Lecture Management accounting: An Australian perspective: Chapter 12 - Kim Langfield-Smith

Contemporary developments in measuring financial performance are integrated with conventional responsibility accounting performance reports. Real-time reporting, the impact of shared services and team-based structures are now included. The transfer pricing section has been reformulated to provide a clearer demonstration of the operation of such systems.
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Lecture Management accounting: An Australian perspective: Chapter 12 - Kim Langfield-Smith Chapter 12 Financial performance reports and transfer pricingCopyright 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-SmithDecentralisation Benefits Managersofsubunitshavebetterlocalinformationabout marketsandoperationstoenablethemtomanagetheir areasmoreeffectively Providesmanagerialtrainingforfuturehigherlevel managers Mayleadtogreatermotivationandjobsatisfactionfor subunitmanagers Allowscorporatemanagersmoretimeforstrategicissues Allowstheorganisationtoreactmorequicklyto opportunitiesandproblemsastheyariseCopyrightª2003McGrawHillAustraliaPtyLtd, 2Decentralisation andResponsibility accounting Decentralisation Therestructuringoftheorganisationintosmaller subunits,suchasdivisionsanddepartments, eachwithspecificoperationsanddecision makingresponsibilities Responsibilityaccounting Assignresponsibilitytomanagerstorun particularsubunitsoftheorganisation Helpstoreinforcetheadvantagesof decentralisationCopyrightª2003McGrawHillAustraliaPtyLtd, 3Decentralisation Negativeconsequences Managersmayfocustoonarrowlyontheirownsubunit performanceratherthanonattainingtheorganisations overallgoals Sometasksandservicesmaybeduplicated unnecessarily Goalcongruence:abehaviouralchallenge Goalcongruencemaybedifficulttoachieveina decentralisedorganisation Performancemeasuresandrewardsystemsmayprovide directionandincentivestoachievewiderorganisational goalsCopyrightª2003McGrawHillAustraliaPtyLtd, 4Responsibility centres Aresponsibilitycentresisasubunitofan organisationwherethemanagerisheld accountableforthesubunit’sactivitiesand performance Investmentcentre Profitcentre Costcentre RevenuecentreCopyrightª2003McGrawHillAustraliaPtyLtd, 5Copyrightª2003McGrawHillAustraliaPtyLtd, 6Responsibility centres Terminologyinpractice Costcentreiscommonlyused Revenuecentreseldomused Profitcentremayrefertobothprofitcentresand investmentcentres Strategicbusinessunit(SBU)oftenusedtorefer toinvestmentcentresandsometimesprofit centreswheretheyhavetheirowndistinct marketsandstrategiesCopyrightª2003McGrawHillAustraliaPtyLtd, 7New developments inorganisational structuring Sharedservices Theconcentrationofsomesupportservicesthatare typicallyspreadacrossadecentralisedorganisationintoa separateunittoservicemultipleinternalcustomers Mayfocusonnonstrategicareas,suchasaccounts payable,payroll,finance,informationtechnology Capturethebestaspectsofcentralisedanddecentralised structures Businessunitsmaychoosetouseasharedserviceunit oranoutsideprovider,sothereisanincentiveforshared serviceunitstodeliverhighqualityservicetointernal customersCopyrightª2003McGrawHillAustraliaPtyLtd, 8Copyrightª2003McGrawHillAustraliaPtyLtd, 9New developments inorganisational structure Teambasedstructures Firmshavemovedawayfromhierarchical structurestowardsflatterstructuresthatinvolve fewerlevelsofmanagement Selfmanagedworkteamsmaybeusedto manageallaspectsofaprocess Intheproductionarea,teamresponsibilities mayinclude Productionplanning,orderingmaterials,liaisingwith suppliersandcustomers,allaspectsoftheproduction process,costbudgetsandperformancemanagement continuedCopyrightª2003McGrawHillAustraliaPtyLtd, 10New developments inorganisational structure Teambasedstructures Teamsmaymanagesomeprocessesmore effectively Teamsmaypromoteemployeesatisfaction, improvedcustomersatisfactionandproductivity Greaterempowermentmayresultfromtransferof decisionmakingresponsibilityfrommiddlemanagers toteams Teamsareoftensetupascostcentres Nonfinancialmeasuresmaybemoreimportantin managingateamthancostmeasuresCopyrightª2003McGrawHillAustraliaPtyLtd, 11Copyrightª2003McGrawHi ...