatter graphs).
Outline the importance of professional ethics for management accountants.

Management accounting is the 'application of the principles of accounting and financial management to create, protect, preserve and increase value for the shareholders of for-profit and not-for-profit enterprises in the public and private sectors.'
CIMA Official Terminology

A CASE FROM MANUFACTURING SECTOR

RESPONSIBILITIES OF MANAGERIAL
ACCOUNTANTS:
Gather and analyze financial information for internal use;
Support budgeting and funding;
Evaluate the company’s performance using key data;
Make forecasts to assist business planning and decision-making;
Conduct risk assessment and advise on ways to minimize risk;
Advise on problems and suggest improvements;
Supervise lower-level personnel;
Make upper-level strategy recommendations based on financials;
Supporting auditing projects;
Recommend methods and strategies for cutting cost.

MANAGERIAL ACCOUNTANTS IN THE ORGANIZATION

COMPARISON OF FA AND MA

THE MAIN FUNCTIONS OF MANAGEMENT ARE:

EXAMPLE:
HOW GEORGE GOES THROUGH THESE 3 STAGES

DIFFERENCE BETWEEN STRATEGIC, TACTICAL AND OPERATIONAL PLANNING

STRATEGIC DECISIONS AND THE MANAGEMENT ACCOUNTANT
What is strategy?

EXAMPLES FOR STRATEGIES
1. Cost leadership strategy
2. Product differentiation

FIVE-STEP DECISION-MAKING PROCESS:
3. Make predictions about the future;
4. Make decisions by choosing among alternatives;
5. Implement the decision, evaluate performance, and learn.

EXAMPLE:
HOW GEORGE GOES THROUGH THESE 5 STAGES
1. Identify the problem and uncertainties.
(Revenue is decreasing due to increasing production costs);
2. Obtain information.
(George asks his production manager to provide all the necessary data on labor costs, worker efficiency, cost of materials, material usage, overhead costs);
3. Make predictions about the future.
4. Make decisions by choosing among alternatives.
(He decides to improve the efficiency of the production process so that less material is wasted. Reducing a high level of waste ties which is especially present in packaging department);
5. Implement the decision, evaluate performance, and learn.
(Due to this measure, George managed to increase total revenue by 5% during next accounting period).

3 MANAGEMENT ACCOUNTING GUIDELINES:

SOURCES OF DATA
Data is the raw material for data processing.
Information is data that has been processed in such a way as to be meaningful to the person who receives it.

ATTRIBUTES OF GOOD INFORMATION
Good information should be ACCURATE:
Accurate
Complete
Cost-effective
Understandable
Relevant
Accessible
Timely
Easy to Use

TYPES OF INFORMATION:
1. Financial
2. Non-financial
3. A combination of financial and non-financial information

INFORMATION CAN BE GATHERED EITHER VIA INTERNAL OR EXTERNAL SOURCES

SAMPLING TECHNIQUE
Probability sampling methods:
1. Random
2. Systematic
3. Stratified random
4. Multi-stage
5. Cluster
Non-probability sampling method:
1. Quota sampling:
2.Snowball sampling:
3. Judgmental or Purposive sampling
4. Convenience sampling

SAMPLING TECHNIQUE
Source: Saunders, 2019

PRESENTING INFORMATION
1. Written reports;
2. Tables, charts and graphs (need interpretation).

IMA STATEMENT OF ETHICAL PROFESSIONAL PRACTICE PRINCIPLES
Honesty
Fairness
Objectivity
Responsibility

IMA STATEMENT OF ETHICAL PROFESSIONAL PRACTICE
STANDARDS

PROFESSIONAL QUALIFICATIONS AND PROFESSIONAL BODIES

LITERATURE
Srikant M. Datar, Madhav V. Rajan (2018), Horngren's Cost Accounting: A Managerial Emphasis,16th Edition; Pearson.
Ray H. Garrison, Eric W. Noreen & Peter C. Brewer (2018), Managerial Accounting, 16th Edition; McGraw-Hill Education.
3. Colin Drury (2018), Management and Cost Accounting, 10th Edition; CENGAGE.
4. Foundations in Accountancy FMA/ACCA F2 (2017), Management Accounting, Practice and Revision Kit, BPP Learning Media Ltd (ACCA Approved).
5. Foundations in Accountancy FMA/ACCA F2 (2017), Management Accounting, Interactive Text, BPP Learning Media Ltd (ACCA Approved).
6. Saunders, M., P. Lewis, A. Thornhill (2019) Research Methods for Business Students, London: Pearson.

LECTURE ROUNDUP:
1. Financial accounting reports to external users on past financial performance
using GAAP. Management accounting provides future-oriented information in
formats that help managers (internal users) make decisions and achieve organizational
goals.
2. Managers use a five-step decision-making process to implement strategy:
identify the problem and uncertainties;
obtain information;
make predictions about the future;
make decisions by choosing among alternatives;
implement the decision, evaluate performance, and learn.
3. Three guidelines that help management accountants increase their value to managers are
(a) employ a cost-benefit approach,
(b) recognize behavioral as well as technical considerations,
(c) identify different costs for different purposes.
4. Management accountants have ethical responsibilities that relate to competence, confidentiality, integrity, and credibility.

LECTURE ROUNDUP:
5. Data is the raw material for data processing. Data relates to facts, events and transactions and so forth. Information is data that has been processed in such a way as to be meaningful to the person who receives it. Information is anything that is communicated.
6. Good information should be relevant, complete, accurate and clear, it should inspire confidence, it should be appropriately communicated, its volume should be manageable, it should be timely and its cost should be less than the benefits it provides.
7. Information for management is likely to be used for planning, control and decision making. Information within an organisation can be analysed into the three levels assumed in Anthony's hierarchy strategic; tactical; and operational.
8. Data are often collected from a sample rather than from a population. A probability sampling method is a sampling method in which there is a known chance of each
member of the population appearing in the sample. Probability sampling methods:
–Random – Stratified random – Systematic – Multistage – Cluster

LECTURE ROUNDUP:
9. A non-probability sampling method is a sampling method in which the chance of each member of the population appearing in the sample is not known; for example, quota sampling.
10. Once data have been collected they need to be presented and analysed. It is important to remember that if data have not been collected properly, no amount of careful presentation or analysis can remedy this defect.
11. According to IMA Statement of Ethical Professional Practice there are 4 Principles: Honesty, Fairness, Objectivity, Responsibility.