BASIC MANAGEMENT

FUNCTIONS AND
CONCEPTS
Basic Functions of Management (POSDC)

• Planning
• Organizing
• Staffing
• Directing
• Controlling
• Planning requires management to look ahead and to establish objectives and
strategies to meet the mission and vision of the company.
-setting immediate and long-range goals
-predicting future conditions that are expected to prevail
-considering different means or strategies by which goals set may be achieved
-deciding (in light of the forecast future condition) the most appropriate course of
actions to achieve predetermined goals
*Objectives must satisfy with SMART
• Organizing involves the determination of activities that need to be done in
order to reach the company goals, assigning these activities to the proper
personnel, and delegating the necessary authority to carry out these activities
in a coordinated and cohesive manner.
• Staffing involves the process of recruiting, training, developing,
compensating and evaluating employees and maintaining this workforce with
proper incentives and motivations.
• Directing involves articulating a vision, energizing employees, inspiring and
motivating people using vision, influence, persuasion, and effective
communication skills.
• Controlling is the process of keeping the activities on track. It means
comparing the actual results to the budget and making corrective actions to
the when goals are not met.
Introduction to Management Accounting
DISTINCTION AMONG MANAGEMENT,
COST AND FINANCIAL ACCOUNTING
Financial Accounting Cost Accounting Management accounting
Assist external users w/ -Has internal focus is concerned with how cost information
business decisions (e.g. -Identifies, collects, measures, and other financial and non-financial
purchase & sale of stocks, classifies and reports information that information should be used for planning,
issuance of loans) is used by managers for costing controlling and decision making
purposes, planning, controlling, and -BOTH the cost management information
decision making (pricing decisions) system & the financial accounting
-Attempts to satisfy costing objectives information system are part of the entire
for both financial and management accounting information system
accounting
 THE CONTROLLER: CHIEF MANAGEMENT
ACCOUNTANT
The chief management accounting executive of an organization is called a
controller¹ who is mainly responsible for the accounting aspects of
management planning and control.

Generally performs two basic, interrelated roles:

(1) accumulation and reporting of accounting information to all levels of
management
(2) Directing management’s attention to problems and assisting them in
solving such problems
 Functions of the Controller
1. Planning for control - to establish, coordinate and administer, as an integral
part of management, an adequate plan for the control of operations. This plan
would provide, to the extent required in the business, profit planning,
programs for capital investing and for financing, sales forecasts, expense,
budgets and cost standards, together with the necessary procedures to
effectuate such plan;
2. Reporting and interpreting - to compare performance with operating plans and
standards and to report and interpret the results of operations to all levels of
management and to owners of the business. This function includes the
formulation of accounting policies, the coordination of systems and
procedures, the preparation of operating data and special reports as required.
 Functions of the Controller
3. Evaluating and consulting - To consult with all segments of management
responsible for policy or action concerning any phase of the operation of
the business as it relates to the attainment of objectives and the
effectiveness of policies. organizational structures and procedures.
4. Tax administration - To establish and administer policies and tax procedures.
5. Government reporting - To supervise or coordinate the preparation of reports to
government agencies.
 Functions of the Controller
6. Protection of assets To assure protection for the assets of business
through internal control, internal auditing and assuring proper insurance
coverage.

7. Economic appraisal To continuously appraise economic and social forces

and government influences and to interpret their effect upon the business.
ROLES & ACTIVITIES OF CONTROLLER & TREASURER
Line Positions Staff Positions
Those that have theLine vs. and
responsibility Staff Authority
-Provide support, assistance
authority for achieving the major goals (targets and specialized advice and
for revenue & profits) of the corp. expertise to colleagues in line
-Those directly involved in the daily operations positions
of a business by selling or producing a product -Provide consultancy
or service -Controller, HR, IT
-Obtaining specific objectives of a company
-If assigned to operations, mostly they are
considered line functions
-CFO, Treasurer, COO, Marketing, Production
Does the Controller control operations?
 Does the Controller control operations?

It can be said that over his own department only (controller's

accounting department). However, as far as his role in the whole
organization is concerned, the controller does not control operations,
for he exercises staff authority, though in a special sense, he “does"
some controlling, since by reporting and interpreting relevant data,
and by giving recommendations to line managers, he exerts some
force or influence over such managers in making logical decisions
toward the attainment of the objectives of the organization.
International certifications in management
accounting
Certified Management Accountant (CMA)
Who is it for?
PROFESSIONALS
• Early and mid-level accounting and finance professionals, who want to advance to
management roles in business
• CPAs moving from audit to industry and career changers

STUDENTS
• Students from traditional four-year college/university accounting programs
International certifications in management
accounting
Certified Management Accountant (CMA)
Career Aspirations
• Senior Manager, Controller, Senior Accountant, Director, VP, CFO, Leader
in Accounting and Finance function
Eligibility Requirements
• Bachelor's degree or equivalent and two years of continuous relevant
work experience
 International certifications in management
accounting
The CMA: Two Exam Parts Covering 12 Competencies
• CMA Part 1: Financial Planning, Performance, and Analytics
15% External Financial Reporting Decisions
20% Planning, Budgeting, and Forecasting
20% Performance Management
15% Cost Management
15% Internal Controls
15% Technology and Analytics
• CMA Part 2: Strategic Financial Management
20% Financial Statement Analysis
20% Corporate Finance
25% Business Decision Analysis
10% Enterprise Risk Management
10% Capital Investment Decisions
15% Professional Ethics
Professional ethics and code of conduct for
Management Accountants
Competence
Practitioners of management accounting and financial management have a
responsibility to:
• Maintain an appropriate level of professional competence by ongoing development
of their knowledge and skills.
• Perform their professional duties in accordance with relevant laws, regulations, and
technical standards.
• Prepare complete and clear reports and recommendations after appropriate analysis
of relevant and reliable information
Professional ethics and code of conduct for
Management Accountants
Confidentiality
Practitioners of management accounting and financial management have a responsibility to:
• Refrain from disclosing confidential information acquired in the course of their work except
when authorized, unless legally obligated to do so.
• Inform subordinates as appropriate regarding the confidentiality of information acquired in
the course of their work and monitor their activities to assure the maintenance of that
confidentiality.
• Refrain from using or appearing to use confidential information acquired in the course of
their work for unethical or illegal advantage either personally or through third parties.
Professional ethics and code of conduct for
Management Accountants
Integrity
Practitioners of management accounting and financial management have a responsibility to:
Avoid actual or apparent conflicts of interest and advise all appropriate parties of any potential
conflict.
• Refrain from engaging in any activity that would prejudice their ability to carry out their
duties ethically.
• Refuse any gift, favor, or hospitality that would influence or would appear to influence their
actions.
• Refrain from either activity or passively subverting the attainment of the organization ’s
legitimate and ethical objectives.
Professional ethics and code of conduct for
Management Accountants
Integrity
• Recognize and communicate professional limitations or other constraints that
would preclude responsible judgment or successful performance of an activity.
• Communicate unfavorable as well as favorable information and professional
judgment or opinion.
• Refrain from engaging [in] or supporting any activity that would discredit the
profession.
Professional ethics and code of conduct for
Management Accountants
Objectivity
Practitioners of management accounting and financial management have a
responsibility to:
• Communicate information fairly and objectively.
•Disclose fully all relevant information that could reasonably be expected to
influence an intended user’s understanding of the reports, comments, and
recommendations presented.
 Resolution of Ethical Confl icts
In applying the standards of ethical conduct, practitioners of management
accounting and financial management may encounter problems in identifying
unethical behavior or in resolving an ethical conflict. When faced with
significant ethical issues practitioners of management accounting and financial
management should follow the established policies of the organization bearing
on the resolution of such conflict. If these policies do not resolve the ethical
conflict, such practitioner should consider the following course of action.
• Discuss such problems with the immediate superior except when it appears that
superior is involved, in which case the problem should be presented to the next higher
managerial level. If a satisfactory resolution cannot be achieved when the problem is
initially presented, submit the issue to the next higher managerial level.

• If the immediate superior is the chief executive officer or equivalent, the acceptable
reviewing authority may be a group such as the audit committee, executive committee,
board of directors, board of trustees, or owners. Contact with a level above the
immediate superior should be initiated only with the superior ’ s knowledge, assuming
the superior is not involved. Except where legally prescribed, communication of such
problems to authorities or individuals not employed or engaged by the organization is
not considered appropriate.
• Clarify relevant ethical issues by confidential discussion with an objective adviser to
obtain a better understanding of possible course of action.

• Consult your own attorney as to legal obligations and rights concerning the ethical
conflict. If the ethical conflict still exists after exhausting all levels of internal review,
there may be no other recourse on significant matters than to resign from the
organization and to submit an informative memorandum to an appropriate
representative of the organization. After resignation, depending on the nature of the
ethical conflict, it may also be appropriate to notify other parties.