NGUYỄN THU HẰNG – GBH17529

Contents
LO 1: Demonstrate an understanding of management accounting systems .................................... 2
P1: Explain management accounting and give the essential requirements of different types of
management accounting systems. ...................................................................................................... 2
P2: Explain different methods used for management accounting reporting. ................................ 4
P5: Compare how organisations are adapting management accounting systems to respond to
financial problems. ................................................................................................................................. 8
M1: Evaluate the benefits of management accounting systems and their application within an
organisational context.......................................................................................................................... 12
M4: Analyse how, in responding to financial problems, management accounting can lead
organisations to sustainable success. .............................................................................................. 12
D1: Critically evaluate how management accounting systems and management accounting
reporting is integrated within organisational processes ................................................................. 12
D3: Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organisations to sustainable success. ................................................................ 12
References ................................................................................................................................................ 13

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LO 1: Demonstrate an understanding of management accounting systems

P1: Explain management accounting and give the essential requirements of

different types of management accounting systems.
According to BTEC (2018) management accounting, also known as management
accounting or cost accounting, is the process of analyzing business and operating
expenses to prepare internal financial statements, records and accounts to support too.
Decide the decision of the manager in achieving the business goals. In other words, it is
the act of making sense of financial data and costs and translating that data into useful
information for management and staff in an organization for users in:

Planning

Planning must occur at all levels. First of all, it happens at the abnormal state of setting
methodology. It at that point moves to wide based pondered how to set up an ideal
"position" to amplify the potential for acknowledgment of objectives. At last, planning
must give insightful thought to money related substances/imperatives and foreseen
fiscal results (spending plans) (principleofaccounting.com., n.d).

A business association might be comprised of numerous people. These people must be

organized to cooperate in agreement. It is essential that they share and comprehend
the hierarchical plans. To put it plainly, "everybody should be in agreement." With such,
clear correspondence is basic (principleofaccounting.com., n.d).

Control

The managerial bookkeeper is a noteworthy facilitator of this control process, including

investigation of elective remedial procedures to cure negative circumstances.

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What's more, an ongoing pattern is for improved inner controls and obligatory
accreditations by CEOs and CFOs with regards to the precision of money related
reports. These accreditations convey punishments of prevarication, and have gotten the
consideration of corporate administrators. This has prompted significantly extended
accentuation on controls of the different inner and outside revealing components
(principleofaccounting.com., n.d).

Performance evaluation

Performance evaluation is the assessment of the profitability of each product and

product line, identifying the relative contributions of different managers and different
parts of the organization. In nonprofit organizations, performance assessments are
evaluating the effectiveness of managers, departments, and programs (BTEC, 2018).

A management accounting system collects financial data from business operations such
as sales data, inventory changes and material cost changes, and then transfers
information to the analysis report (BTEC, 2018).

Integrated accounting systems: It is always a smart business decision to choose an

integrated accounting management system with the company's financial accounting
system. This eliminates redundancy and improves the timeliness of management
reports (BTEC, 2018).

Requirements of accounting skills

Organizational skills

One of the most important accounting skills is organizational capabilities. The most
successful accountant is detailed navigation since everything must be added exactly to
the bottom line and every cent a business must be accounted for. This also involves in
working extremely comfortable and monitoring large amounts of data (Krakoff, n.d).

In addition, accountants must be often responsible for a variety of different systems that
require ongoing maintenance and updating. They must be good planners, as
accountants must constantly advance to their next term, and have strong time

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management skills. On top of this, the accountant must be able to keep up with the high
level of the organization even under pressure, especially during busy times like the tax
season (Krakoff, n.d).

Financial skills

The most obvious skill for an accountant is having a database of financial data. By the
most basic definition, an accountant is the manager, auditor, and financial analyst of a
business or individual. As a result, some of the most important skills in accounting
include the ability to apply financial frameworks used by businesses to prepare financial
statements and complete other financial tasks (Krakoff, n.d).

A good accountant will be able to apply professional judgment when preparing,

analyzing and interpreting financial information, and will be able to perform these tasks
in a way that reflects both the art and accounting science. . Accountants may also be
required to evaluate an organization's accounting system to ensure sound financial
information, generate appropriate asset assessments, and reduce the risk of fraud.
They also feel comfortable assessing the ethics of financial decisions and should be
cautious in their reports (Krakoff, n.d).
Customer Service Oriented

Whether you work in public or private accounting, solid customer service skills are very
important. If you work in a public accounting company, it is essential that you retain
existing customers and bring in new customers. If you work in business accounting, you
must meet the needs of departments and other managers of the organization. The
accounting expert can prove good customer service by really listening to the needs and
concerns of your customers, whether they are internal or external. A positive attitude
can also go a long way, especially when the stress level is high and be careful not to
overpromise when it comes to deadlines or deliverables (Half, 2018).

P2: Explain different methods used for management accounting reporting.

Cost report

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Managerial accounting decides the price of things. This is finished by taking the entire
new item prices, overhead, work, and some other prices into thought. The whole costs
are partitioned by sums of things made. In a cost report, the entire information is brief
and this last cost report empowers administrators the capacity to see the prices of
merchandise versus offering costs. It likewise enables director to design and oversees
pay limits (steemit, 2018).

In this report, the manager take the audit, amount and the budget depend on the hours.
Besides, they plus all the function and take the total of the days, months or year.

Budget report

A major component of Management Accounting is spending planning. Budgeting is

usually done using financial plans of previous years and adapting to future projections.
An organization's expenditure lists all sources of income and expenses. An organization
tries to accomplish its goals and objectives while still in the budget. Managers regularly

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look for new sellers to use as raw material providers for backup. They also explore ways
to expand transactions while reducing costs (BTEC, 2018).

This report shows the variable cost and fixed cost, the typical functions in budget cost.
In addition, they take each of the function the flexible budget and actual budget. After
all they could find the total variable costs and total fixed cost and the total overhead.

Inventory and Manufacturing

The Manufacturing and Trade Inventories and Sales estimates are based on data from
three surveys: the Monthly Retail Trade Survey, the Monthly Wholesale Trade Survey,
and the Manufacturers’ Shipments, Inventories, and Orders Survey. Data for the
wholesale and manufacturing sectors are unrevised from the most recent Monthly
Wholesale Trade Report and the Full Report on Manufacturers’ Shipments, Inventories
and orders. Data from the Retail sector is revised and presented in more detail from the
most recent Advance Economic Indicators Report (Census.gov, 2018) .

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The report shows about the current assets such as cash and cash equivalents,
investment, material and so on. Therefore, they could find the prepaid expenses of the
assets of the company.

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P5: Compare how organisations are adapting management accounting systems

to respond to financial problems.

Budgeting and cost accounting system

Budgeting and cost accounting system consist of the appraisal of cost, the setting of an
agreed budget, and manage actual cost against budget (apm.org.uk., n.d).

Initial cost estimates could be parallel. These are refined as the feasibility and
desirability of the investigated and a large understanding of scope, schedule and
resources is developed. Once approved, these refined the basis of the cost is the
baseline cost. A profile of expenditure is designed by allocating costs activities in a
timeline (apm.org.uk., n.d).

Management control framework

A control framework is a data structure that organizes and categorizes an organization’s

internal controls, which are practices and procedures established to create business
value and minimize risk (Rouse, 2011).

Contingency theory

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The contingency theory explains that there are specific situational factors that can affect
the direct relationships between independent and dependent variables in the study of
organizational behavior. Independent variables (x) are the cause of the change in the
dependent variable, while dependent variables (y) are a response affected by an
independent variable (study.com., n.d).

The basic premise of Contingency Theory is that there is no one best way to lead an
organization. There are too many external and internal constraints that will alter what
really is the best way to lead is in a given situation. In other words, it all depends upon
the situation at hand as to what will be the best course of action (business.com., 2017).

ABC (Activity based cost)

Activity based costing ABC is a method for assigning costs to products, services
projects, tasks, or acquisitions, based on activities that go into them and resources
consumed by these activities. ABC contrasts with traditional costing (cost accounting),
which sometimes assigns costs using somewhat arbitrary allocation percentages for
overhead or the so-called indirect costs. As a result, ABC and traditional cost
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accounting can estimate cost of goods sold and gross margin very differently for
individual products. Contradictory and uncertain cost estimates can be a problem when
management needs to know exactly which products are profitable and which are selling
at a loss (Businesscaseanalysis.com, 2018)

ABC (Activity Based Cost) are composed of overhead cost, direct costs such as direct
materials costs and direct labour costs and indirect costs. Moreover, cost driver is
typical in ABC (Activity Based Cost) and changes every situations.

Strategic cost management

Strategic cost management is the process of reducing total costs while the manager
makes progress of the strategic position of a company. This goal can be achieved
by thoroughly understanding the cost supporting of a company's strategy and what
costs undermine or not influence it. The cost reduction initiatives should focus on
those costs in the second category. Conversely, it can be helpful to increase the
cost of supporting the strategic location of the business (Accountingtools. com,
2018).

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For example, the strategy of a manufacturing company is to be able to provide rapid

change of customer orders by maintaining strict control over its bottleneck
operations. In contrast, cutting costs at bottleneck operations will reduce the
production capacity of the business and will have an immediate negative impact on
its profitability. From a strategic point of view, the company will do better to cut
costs in bottleneck bottlenecks downstream from the bottleneck, as these cuts will
not affect delivery times (Accountingtools.com., 2018).

Balanced scorecards

The balanced scorecard (BSC) is a strategic planning and management system that
organizations use to make communication about what they are trying to manage;
coordinate the day by day work that everyone do; take the projects, products and
service in prioritization; strategic planning and management system that organizations
use to and control progress towards strategic goals (Balancedscorecard.org, n.d).

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M1: Evaluate the benefits of management accounting systems and their

application within an organisational context.

M4: Analyse how, in responding to financial problems, management accounting

can lead organisations to sustainable success.

D1: Critically evaluate how management accounting systems and management

accounting reporting is integrated within organisational processes

D3: Evaluate how planning tools for accounting respond appropriately to solving
financial problems to lead organisations to sustainable success.

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References
Principleofaccounting.com., n.d. “Planning”

Available at: https://www.principlesofaccounting.com/chapter-17/planning/ [Accessed:

4/6/2018]

Steemit., 2018. “methods of management accounting report”

Available at: https://steemit.com/management/@zainqureshi/methods-of-management-

accounting-report [Accessed: 4/6/2018]

Rouse, M., 2011 “Management control framework”

Available at: https://searchcompliance.techtarget.com/definition/control-framework

[Accessed: 8/6/2018]

Business.com., 2017. “Contingency theory”

Available at: https://www.business.com/articles/contingency-management-theory/

[Accessed: 7/6/2018]

Study.com., n.d. “Contingency theory”

Available at: https://study.com/academy/lesson/contingency-theory-definition-and-

significance-to-organizational-behavior.html [Accessed: 8/6/2018]

Businesscaseanalysis.com., 2018. “Activity based cost”

Available at: https://www.business-case-analysis.com/activity-based-costing.html

[Accessed: 9/6/2018]

BTEC, 2018 “Lecture 1”

Available at:
https://drive.google.com/drive/u/1/folders/1_zP5cTccVgwYimI9ku3mxtLRZAhVmIcU
[Accessed: 9/6/2018]

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Apm.org.uk., n.d. “Budgeting and cost control”

Available at: https://www.apm.org.uk/body-of-knowledge/delivery/financial-cost-

management/budgeting-and-cost-control/ [Accessed: 10/6/2018]

Census.gov., 2018. “Inventory and Manufacturing”

Available at: https://www.census.gov/mtis/www/data/pdf/mtis_current.pdf [Accessed:

10/6/2018]

Accountingtools.com., 2018. “Strategic cost management”

Available at: https://www.accountingtools.com/articles/strategic-cost-management.html

[Accessed: 10/6/2018]

Balancedscorecard.org, n.d. “BSC: Balanced scorecards”

Available at: http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-

Scorecard [Accessed: 10/6/2018]

Krakoff, S., n.d. “Key skills for accountants”

Available at: https://www.champlain.edu/online/blog/accountant-key-skills [Accessed:

10/6/2018]

Half, R., 2018. “Accounting skills”

Available at: https://www.roberthalf.com/blog/salaries-and-skills/the-accounting-job-

skills-you-need-to-succeed [Accessed: 10/6/2018]

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