Management Accounting & Control
Pre-Master Controlling
Drs. Åge van Roon
Accounting for Decision making And Control
Jerold Zimmerman – 10th edition, 2020
Chapter 1 Introduction
Artikel: Rouwelaar (2007) - Politieagent of juist betrokken business partner?
Chapter 2 The Nature of Costs
Chapter 4 Organization Architecture
Chapter 5 Responsibility Accounting and Transfer Pricing
Chapter 6 Budgeting
Artikel: Bouwens & Kroos (2017): Targetstelling en resultaatmanupilatie: Bestijding
van het Ratchet-Effect
Artikel: Bouwens (2008): De targetpuzzel: Waarom bedrijven targets systematisch
onder niveau managers stellen
Book: Management Control Systems – Antony et al (2014) – Chapter 11: Theories
on Incentives and Motivation
Chapter 7 Cost Allocation: Theory
Chapter 8 Cost Allocation: Practices – Part A & B
Chapter 9 Absorption Cost System
Chapter 10 Criticisms of Absorption Cost Systems: Incentive to Overproduce
Chapter 14 Management Accounting in a Changing Environment
Book: Translating Strategy into the Balance Scorecard – Kaplan & Norton (1996) –
Chapter 7: Linking Balance Scorecard Measures to your Strategy
Book: Performance Measurement & Control Systems for Implementing Strategy –
Simons (2014) – Chapter 13: Levers of Control for Implementing Strategy
Artikel: Roon & Rouwelaar (2013) - De financial als ambassadeur voor een gezonde
balans tussen zorg en zakelijkheid
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,Chapter 1: Introduction
A. Managerial Accounting: Decision Making and Control
Information System = a single, integrated system, Most consist of formal , organized,
tangible records but also more informal documents as memo’s, managers opinions etc.
The bigger the company the more management relies on information provided from the
information system to manage operations.
Internal accounting system = an important part of the information system, including
budgets, cost data, inventory records and financial reports.
Accounting information is used to help manage inflow and outflow of resources and to help
align the owners’ and employees’ interests, no matter what objectives the owners wish to
pursue (profit or non-profit objectives).
Control system: Owners of a firm usually want to maximize profits, but managers and
employees will do so only if it is in their interest. To control this conflict owners will design
systems to monitor and incentivize employee behavior, so both interests are aligned.
Internal accounting systems serve two purposes:
1. To provide knowledge necessary for planning and decision-making.
2. To help motivate and monitor the people in the organization – to exercise control.
B. Design and Use of Cost Systems
Controllers are charged with designing, improving and operating the firm’s accounting
system to use as a decision-making and performance evaluation system.
The accounting system supports both external and internal reporting systems. Internal reports
are generated more frequently and less formal than external reports. Firms can decide to keep
separate books for internal and external reporting, but they generally don’t to avoid
confusion. Here the firm is confronted with a trade-off. A system that is best for performance
measurement and control is unlikely to be the best for decision making or external reporting.
C. Marmots and Grizzly Bears
Since accounting data is based on historical data, manager often criticize its usefulness in
decision making for the future.
Economic Darwinism = in a competitive world, if surviving organizations use some
operating procedure (like using historical cost accounting) over long periods of time, then this
procedure likely yields benefits in excess of its costs.
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, D. Management Accountant’s Role in the Organization
The controller has responsibility for data collection and reporting. He compiles data to
prepare the firm’s balance sheet, income statement and tax returns. Also the internal reports
for the various departments within the firm to help managers make decisions and to evaluate
performance.
The controller must balance providing information to managers for decision making and
providing monitoring information to top-executives to help control behavior.
Internal control systems include internal procedures, codes of conduct, and policies that
prohibit corruption, bribery, and kickbacks. Internal control systems should prevent
intentional and accidental financial misrepresentation by managers.
E. Evolution of Management Accounting: A framework for Change
In the period between 1925 and 1975, management accounting was heavily influenced by
external considerations, like income taxes and financial reporting requirements.
Since 1975, two major environmental forces have changed organizations:
1. Factory automation and computer/information technology
2. Global competition.
These environmental changes forces managers to reconsider their organizational structure and
their management accounting procedures.
An organization architecture is composed of three related processes:
1. The assignment of decision-making responsibilities
2. The measurement of performance
3. The rewarding of individuals within the organization.
Changes in the business environment lead to new strategies and ultimately to changes in the
firm’s organizational architecture. These changes include altering the accounting system to
better align the interests of the employees with the objectives of the firm.
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, Artikel: Rouwelaar (2007) - Politieagent of juist betrokken business partner?
Traditionele rol van de controller: financieel geweten van de organisatie.
Verandert in een support rol als een business partner waarbij de controller meer betrokken
wordt bij de besluitvorming.
Echter door een te hoge mate van betrokkenheid van de controller bij het management bestaat
het risico dat de rapportages minder onafhankelijk en dus minder eerlijke worden opgesteld.
Code tabaksblat: regelgeving om fraude te voorkomen. Ingevoerd na een aantal
boekhoudschandalen.
Four types of controllers:
Een afweging van twee tegengestelde belangen tussen enerzijds de kans dat er kosten worden
gemaakt door foutieve rapportages en anderzijds de kans dat er kosten worden gemaakt
vanwege verkeerde beslissingen door het management
1. Involved Controller: 3. Split Controller
Characteristics: Characteristics:
▪ Emphasis on service to management ▪ The 2 roles for separate individuals
▪ Actively involved in the decision- PRO’s
making process ▪ Every role gets full attention
PRO’s CON’s
▪ Knowledge controller in decision ▪ Disadvantages between ‘involved’
process and ‘independent’ remain.
CON’s ▪ Inefficient
▪ Impediment to creativity + initiatives ▪ Weakens coordination between the
management various phases
▪ Colored information to the group
2. Independent Controller 4. Strong Controller
Characteristics: Characteristics:
▪ Emphasis on financial reporting and ▪ Both roles with one person.
internal control PRO’s
▪ Objective and independent in dealing ▪ All the benefits of ‘independent’
with management and ‘involved’, possibility for
PRO’s before-the-fact checking.
▪ Correctness of reporting and CON’s
integrity of internal control ▪ Cannot be fulfilled by just
CON’s everyone.
▪ Corporate spy, no access to sensitive
information, not preventative
De afweging tussen kosten van foute rapportages en kosten voor foute beslissingen, lijkt het
voor de hand te liggen, dat een zeer involved controller of een zeer independent controller
minder effectief is voor de prestaties van het bedrijf, dan één controller, die deze twee
uitersten in zich kan verenigen.
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