AC 312 ADVANCED MANAGEMENT ACCOUNTING. Semester 1 (2001/2002)

Transcription

1 AC 312 ADVANCED MANAGEMENT ACCOUNTING Course Description and Scope Semester 1 (2001/2002) As the role of management accountants continues to evolve, it is recognized that the role must include the creation of information, not only for achieving operational excellence, but more critically for the formulation and implementation of strategy. The objectives of the course are to: (i) provide a theoretical framework to better understand management accounting practices, (ii) develop an understanding of how cost information can be used for decision making by describing and evaluating various costing systems, (iii) introduce various performance evaluation measures, focusing on those that are more effectively linked to value creation and strategy implementation, and (iv) highlight contemporary issues in management accounting theory and/or practice. Topics include organizational and behavioral framework, strategic cost management, variance analysis, contemporary cost management systems, decentralization and evaluation of business units, transfer pricing, performance evaluation and compensation systems, and contemporary issues in management accounting. Lecture Schedule Week No. 1 Topics FRAMEWORK OF MANAGEMENT ACCOUNTING AND CONTROL Historical overview of management accounting Contingency Theory Agency Theory Organisational Control Systems Readings KA Chs 1 &14 Readings STRATEGIC COST MANAGEMENT Activity-based management (ABM) Strategic Value Chain Analysis ABC analysis of value chain processes Managing value chain relationships with suppliers VARIANCE ANALYSIS FOR OPERATIONAL CONTROL Production variances: direct material, direct labour, and overheads Accounting treatment of variances Variance investigation Variance analysis in ABC environment VARIANCE ANALYSIS FOR MANAGING MARKETING EFFECTIVENESS Sales Variances: sales volume, mix, quantity, market-share and market size Customer Profitability Analysis KA Chs 4 & 5 HBFD Ch 11 Readings 4-7 HBFD Chs 15, 16 & 17 Reading 8 HBFD Ch 12 pp Reading 9 1

2 CONTEMPORARY COST MANAGEMENT CONCEPTS Target costing Life-cycle costing Theory of constraints CONTEMPORARY COST MANAGEMENT CONCEPTS Quality costs Kaizen costing DECENTRALISATION AND EVALUATION OF BUSINESS UNITS Decentralisation Reasons for decentralisation organisation of business units Performance measures for business units Return on investment (ROI) Residual Income (RI) MEASURING VALUE OF THE FIRM: EVA What is EVA? How can companies create value Recess (Week 9: 3 Sept. - 9 Sept.) MEASURING VALUE OF THE FIRM: THE BALANCED SCORECARD Four perspectives: customer, internal processes, innovation and learning, and financial Measures that link to strategy TRANSFER PRICING AND CONTROL IN MULTINATIONAL OPERATIONS Transfer pricing Objectives Alternative methods Control in multinational operations Multinational transfer pricing and tax considerations Performance measurement issues INCENTIVE AND COMPENSATION SYSTEMS Expectancy theory Tying rewards to performance Types of incentive and compensation systems CONTEMPORARY ISSUES IN MANAGEMENT ACCOUNTING Management accounting and knowledge management KA Ch 6 HBFD Ch 12 pp , Ch 20 pp Readings KA Ch 6 pp , Ch 11 pp HBFD Ch 20 pp Readings 13,14 KA Ch 7 & Ch 9 pp Ch 10 HBFD Ch 18 pp Ch. 19 KA Ch 10 HBFD Ch 19 pp Readings KA Chs 8 & 11 HBFD Ch 20 pp Reading 18 KA Ch 9 pp HBFD Ch 18 Reading KA Ch 13 HBFD Ch 19 pp Readings Readings

3 Basic Text & Prescribed Readings KA Robert S. Kaplan & Anthony A. Atkinson, Advanced Management Accounting, Prentice Hall, 3 rd edition, 1998 (Call No. HF5635.K ) HBFD Charles T. Horngren, Alnoor Bhimani, George Foster & Srikant M. Datar, Management and Cost Accounting, Prentice Hall, 1999 (Call No. HF5686.C8M266) List of prescribed readings is provided at the end of this subject outline. References Ashton D., T. Hopper & R. W. Scapens (ed), Issues in Management Accounting, Prentice Hall, 2 nd edition, (Call No. HF I ) Barefield J.T., C.A.Raiborn & M.R.Kinney, Cost Accounting: Traditions and Innovations, South- Western, 3 rd ed Blocher, E.J., K.H.Chen & T.W.Lin, Cost Management: A Strategic Emphasis, McGraw-Hill, Hansen D.R. & M.M.Mowen, Cost Management, South-Western, 3 rd edition (Call No. HF5686.C8H ) Hilto, R.W., M.W.Maher & F.H.Selto, Cost Management: Strategies for Business Decisions, McGraw- Hill, Simons, R., Performance Measurement & Control Systems for Implementing Strategy: Text and Cases, Prentice-Hall, Tissen R., D. Andriessen & F. L. Deprez, The Knowledge Dividend, Prentice Hall, (This book by three KPMG authors provides a good account of how to create high-performance companies through value-based knowledge management). Young S.M., Readings in Management Accounting, Prentice Hall, (Call No. HF R287r) Zimmerman J.L., Accounting for Decision Making and Control, Irwin, 2 nd edition, (Call No. HF5635.Z72) Newspapers and business magazines: The Asian Wall Street Journal, The Straits Times, Business Times, Fortune, Business Week, etc. Method of Instruction Lectures : 2 hours per week Tutorials : 2 hours per week Lectures commence in week 1 and end in week 13 Tutorials commence in week 2 and end in week 14 Course Assessment Continuing Assessments : 30% Final Examination 70% Total 100% 3

4 Lecturer Office Room No. Tel Ext Teoh Hai Yap* 01C Billy Hu Kin Hoi B1A *Subject co-ordinator Prescribed Readings (1) B.Maskell and B.Baggaley, The Future of Management Accounting, Journal of Cost Management, Sept/Oct 2000, pp (2) R.J.Indjejikian, Performance Evaluation and Compensation Research: An Agency Perspective, Accounting Horizons, June 1999, Vol. 13 No. 2 pp (3) D.Otley, "Management Control, Organizational Design and Accounting Information Systems," in D. Ashton, T.Hopper, and R. Scapens (eds.), Issues in Management Accounting, 2 nd edition, Prentice Hall, 1995, pp (4) D.R.Hansen and M.M.Mowen, Chapter 13 Strategic Cost Management, 3 rd edition, South-Western 1999, pp (5) J.Shank and V.Govindarajan, Strategic Cost Management and the Value Chain, Journal of Cost Management, Winter 1992, pp (6) R.Cooper and R.Slagmulder, Strategic Cost Management, Management Accounting, March 1998, pp. 18, 20. (7) A.McGowan and T.Klammer, "Satisfaction with Activity-Based Cost Management Imp lementation," Journal of Management Accounting Research, Vol. 9, 1997, pp (8) J.M.Ruhl, Activity-Based Variance Analysis, Journal of Cost Management, Winter 1995, pp (9) G.Foster, M.Gupta and L.Sjoblom, Customer Profitability Analysis: Challenges and New Directions, Journal of Cost Management, Spring 1996, p (10) Y.Kato, G.Boer and C.W.Chow, "Target Costing: An Integrative Management Process." Journal of Cost Management, Vol. 9 No. 1 Spring 1995, pp (11) J.K.Shank and J.Fisher, Target Costing as a Strategic Tool, Sloan Management Review, Fall 1999, pp (12) J. S.Baxendale and M.Gupta, TOC and ABC, Management Accounting, April 1998, pp (13) J.Lee and Y.Monden, An International Comparison of Manufacturing-Friendly Cost Management Systems, The International Journal of Accounting, Vol.31 No.2, pp (14) G.Giakatis and E.M.Rooney, The Use of Quality Costing to Trigger Process Improvement in an Automotive Company, Total Quality Management, Vol. 11 No. 2, 2000, pp (15) P.A.Dierks and A.Patel, What Is EVA, and How Can It Help Your Company? Management Accounting, November 1997, pp

5 (16) S.D.Young, Some Reflections on Accounting Adjustments and Economic Value Added, The Journal of Financial Statement Analysis, Winter 1999, pp (17) "EVA Storms Corporate World" Business Times Online, 23 April SPH Creates Best Value, Survey Shows The Straits Times, Tuesday 13 April Hey, Mr CEO, Watch that EVA, Will You? The Sunday Times, 15 August (18) R.S.Kaplan and D.P.Norton, Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review, January-February 1996, pp (19) R.W.Adler, "Transfer Pricing for World-Class Manufacturing," Long Range Planning, February 1996, pp. 69- (20) J. Elliott and C. Emmanuel, "International Transfer Pricing," European Management Journal, April 2000, pp (21) R.M.Steers and Lyman W. Porter, Motivation and Work Behaviour, 5 th edition, McGraw- Hill, (22) Workers Here Value Human Touch The Straits Times 30 July Performance-Related Pay Works for Singapore The Straits Times 16 February Staff Appraisal Becoming More Crucial The Straits Times 19 March Staff Stock Options Distorting Market Returns The Straits Times 15 January Too Much of a Good Thing can be Bad The Straits Times 31 March F & N s Gratuity Plan Raises Eyebrows The Straits Times 17 February (23) W.P.Birkett, "Management Accounting and Knowledge Management," Management Accounting, November 1995, pp (24) I. Nonaka, The Knowledge-Creating Company, Harvard Business Review, November- December 1991, pp (25) R. Dzinkowski, The Measurement and Management of Intellectual Capital, Management Accounting (UK), February 2000, pp.32-34, 36. (26) Failed Again? Well Done The Sunday Times, August Rules that 3M Lives By The Sunday Times, August Shut Up the Old, Open Up the New The Straits Times 22 March