RSM322H1 Lecture Notes - Lecture 14: Philips, Decision Management, Historical Cost
Document Summary
Internal accounting systems continue to evolve in response to changing needs and environments. As firms evolve, internal accounting systems evolve. Early 1800s: multi-process textile mills develop absorption costing. 1850 - 1910: multi-location firms create cost controls. 1915 - 1925: large corporations decentralize in operating divisions. 1925 - 1975: external reporting dictates internal accounting design. Recent: automation induces redesign of product costing. Recent: jit producers want to identify non-value-adding activities. Recent: the balanced scorecard links strategy to key performance indicators to help determine if the organization is moving in the right direction. Eliminate all non-value activities from value chain. Some firms can use historical financial accounting. Publicly-traded firms may use stock market value. Customer base influences distribution of specialized knowledge. Knowledge creation influences partitioning of decision rights. If knowledge is easy to acquire, more centralization is possible. Push decision rights down to operating and marketing. Issued by international standards organization, a european community body that sets quality standards.
