Managerial Accounting System Design

Managerial accounting systems are quite complex in reality and require consideration of a wide range of issues, including how they must integrate with enterprise resource planning systems and financial reporting systems, and how managers and employees are evaluated and compensated based on performance.

For this Discussion, you will focus on the core theoretical aspects of managerial accounting systems, which can be viewed in a relatively simple way: an optimal managerial accounting system captures, reports, and analyzes data in a way that allows users to identify the causes of deviations from expected plan outcomes. As you will see, this requires a close correspondence between the data and information used in planning, and that used in control.

To simplify this Discussion, it will be helpful to isolate components of plans, outcome measurements, and controls, and analyze them separately. For example, when discussing a planning-control feedback loop for revenues, you might examine revenue forecasting/budgeting, accounting measurements, and performance variance analysis individually.

Discussion—Week 6 (D-W6)

Participants:

By Day 5 of Week 6, respond to the following in precise, well-defined terms, and with reference to this week’s Learning Resources:
•Analyze how an organization’s forecasts, budgets, revenues, costs and cash flows correlate with one another. What additional data should be captured and reported in a managerial accounting system? Why?
•Analyze the role planning factors play in driving profits. Explain how data reported by the managerial accounting systems can be turned into information relevant for adjusting future plans. In other words, how is the data used in developing information required to operate an organization’s planning-control feedback loop?