BASIC CONSIDERATIONS
Management Advisory Services – function of providing professional advisory (consulting) services, primary purpose of
which is to improve the client’s use of its capabilities and resources to achieve objectives
Levels of Strategy:
● Top Level (Overall/Strategic) Planning – encompasses long-range (5 years+) objectives and is concerned with
corporate results rather than sectional objectives
● Business Level Strategy – focuses on how to attain and satisfy customers
● Corporate Level Strategy – makes a decision that affects the whole company; short term
● Operational Strategy – methods companies use to reach objectives
Basic Functions of Management (POS-DC):
● Planning – thinking process; SMART
o Specific o Realistic
o Measurable o Timebound
o Attainable
● Organizing – laying down the activities to achieve desired outcomes
● Staffing – hiring and training
● Directing – telling what to do
o Supervision o Leadership
o Motivation o Communications
● Controlling – making sure objectives are being attained
Financial vs Managerial Accounting:
Financial Accounting Managerial Accounting
External users Internal users
Summarizes past transactions Strong emphasis on the future
Data should be objective and verifiable Data should be relevant
Focuses on precision Focuses on timeliness of information
Conform to reporting standards Does not conform to reporting standards
Reporting for company as a whole Focuses on segments of a company
Mandatory Not mandatory
Roles and Activities:
● Consultant – external
● Controller – proper utilization of resources; primary concern is profitability; financial accounting (PERFECT-Govt)
o Planning and control o Evaluating
o Economic appraisal o Computing (cost accounting)
o Reporting and interpreting o Tax administration
o Protection of asset o Govt reporting
● Treasurer – involves cash and custody of assets; primary concern is liquidity; financial management (PICC-BIISH)
o Provision of capital o Banking
o Investor relations o Investments/risk management
o Collection management o Insurance
o Credit management o SHort term financing
● Line Position – directly related to production, sales, marketing and delivery (e.g., vp production, president)
● Staff Position – advices line positions (e.g., VP Finance, controller, HR)
Formulating Strategy
Strategic Analysis – matching knowledge of marketplace opportunities and threats with company’s resources
Competitive Advantage (Michael Porter’s)
● Cost Leadership Strategy – affordable but quality is high
● Differentiation Strategy – unique thus may offer high price
● Focus Strategy – focusing on special few
Competitive Forces (Michael Porter’s)
● Competition in the Industry
o Red ocean marketing – high competition
o Blue ocean marketing – low competition
● Potential of New Entrants into an Industry
o Pure Competition – anyone can enter with same products
o Monopolistic Competition – anyone can enter but with unique products
o Monopoly – one player
o Oligopoly – few players
● Power of Suppliers – the more suppliers, the better
● Power of Customers – their power to negotiate; the more customers, the better because they can’t bargain
much
● Threat of Substitutes – depends on the nature of the product
BCG Growth-Share Matrix
Implementing Strategy
1. Planning
a. Thinking Process
i. Selecting organization goals
ii. Predicting results under various alternatives
iii. Deciding how to attain desired goals
b. Communicating goals and how to attain to entire organization
2. Control
a. Taking actions to implement planning decisions
b. Deciding on performance evaluation
3. Feedback – linking planning and control to help future decision making
Supporting Managers
● Roles of Management Accountants for Success
o Problem solving – choosing between alternatives; strategy & planning
o Scorekeeping – control (e.g., daily sales report)
o Attention directing – reporting and interpreting information that helps managers to focus on problems;
control
● Goals to Assist Managers
o Different decisions emphasize roles differently
o Interaction among types of decisions means activity/roles done simultaneously
o Information must be relevant and timely to be useful
Enhancing the Value
● Customer Focus
● Value-chain Analysis – usefulness is added
1. R&D 4. Marketing
2. Design of products, services, or 5. Distribution
processes 6. Customer service
3. Production
● Supply-chain Analysis – movement of goods from raw materials to end user
● Key Success Factors – directly affects the economic viability
o Cost and Efficiency o Time
o Quality o Innovation
● Continuous Improvement and Benchmarking
Information Systems
● Functions: Input > Process > Output > Storage > Control
● Big Data Analysis: Data > Information > Knowledge > Insights > Action
International Certifications in Management Accounting
● Institute of Management Accountants USA
● Institute of Certified Management Accountants (Australia) – recognized if IMA-USA
● Certified Management Accountants of Canada
Ethical Standards (CPA – IESBA, CMA – IMA)
IMA Guiding Principles (HFOR) – won’t revoke certificate
● Honesty ● Objectivity
● Fairness ● Responsibility
IMA Standards (CCIC) – revokes certificate
● Competence ● Integrity
● Confidentiality ● Credibility
IMA Resolution of Ethical Conflict
1. Discuss issue with immediate supervisor but if supervisor is involved, present to the next level
Note: Communication of problems to authorities/individuals not employed by the organization is not considered
appropriate, unless there is violation of law
2. Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor
3. Consult your own attorney as to legal obligations and rights concerning ethical conflict
4. Disassociate yourself with the company.
NOCLAR Provision
● The appropriate authority that will report depend on nature of matter
o Not an auditor – raise with management of the client, or those charged with governance
o Non-senior accountant – escalate concerns to immediate supervisor or next highest level of authority
within organization; if superiors are complicit, establish internal whistle-blowing mechanism (e.g.,
anonymous call, open box suggestions)
o Senior professional accountants – raise to superiors or those charged with governance; determine
whether to alert external auditor
● Applies to laws and regulations that have a direct effect on material figures in FS
● Applies to all professional accountants but the framework the accountant must follow depends on the nature of
his engagement/role
