Accounting for Performance Management (MANBCU2016)
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Summary Accounting for Performance Management
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Course
Accounting for Performance Management (MANBCU2016)
Institution
Radboud Universiteit Nijmegen (RU)
This is a summary of the course, it is provided with notes from the lecture and if necessary things were added from the book. Also in the end some examples of exam questions.
Accounting for Performance Management (MANBCU2016)
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Accounting for performance management notes
Lecture 1
Management
- Optimizing performance:
o Financial versus nonfinancial performance
o Sustainability of the organization in the short and in the long run
§ Social and environmental
§ Innovation, adaptation, new technologies
o Performance for shareholders and stakeholders.
Economics Majors:
- Economic theories about organizations (TCE, GT...) are crucial for business
economists.
- However:
o Important to think about how theories relate to economic management of
organizations in practice;
o We are not just studying how organizations are managed, but also study how
Business Administration Majors:
- Role of culture, leadership, learning, motivating is crucial for business
administration majors.
- However:
o Only effective when organization is financially (and nonfinancially) healthy;
o Culture, leading, learning and motivating often based on financial
information;
o Using financial information without thinking hurts culture, leadership,
learning and motivation
Accounting can support performance management, so you’d better understand it
- Many organizations lack financial literacy and cost consciousness. Do not have
good insights in costs, difficulties to bring back to the problem.
- Result:
o No attention for (hidden) costs
o No accurate analysis of actual causes of failing organizations
- Good accounting practices are crucial to avoid these problems.
,Financial accountants versus management accountants
Tasks of management accountants
- Reports to chief financial officer (CFO)
- Administers internal and external accounting
- Budgetplanning
- Controls financial (and nonfinancial) data collection and reporting
- Growing role as internal consultants or business analysts to the point of being
viewed as business partners
Balance between providing information to other managers for decision-making against
providing monitoring information used to control behavior of lower-level managers.
Managers constantly make decisions about which option is best from amongst a set of
alternatives:
- Special orders
- Outsourcing
- Keep or drop
- Capacity expansion
- Capacity concentration
- Pricing
Relevant, reliable, timely, and accurate accounting information is crucial to assist those
decisions.
Management accounting/controlling profession in the Netherlands
- RC title (registered controller)
o Executive master of finance and control
o VRC: professional organization
o Vacancies: financial controller, business controller
- Changing role of controllers:
o Connector between different departments
o Business partner role:
§ Not only administrative function, also advising
, o Increasingly confronted with digitalization
o Growing importance of sustainable performance
Controller profession: role of connector
With which departments and/or functions within or outside
your organization do you cooperate?
Controller profession: responsibilities
Controller profession: role of digitalization
- Respondents agree that the following phenomena are taking place in their
organizations and expect an increase in the next five years:
o Digitalization of the primary processes
o Digitalization of the administrative and/or financial processes
o Digitalization of the business model
o Collecting/availability of data to support decisionmaking
- This tendency is not so strong in SMEs as in other companies.
Controller profession: role of sustainability
- Controllers are confronted with a demand for sustainability and their function is
affected by this demand:
o As part of the strategy of the organization for which they work
o When offering products and services
o As part of the organizational processes
o Regarding procurement
o As investment criterion
o Sustainability performance is measured and reported externally
o Nonfinancial information is quantified
o Controllers’ functions are geared towards creating nonfinancial value
, - Sustainability is less important in SMEs than in other organizations
- Respondents have the necessary knowledge to integrate sustainability in their
function.
- The EU taxonomy and CSRD will have implications for controllers’ functions, but
are at the same time experienced as an administrative burden.
Controller profession: role of uncertainty
- Current global circumstances are affecting controllers:
o Not specifically financially (revenues, customers’ willingness to pay, not
affected by changing exchange rates)
o Rather practically:
§ Suppliers cannot always deliver
§ Much competition for personnel
§ More time is spent on budgeting
o Targets are being met
§ But less often than five years ago
Controller profession: work satisfaction
- Controllers are very satisfied with their job:
o It is clear how they contribute
o They feel like they have the necessary knowledge and skills
o Challenging function
o Enough time to do what is expected from them
o Not uncertain about the future of their job
o The function will not become superfluous because of digitalization
o They are not planning to switch organizations in the upcoming year
o They are willing to exert more effort than expected
o They don’t feel like they need to make sacrifices
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