Management Accounting and Financial Management
1. Global management accounting definition and differentiate between financial and management accounting
Management accounting
As explained by Horngren et al. (2002) Management accounting is concerned with internal accounting processes and this information is for the management and employees to take strategic decision regarding future investments and projects. Management accounting enhances decision making in light of the fact that it systematically enhances value of data to gain more leverage by precise decision-making. Kaplan and Atkinson (2015) define that managerial accounting is an effective tool to analyze accessible data and define a future strategic direction of the organization.
Financial Vs. Managerial Accounting
Financial accounting deals with financial statements of the company which are distributed to stockholders, loan takers, budgetary experts, and other parties outside of the organization. Financial accounting is utilized to show the financial wellbeing of an association to its external partners. Top managerial staff, stockholders, financial foundations and different investors are the clients of financial accounting matters (Scott, 2014). Financial accounting exhibits a particular timeframe in the past and empowers the group of members to perceive how the organization has performed.
Financial accounting reports must be documented on a yearly premise, and for publically exchanged organizations, the yearly report must be made part of general society record. While on the other hand, Management accounting focuses on provision of information within the organization so that its administration can work the organization all the more adequately. Management accounting and cost accounting likewise give guidelines on registering the expense of items. These expenses will then be utilized as a part of the external financial statements. Management accounting is utilized by managers to settle decisions concerning the everyday operations of a business. It is not based on past execution, but rather on present and future patterns (Ward, 2012).
2. Do you believe that these principles would have a positive impact on the way a business is run?
Professionalism
Professionalism is one of the most essential elements which impact on enhancing positive impact of the business in the society. It also helps in improving organizational internal and external operations and relations. Professionalism refers towards a way which an individual performs while working within an organization or a workplace. It includes conduct of people while dealing with people within the origination. When an individual show respect and commitment for his work and workplace, he or she fulfills the concept of professionalism. According to Freidson (2001) it has been identified that, professionalism enhances organizational reputation, profitability and overall organizational performance as it comes from employees’ dedication and commitment (Freidson, 2001). Furthermore, key elements of professionalism within the organization include loyalty with work, exceeding expectation of related party, fulfilling of commitments and treating others with respect. All of these elements contribute effectively in enhancing positive impact of businesses.
Process
Every organization use to practice business processes for performing their operations. Processes play imperative part in enhancing efficiency of the organizations. They also act as main part in the competitive world of business as it differentiate companies from their rivals and make them able to perform more effectively. Efficient processes help businesses in performing their tasks and enhance management of the firms. According to Becker, Kugeler, and Rosemann (2013) Processes improve business agility, enhance business visibility, safety, security and compliance, improve efficiency and reduce cost for organizations (Becker et al., 2013).
Practice
Practice is another essential principle of management accounting which impacts positively on enhancing image and profitability of the organizations. Practice helps organizations in enhancing their efficiency and effectiveness of the processes. Where all of the principles of management accounting are inter connected, practice is also linked with processes and professionalism. When employee uses to practice professionalism within their working place, organizations processes become more efficient and at the end, organization achieves its competitive advantage.
3. List and explain any 8 main practices area that will help improve the performance management of an organisation
Performance management process of the organizations can get improved through incorporating effective practices or steps (Rummler and Brache, 2012). Various practices help companies in reducing their performance management issues and also support them in designing and implementing more effective management system.
1.Identify and explain expectation from employees
Employees should understand and remain aware regarding their performance goals and expected results. When employees will remain aware regarding their goals, they will perform more effectively. This practice will also help organizations in generating positive results from their performance management process.
2. Set standard and communicate how the results will be measured
Performance of the employees will also become well when they will realize that evaluation of their performance will be on merit. Employees will become satisfied and perform well when they get knew and understand standards of their performance evaluation.
3.Design monitoring process which will monitor the entire performance management process
Monitoring process would help organization in identifying such reasons which are impacting in employee performance. It helps organizations in enhancing their performance management system as it identifies and suggests ways to overcome those reasons which could reduce the strengths of employees (Hope and Fraser, 2013).
4. Monitor plan and evaluate results
Evaluation of results will compare that whether actual results have met the standards of expected results or not. Results evaluation will also encourage employees to perform better and enhance their organizational productivity.
5. Take corrective actions to make changes in the performance of the employees
Effective actions and strategies must be adopted for enhancing the positive impacts of the employee’s performance and also for reducing their weaknesses. This practice would improve performance management of the organization.
6. Deliver impactful feedback regularly.
Gather input on representative execution from different sources. Utilize a proper way of meeting to share feedback and own perceptions and observations with employees as it enhance performance management system of the organization.
7. Identify why employees are performing as the way they perform
Take an ideal opportunity to comprehend why the performance of employees is the thing that it is, and motivate them to take proprietorship for performance changes
8. Provide employees continuous coaching
Regularly check in with representatives on their advancement on objectives; offer guidance or help, or reexamine objectives for providing continuous feedback to the employees.
References
Becker, J., Kugeler, M. and Rosemann, M. (2013) Process management: a guide for the design of business processes. Springer Science & Business Media.
Freidson, E. (2001) Professionalism, the third logic: on the practice of knowledge. University of Chicago press.Hope, J. and Fraser, R. (2013) Beyond budgeting: how managers can break free from the annual performance trap. Harvard Business Press.
Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D. and Schatzberg, J. X. (2002) Introduction to Management Accounting: Chapters 1-17. Prentice Hall.
Kaplan, R. S. and Atkinson, A. A. (2015) Advanced management accounting. PHI Learning.Rummler, G. A. and Brache, A. P. (2012) Improving performance: How to manage the white space on the organization chart. John Wiley & Sons.
Scott, W. R. (2014) Financial accounting theory. Pearson Education Canada.Ward, K. (2012) Strategic management accounting. Routledge.