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Chapter 9

Chapter 9 BU247.docx

4 Pages
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Department
Business
Course Code
BU247
Professor
Greg Clark

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BU247 Chapter 9 – Behavioural & Organizational Issues in Management Accounting Week 8 & Control Systems What are Management Accounting and Control Systems? -Management accounting and control system (MACS) – a system that generates and uses information that helps decision makers assess whether an organization is achieving its objectives. The system includes the set of procedures tools, performance measures, systems, and incentives that organizations use to guide and motivate all employees to achieve organizational objectives. The system also incorporates plan-do-check-act cycle The Meaning of “Control” -Control refers to the set of procedures, tools, performance measures, systems, and incentives that organizations use to guide and motivate all employees to achieve organizational objectives -The process of keeping it in control includes plan-do-check-act from chapter 1 Characteristics of a Well-Designed MACS Technical Considerations 1. Accurate 2. Timely 3. Consistent 4. Flexible – MACS designers must allow employees to use the system’s available information in a flexible manner so that they can customize its application for local decisions Behavioural Considerations 1. Embedding the organization’s ethical code of conduct into MACS design 2. Using a mix of short- and long-term qualitative and quantitative performance measures (or the Balanced Scorecard Approach) 3. Empowering employees to be involved in decision making and MACS design 4. Developing an appropriate incentive system to reward performance The Human Resource Management Model of Motivation -Scientific management school – management believed that employees should follow highly detailed prescribed procedure and that behaviour should be monitored and controlled very carefully through time-and-motion studies -Human relations movement – employees wanted respect, discretion over their jobs and a feeling that they contributed something valuable to their organization -Human resources model of motivation – introduces a high level of employee responsibility for and participation in decisions in the work environment -The central assumptions of HRMM are that organizations operate under a system of beliefs about the values purpose, and direction of their organization; that people find work enjoyable; and that people desire to participate in developing objectives, making decisions, and attaining goals in their work environment The Organizations’ Ethical Code of Conduct and MACS Design -At the centre of many boundary systems is a set of ethical principles, and thus a well-designed MACS should incorporate the principles of an organization’s code of ethical conduct to guide and influene behaviour and decision making -Management pressures: BU247 Chapter 9 – Behavioural & Organizational Issues in Management Accounting Week 8 & Control Systems -Requests to tailor information to favour particular individuals or groups -Please to falsify reports or test results -Solicitations for confidential information -Pressures to ignore a questionable or unethical practice -To incorporate ethical principles, system designers might attempt to ensure the following: 1. That the organization has formulated, implemented, and communicated to all employees a comprehensive code of ethics. This is often accomplished through the organization’s beliefs system 2. That all employees understand the organization’s code of ethics and the boundary system that constrain behaviour 3. That a system in which employees have confidence exists to detect and report violations o the organization’s code of ethics Avoiding Ethical Dilemmas -Most organizations attempt to address ethical considerations and avoid ethical dilemmas by developing a code of ethics Dealing with Ethical Conflicts Conflicts between Individual and Organizational Values -People brin
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