Accounting technologies of non-financial reporting lever of improving performances in tourism

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1 Available online at Procedia Economics and Finance 3 ( 2012 ) Emerging Markets Queries in Finance and Business Accounting technologies of non-financial reporting lever of improving performances in tourism Mariana Man a a a * a University of Petrosani, Str. Universitatii nr. 20, Petrosani , Romania Abstract This paper briefly presents and proves the usefulness of accounting technologies of non-financial reporting of performances for the management of tourism entity, as a complex system. Identification of relationships between its subsystems, highlighting pertinent information allowing operational subsystem an decisional subsystem attain the proposed objectives, can be supported by the use of certain instruments of performance monitoring and control: Tableau de bord, Reporting, Balanced Scorecard. These performance monitoring and control instruments also point out the non-financial objectives that a tourist entity should reach order to attain it financial objectives The Authors Published by by Elsevier Elsevier Ltd. Ltd. Selection and peer-review under responsibility of the Emerging Selection and Markets peer review Queries under responsibility in Finance of and Emerging Business Markets local Queries organization in Finance and Business local organization. KeyWords: tableau de bord, reporting, balaced scorecard, performance, management, tourism 1. Introduction Traditional assessments of entity performance refers in fact to the use of ratios resulted from pertinent studies and analyses Lucey, Traditional analysis instruments mainly used to rely on inside financial ency requires those to be mainly oriented toward the possibility of incorporation and processing of non-financial information from the outside as well. In order to improve its performance, any tourism entity, as any other service providing entity, attempts to provide their specialists more and more flexible interrogation and analysis instruments for the data base, so that in their turn they would provide managers all the information required. In order to be useful for the tourism entity managers, * Corresponding author. Tel.: ; address: ravasbogdan@yahoo.com The Authors. Published by Elsevier Ltd. Selection and peer review under responsibility of Emerging Markets Queries in Finance and Business local organization. doi: /s (12)

2 404 Mariana Man et al. / Procedia Economics and Finance 3 ( 2012 ) performance control instruments should be developed based on relevant indicators and should include essential information in a succinct but clear manner, which would allow them to notice the possibly unfavorable differences, so that those might be changed in useful time. Performance control instruments should combine traditional financial instruments with non-financial ones and offer managers relevant information on the activities they run. 2. Literature review Cohen, 1994 considers that the tableau de bord compares evident reality in certain period of an entity, with previously fixed objectives, highlighting deviations for significant indicators and their analysis allows identification of mistakes, errors and represents a previous condition for correcting trajectory of the entity and modification of its projects instrument of information and signalling. Bouquin, 2001, believes that the tableau de bord represents a piloting instrument. Support instrument in making decisions and in predictions, the tableau de bord is an body of indicators, developed for the managers to be aware of the stage of evolution of the systems piloted by them and to identify future tendencies. In order to accomplish its role of instrument of diagnosis and progress, the tableau de bord should point out the significant deviations. Kerviller and Kerviller, 2000 say that the tableau de bord is an instrument of dialogue between the managers of various hierarchic levels and a support of objective appreciation of performances, since it helps to observe, depending on the evolution of the results, whether corrective actions had been taken and whether those were opportune or not. Meanwhile, it is a working instrument, since it allows self-correction. Horngreen C., Datar S.M. and Foster G., 2006 consider that the tableau de bord also points out the non-financial objectives that an organization should reach, in order to attain its financial objectives., 2009 considers that the tableau de bord is meant to highlight the alert points of the entity, its sense of evolution, in relation to the objectives fixed, and consequently, to help improve its performance. This board is designed as a centralizer of information presented in a systematic, synoptic form, referring to the state and evolution of economic phenomena that characterize its fields of activity. Sgârdea, 2009 defines the tableau de bord as a body of indicators, not too numerous(from five to ten), designed to allow managers to inform accurately and in time on the patrimony situation, evolution of systems being piloted by them, including discharge of tendencies on a short time perspective. Caraiani and others, 2010 consider that reporting is based on three concepts: structure of entity, fixing objectives and possibility of control. Reporting only views financial indicators, largely centred on budget control, calculus and analysis of deviations and because of its limitations, lead to a new monitoring and reporting instrument for performance: balanced scorecard. Kaplan R. and Norton D., 1996 are those who designed scorecard balance. 3. Research methodology The scientific novelty of this paper lies in the thorough study of the performance control instruments as well as the laying the foundation for the decisions of their implementation at the level of entities in tourism. From a methodological point of view, the research goes from general to particular, using mixed research methods, trying to identify the main aspects and elements influencing the development and implementation of performance control instruments in the field of tourism at microeconomic level. Five data types were analyzed, taking part in the building up of a durable and responsible performance tableau de bord: elementary data presented in the information system of the entity; declarative, verifiable data, obtained by interviews; unverifiable data or data difficult to be verified; statistical data obtained by inquiry; estimations presented by assessors. 4. Tableau de bord tableau de bord instrument for the entity, because it allows managers to have, in real time, a synthetic view n the main

3 Mariana Man et al. / Procedia Economics and Finance 3 ( 2012 ) indicators regarding the organization and the business environment, in view of making decisions in the framework of their competencies. There are three stages in the development of the Tableau de bord: defining -factors of success, allowing these objectives to be reached; selection of representative indicators of key-factors of success. Developing the Tableau de bords at the level of tourism entities involves in the first place to determine the organizational context and to assess the usefulness of drawing up an tableau de bord for a certain tourism entity managers, who set up objectives and establish action plans to achieve these objectives. The main objectives assigned to an administration tableau de bord for a tourism entity may be: quantity objectives(increasing turnover, gaining a market share, reducing costs, improving stock profitability) and quality objectives(improving service quality, improving the presentation ). Key-factors for success are essential conditions allowing objectives to be attained and resistance to actions of a hostile environment(negotiation power of clients/tourists and suppliers, existing competition, threat of new competitors on the market etc.). They can take the form of : distinct competencies, not partitioned by the competitors and without possibility of take over, conferring tourism entity a competition advantage; minimal performance to be achieved, whose insufficiency would compromise the position of the tourism entity as to the competitors and might lead its elimination from the market. The Tableau de bord should be centred around keyfactors of success of the tourism entity ant attached to someone in charge. it includes a reduced number of indicators. For instance, indicators used at the level of a hotel can be: occupation rate of rooms; average income per occupied room; share of tourists with more than 6 of stay in total of accommodated tourists; rate of client fidelity, etc. The main objective of the decentralized Tableau de bord is to provide significant information for a limited number of key-points of managing the operations run by the operational people in charge, at close intervals. in the field of tourism services, these key-points refer to four families of criteria: profitability,; level of activity; productivity; quality of services rendered. Thus, the general Tableau de bord of a tourism entity, in a simplified version, can look as in Table 1(where> M current month; N current year; M- 1 previous month; MN-1 month corresponding to the previous year). Table 1 General Tableau de bord of an entity in tourism Elements Ratio of number of at the table and number of in the rooms Ratio of the investment volume and turnout of the first year of operation Degree of occupation (occupation rate) Index of visit as a ratio of the number of nights and number of rooms taken Average period of the stay as ratio between the number of nights and number of tourists M 1,2 M-1 MN-1 at the end of N average Objective M Objective at the end of N average a b c d e f g h i 1 1 1,2 1,2 1, a/e % d/f % Obs % 65% 63% 70% 70% 75% ,16 arrived. Real average tariff of rooms 80 / Revpar: ratio of turnover from accommodation and number of available rooms 9,06 1,3 2,8 75 / pers 8 1,1 2,2 75 / pers 8,5 3,16 80 / pers / pers 8, / pers 9%

4 406 Mariana Man et al. / Procedia Economics and Finance 3 ( 2012 ) Average price of a table at the restaurant 25,5 / 24 / 24,5 / 25,5 / 25 / 25 / Profitability rate 33,86% 28% 27,5% 33,86% 30% 30% Indicators can be measured either as volume of activity, or as resource consumption as well as personnel cots, IT costs etc. Such a board can offer information regarding tendencies from one month to another or from one month of the current year to the same month of the previous year. Comparing the value achieved of one month with the proposed objective, one can determine the rate of achievement of the monthly objective. In the same way one can calculate the rate of achievement of the annul objective. One can notice that to be useful for the managers of the tourism entities, the tableau de bord will be developed based on relevant indicators and should include essential information in a succinct but clear manner, allowing managers to observe the possible unfavourable differences, so that they might intervene in useful time. It is also noticed that there are significant differences between the tableau de bord and the accounting responsibility. Accounting responsibility is structured so that it should express the degree of achievement of objectives, based on accounting and financial information, considering that the objectives were expressed in reference to the profit. When the tableau de bord emphasizes follow up of activities required to reach objectives, this gives room to non-financial data. In contrast, accounting responsibility is strictly connected to budget structure, financial data being emphasized, even at inferior levels. 5. Reporting and Balanced Scorecard Reporting is an instrument of assessment and follow-up of performances, being very frequently met in large companies. It represents a system of management accounting, adapted to the structure of the organization, so that each manager would visualize only the aspects lying in his administration, and the result for which he is responsible, respectively. The system of Reporting of an entity is a very important element of its operative management. Reporting is developed based on the budget and accounting data, the reporting deadline usually being the end of the month. Reporting includes two components, accounting and administration. The accounting component refers to comparing the achievements with forecast, so as to identify and analyze deviations. The administration component refers to identification of causes generating deviations and defining corrective measures, which after the assessment will be transmitted to the general management together with other documents. When a Reporting is drawn up, a very important result is obtained, namely a more accurate establishing of responsibilities per departments and people, with direct effects on the results of the entity.. This involves two simultaneous actions: acceptance by the management of the delegating responsibilities at lower levels allowing a more rapid solving of problems; budgeting in the same manner, making lower management more interested and responsible. A simplified Reporting model at the level of small and medium entities in tourism having in view supplying information regarding three essential aspects, namely commercial activity, personnel and investment. Reporting can thus be considered a management instrument by figures, by which it is reported how much margins were generated by a responsibility centre and by inside consolidations it is correlated to the accounting result. Reporting is based by a managerial accounting system adapted to the entity structure, so that each manger would visualize only the aspects for which he is responsible. Balanced Scorecard is a situation of monitoring and reporting of performance, which combines traditional financial instrument with non-financial ones and offer managers relevant information on the activities they run. For the first time it was applied in American companies, as a new performance piloting and follow-up instrument. Currently it is known and adopted all over the world and is really successful. Balanced Scorecard is nothing but a balanced Tableau de bord and it is like a body of indicators directly linked to the strategy developed by an entity. it offers the users the possibility to pilot all determining elements of performance and it is based on the concept according to which strategy is transposed into action. Kaplan R. and Norton D. emphasized that an entity should group its performance indicators in four large categories, each with sizes separated from performance, but which are critical for the future success of the

5 Mariana Man et al. / Procedia Economics and Finance 3 ( 2012 ) respective entity. The identified categories, where performance indicators are included, are grouped around four perspectives: financial perspective(it proposes us an other approach in order to be successful in front of the stockholders: which are the stockhold ; clients(helping us understand which are the expectations of the clients/tourists and what they want from the entity: how clients/tourists perceive the entity and which are their pretensions; inside processes(focusing our attention on the processes where the tourist entity should excel in order to succeed in business: can we still develop and can we increase the entity value? which is the field of success?)and the perspective of competency development(showing us the way in which tourist entity capacity will be supported in order to adapt and permanently improve its performances: what should we excel in? how do we support the improvement of tourist products?). By its informational content, this control instrument for global performance is oriented towards action and anticipation, being the result of a data selection process, sothat the information delivered to the management should not be too detailed. Table 2 Balanced Scorecard model applicable at the level of tourist entities Perspectives Strategic directions Strategic objectives Indicators Financial Increase Profitability of the capital used Profitability of assets Profitability Market leader Profitable increase Tourists Inside processes Innovation and learning Satisfaction of tourists Safety and security Competitive service supplier Quality of services Image of the entity Motivated and qualified personnel Satisfaction and loyalty of tourists Quality services Stock management Strategic performance Key-competencies and skills Personnel loyalty Access to strategic information - Rate of profitability of the capital used - Cash-flow - Marginal profit - Marginal cost - Rate of development of reservations - Profitability threshold -Ratio of investment volume and turnover in the first year of operation - Displayed room tariffs - Real average room tariff - Revpar - Total income for an available room - Ratio of real average tariff and specific investment for a room - Average number of tourist served in restaurant at each of the main tables. - Average price of a table in restaurant -Degree of occupation(occupation rate) - Index of visiting - Average duration of stay - Inquiry - Feed-back - Personnel productivity It is noticed that Balanced Scorecard is intended and useful to tourism entity managers. Associating in the d means of allowing a global performance piloting. Total Performance Scorecard is a combination and extension of Balanced Scorecard specific concepts, of total quality management and of competency management. It is a continuous process, focused on the sustainable of personal and corporative performances. It is built on a holistic concept and approaches from personal and corporative perspective the performance indicators as well as the continuous development, improvement and learning process.

6 408 Mariana Man et al. / Procedia Economics and Finance 3 ( 2012 ) Conclusions played by annual financial situations. The Tableau de bord represents a modern tool to achieve a performing management that might include risk management as well. The new generation of Tableau de bords can be considered an answer to the insufficiency of financial accounting and making of decisions by managers. In such a context, administration accounting offers adequate information to resource consuming and results producing activities. The usefulness of the Tableau de bord as a tool meant to synthesize the information required by tourism entity managers, lies in: operative informing of managers regarding the state of managed subsystems; alerting managers on unfavorable situation or deviations from normality; assessment of results obtained in the process of achieving the proposed objectives; quality assessment of decision adopted and actions initiated by making those operational; orientation of managers toward priority objective; orientation of actions taken to achieve the proposed objectives; looking for corrective actions; identification and understanding of the results deviation from the objectives; centralization of information on the results obtained; completing financial judgment with a qualitative dimension. Reporting views only financial indicators, mainly focusing on budget control, deviation calculus and analysis. By Reporting action directions can be established, either to modify forecasts, by recalculating them in view of adapting to new economic conditions where the entity operates, or to improve the activity of the main factors in the entity. Its importance can be associated to the fact that by it limits, it contributed to an other performance monitoring and reporting instrument to come up: Balanced Scorecard. In tourism units Balanced Scorecard, financial-accounting indicators are maintained, but other indicators regarding stockholders way of perceiving tourism entity are presented, as well as the processes where the tourist entity should excel, the manner in which the capacity of the tourist entity to adapt and improve its performances would be supported. In conclusion we can say that various systems of performance control and reporting applied within a tourism - economic contexts. References Bouquin H., 2001, Le controle de gestion, Edition PUF, Paris ; Caraiani C., 2010, Gestion, 8e edition, Economica, Paris, 2005; Guedj N. (coordinateur) et all., 2001, Le controle de gestion. Pour ameliorer la perform edition, Paris, Horngreen C.T., Datar S.M., Foster G., 2006, a a XI- ; Kaplan R., Norton D., 1996, The balanced scorecard, Harvard Business Press; Kaplan R., Norton D., 1998., Les tableaux de bord prospectif, Les ; Kerviller I., Kerviller L., 2000, Le controle de gestion a la portee de tous, Economica, Paris ; Sgârdea F.M., 2009, Control de gestiune, Editura ASE ; 2011, ; De Ronge Y., Cerrada K., 2005, Contrôle de gestion, Pearson Education France, Paris ; Tab 2009, Control de gestiune, Ed