Textbook Notes (368,122)
Canada (161,660)
MGTA02H3 (363)
Chapter 14

Management II Chapter 14

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Management (MGT)
Chris Bovaird

Chapter 14: Understanding Accounting Issues What is a Accounting and Who Uses It accounting: a comprehensive system for collecting, analyzing, and communicating financial information bookkeeping: recording accounting transactions (just one phase of accounting) by sorting, analyzing, and recording thousands of transactions, accountants can determine how well a business is being managed and how financially strong it is (but accounting systems can produce distorted results that cause problems for owners and managers) accounting information system: an organized procedure for identifying measuring, recording, and retaining financial information so that it can be used in accounting statements and management reports (dependable, consistent, mandatory system) users of accounting information: business managers: to set goals , develop plans, set budgets, and evaluate future prospects employees and unions: to get paid and to plan for and receive such benefits as healthcare, insurance, vacation time and retirement pay investors and creditors: to estimate returns to stockholders, to determine a company's growth prospects, and to decide if it is a good credit risk before investing or lending taxing authorities: to plan for tax inflows, to determine the tax liabilities of individuals and businesses, and to ensure that correct amounts are paid in a timely fashion government regulatory agencies: to fulfill their duties: the provincial securities commissions, for example, require firms to file financial disclosures so that potential investors hae valid information about a company's financial status Who are Accountants and What Do They Do the individual who manages all the firm's accounting activities (head of AIS) < ensures that reports and statements needed for planning, controlling, and decision making activities are provided financial accounting system: the process whereby interested groups are kept informed about the financial condition of a firm (concerned with external users of info such as consumer groups, unions, gov't) < prepares and publishes income statements and balance sheets at regular intervals < looks at company as a whole managerial accounting: internal procedures that alert managers to problems and aid them in planning and decision making (serves internal users, such as different departments) < ex. managers to monitor current projects and plan for future activities < ex. engineers may look at costs of materials or production to make operations improvement < internal reports are forward looking in nature, not historical Professional Accountants chartered accountant (CA): an individual who has met certain experience and education requirements and has passed a licensing examination; acts as an outside accountant for other firms (granted by The Canadian Institute of Chartered Accountants to people who have a university degree, competed an educational program and passed the national exam) < half CA are public, half are government or industry workers < CA focus on external financial reporting certified general accountant (CGA): an individual who has completed an education program and passed a national exam; works in a private industry or a CGA firm (formerly not allowed to audit financial statements of publicly held companies, but this is changing in most provinces) < some work in private CGA firms, CA firms < focus on external financial reporting and use computer as management accounting tool certified management accountant (CMA): an individual who has completed a university degree, passed a national examination, and completed a strategic leadership program; works in industry and focuses on internal management accounting (work in organizations of all sizes) < CMAs bring a strong market focus to strategic management and resource deployment Accounting Services auditing: an accountants examination of a company's financial records to determine if it used proper procedures to prepare its financial reports (companies must provide audited financial reports for loans or when selling stock) < audit determines if the firm has control over fraud and errors from going undetected < examine receipts < may even physically check inventories, equipment, other assets forensic accountants: an accountant who tracks down hidden funds in business firms, usually as part of criminal investigation ( used to examine Swiss bank accounts for assets deposited by victims of Nazi persecution during WWII) generally accepted accounting principles: standard rules and methods used by accountants in preparing financial reports (auditor's responsibility to ensure that client's accounting system adheres to these principles tax services: help clients with tax returns, tax planning (tax laws are complex so CA can help a business structure its operations and investments and save millions of dollars in taxes) < accountants must be aware of changing tax laws management consulting services: specialized accounting services to help managers resolve a variety of problems in finance, production scheduling, and other areas (may assist in executive recruitment, plant layout and design, etc private accountant: an accountant hired as a salaried employee to deal with a companys day-to-day accounting needs (to ensure fairness CAs and CGAs must be independent of the firms they audit) CPA vision project: established (US) to assess the future of accounting (explains how six classes of global forces are driving the professions reorientation) Vision Project changes: Accounting should adopt a broader focus beyond numbers that includes strategic thinking
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