Advanced Management Accounting samenvatting
WEEK 1
Management accounting is concerned with the generation, communication, and use of financial and nonfinancial
information for managerial decision making and decision control (G&S, Ch 1, p.3).
Decision making: verminder onzekerheid voor decision making
Decision control: beoordeel (assess) profitability van units/producten
Stimuleer en beloon (reward) werknemers
Q: Tension between decision making and control?
Q: What are the costs of information?
Data → Information → Knowledge → decision making
Verbonden apparaten
Huidige issues in Management Accounting:
1) Skills controller (ten Rouwelaar et al. 2021)
Rol van de controller
Q: Tension between the two roles?
De veranderende rollen van de controller door de tijd:
Historische rol: bean counter, prepare documents
Daarna: Verbeter “business orientation”, participeer meer in de operationele en strategische decision
making. Vele schandalen (rond 2000) waardoor er nieuwe corporate governance regulations
kwamen (vb Sarbanes-Oxley). Als reactie hierop werden controllers weer meer onafhankelijk
(vb.Performance dependent rewards CFO’s < CEO’s).
Huidige rol: Business intelligence role/data analytics
1
, Er is veel meer data beschikbaar / IT wordt steeds belangrijker
PAPER 1. Skill set controller (Ten Rouwelaar et al.)
1. Technical: “computer, accounting, en data modelling vaardigheden
2. Conceptual: “vaardigheid (ability) om het bedrijf als een geheel te zien” V.B., begrijpen strategie,
connecties zien tussen BU’s
3. Interpersonal: “constructively challenge and question assumptions, numbers, and their meanings”
4. Interactions V.B. .; “als MAs moet je meer skilled zijn in technische zaken en meedoen aan debatten en
between skills dialogen worden voordeliger (beneficial)”
Method (survey)/Variables
Sample = 215 Health Care controllers
Increasing competition, greater emphasis on quality, new technologies
Skills
1. Technical accounting: (Importance of computer/accounting/modelling skills)
2. Conceptually: (e.g., “Thinking strategically and forward looking”)
3. Interpersonal: (e.g., “I continually challenge management plans”)
Variables (continued)
Time spend on different activities,
Throughput: administration, debt, salaries, fixed assets, cash
Output: financial reporting, consolidation, fiscal reports
Decision support: non-standard reports, ad hoc support
Controls: age, size, gender, education, etc.
Outcomes:
Influence: Impact on 10 different decisions (e.g., investments, internal processes, organizational
structure)
Effectiveness: e.g. “My contribution is that decisions are better financially and organizationally”
**So decision support highest influence!
2
,Conclusion
→ All three skills are leading to greater effectiveness
→ Technical accounting skills not related to influence →Maybe this is a hygiene factor!
→ Skills are strengthen each other → Interaction effects on influence/effectiveness
→ Time spent on throughput/output negatively related to influence
→ less time available for decision support activities
Recap: **So decision support highest influence!
Paper 2 Evolution of Management Accounting (Groot & Selto, Ch 1)
2) Issues in management accounting
Basic message Ch.1 (p.3):
MA informatie wordt steeds complexer door te tijd heen door:
A) Level of integration of value chains (market-internal transactions)
→ Network structures
B) Organizational structure (centralization-decentralization)
C) Increased complexity of production processes
Kosten van MA informatie neemt af (technology improves)
Meer recente innovaties?
1980/90s:
- Activity-Based Costing (meer competitie, meer indirecte kosten, betere IT, dus goedkoper om cost driver info te
verzamelen)
- Balanced Scorecard (intangibles in measurement, e.g., CS, WS, learning)
- Value-Based Management (inclusief goodwill in asset base) → Cost of Capital
This decade (laatste tien jaar)
- Big data
- Robotization
→ Financial transactions
- Data analytics to gain competitive advantage
- Information environment changes
→ Availability information/Information technology/Visualize information
3
, Samengevat:
1. Gebruik van MA information voor verschillende redenen (multiple goals)
→Decision making, decision facilitating
2. Controller skills influence its impact (Ten Rouwelaar et al.)
3. Informatie heeft waarde, maar ook kosten (see web lecture wk1 wl4)
→ Kosten van informatie daalt over tijd
→ Waardecreatie van informatie is een grote uitdaging (challenge) voor de controller
Wanneer gebruiken we CVP analyse?
→ Voorspellen (forecast) om investeerders, analisten, shareholders te informeren
→ Budgetteren van onderhandelingen tussen BU’s en headquarters
→ Decision making (adopt new technology, launch new products)
Welke informatie is nodig?
How do sales develop?, are we able to increase prices?, Which actions do competitors take? Etc.,
Use point estimates, or confidence intervals?
Relevance of cost information
1. Short-term optimization: Contribution margin
Benodigd (needed) voor korte termijn optimalisatie. Fixed kosten zijn niet relevant.
2. Long-term optimization: Total cost
Veranderingen in productievolumes hebben impact op fixed en overhead kosten.
Strategic decisions hebben effect op fixed en indirecte kosten.
→ Dus, verschillende kosten voor verschillende doelstellingen
CVP Model = [(P -V)* Q - F]* (1-T)
Een deterministic model = variables zijn gegeven, geen risico of onzekerheid verondersteld
Eerste stap richting stochastic model met sensitivity analyses:
→ Verwachte waarden onder onzekerheid
→ Kritische waarden (for instance: when break-even?)
→ Relatieve impact op profit of veranderingen op input variables? (wk2 wl2)
4
WEEK 1
Management accounting is concerned with the generation, communication, and use of financial and nonfinancial
information for managerial decision making and decision control (G&S, Ch 1, p.3).
Decision making: verminder onzekerheid voor decision making
Decision control: beoordeel (assess) profitability van units/producten
Stimuleer en beloon (reward) werknemers
Q: Tension between decision making and control?
Q: What are the costs of information?
Data → Information → Knowledge → decision making
Verbonden apparaten
Huidige issues in Management Accounting:
1) Skills controller (ten Rouwelaar et al. 2021)
Rol van de controller
Q: Tension between the two roles?
De veranderende rollen van de controller door de tijd:
Historische rol: bean counter, prepare documents
Daarna: Verbeter “business orientation”, participeer meer in de operationele en strategische decision
making. Vele schandalen (rond 2000) waardoor er nieuwe corporate governance regulations
kwamen (vb Sarbanes-Oxley). Als reactie hierop werden controllers weer meer onafhankelijk
(vb.Performance dependent rewards CFO’s < CEO’s).
Huidige rol: Business intelligence role/data analytics
1
, Er is veel meer data beschikbaar / IT wordt steeds belangrijker
PAPER 1. Skill set controller (Ten Rouwelaar et al.)
1. Technical: “computer, accounting, en data modelling vaardigheden
2. Conceptual: “vaardigheid (ability) om het bedrijf als een geheel te zien” V.B., begrijpen strategie,
connecties zien tussen BU’s
3. Interpersonal: “constructively challenge and question assumptions, numbers, and their meanings”
4. Interactions V.B. .; “als MAs moet je meer skilled zijn in technische zaken en meedoen aan debatten en
between skills dialogen worden voordeliger (beneficial)”
Method (survey)/Variables
Sample = 215 Health Care controllers
Increasing competition, greater emphasis on quality, new technologies
Skills
1. Technical accounting: (Importance of computer/accounting/modelling skills)
2. Conceptually: (e.g., “Thinking strategically and forward looking”)
3. Interpersonal: (e.g., “I continually challenge management plans”)
Variables (continued)
Time spend on different activities,
Throughput: administration, debt, salaries, fixed assets, cash
Output: financial reporting, consolidation, fiscal reports
Decision support: non-standard reports, ad hoc support
Controls: age, size, gender, education, etc.
Outcomes:
Influence: Impact on 10 different decisions (e.g., investments, internal processes, organizational
structure)
Effectiveness: e.g. “My contribution is that decisions are better financially and organizationally”
**So decision support highest influence!
2
,Conclusion
→ All three skills are leading to greater effectiveness
→ Technical accounting skills not related to influence →Maybe this is a hygiene factor!
→ Skills are strengthen each other → Interaction effects on influence/effectiveness
→ Time spent on throughput/output negatively related to influence
→ less time available for decision support activities
Recap: **So decision support highest influence!
Paper 2 Evolution of Management Accounting (Groot & Selto, Ch 1)
2) Issues in management accounting
Basic message Ch.1 (p.3):
MA informatie wordt steeds complexer door te tijd heen door:
A) Level of integration of value chains (market-internal transactions)
→ Network structures
B) Organizational structure (centralization-decentralization)
C) Increased complexity of production processes
Kosten van MA informatie neemt af (technology improves)
Meer recente innovaties?
1980/90s:
- Activity-Based Costing (meer competitie, meer indirecte kosten, betere IT, dus goedkoper om cost driver info te
verzamelen)
- Balanced Scorecard (intangibles in measurement, e.g., CS, WS, learning)
- Value-Based Management (inclusief goodwill in asset base) → Cost of Capital
This decade (laatste tien jaar)
- Big data
- Robotization
→ Financial transactions
- Data analytics to gain competitive advantage
- Information environment changes
→ Availability information/Information technology/Visualize information
3
, Samengevat:
1. Gebruik van MA information voor verschillende redenen (multiple goals)
→Decision making, decision facilitating
2. Controller skills influence its impact (Ten Rouwelaar et al.)
3. Informatie heeft waarde, maar ook kosten (see web lecture wk1 wl4)
→ Kosten van informatie daalt over tijd
→ Waardecreatie van informatie is een grote uitdaging (challenge) voor de controller
Wanneer gebruiken we CVP analyse?
→ Voorspellen (forecast) om investeerders, analisten, shareholders te informeren
→ Budgetteren van onderhandelingen tussen BU’s en headquarters
→ Decision making (adopt new technology, launch new products)
Welke informatie is nodig?
How do sales develop?, are we able to increase prices?, Which actions do competitors take? Etc.,
Use point estimates, or confidence intervals?
Relevance of cost information
1. Short-term optimization: Contribution margin
Benodigd (needed) voor korte termijn optimalisatie. Fixed kosten zijn niet relevant.
2. Long-term optimization: Total cost
Veranderingen in productievolumes hebben impact op fixed en overhead kosten.
Strategic decisions hebben effect op fixed en indirecte kosten.
→ Dus, verschillende kosten voor verschillende doelstellingen
CVP Model = [(P -V)* Q - F]* (1-T)
Een deterministic model = variables zijn gegeven, geen risico of onzekerheid verondersteld
Eerste stap richting stochastic model met sensitivity analyses:
→ Verwachte waarden onder onzekerheid
→ Kritische waarden (for instance: when break-even?)
→ Relatieve impact op profit of veranderingen op input variables? (wk2 wl2)
4
