Describe the concept of responsibility accounting and explain how this might be implemented in your current organization.

Budgetary Planning                               TOPIC

Response to Budgetary Planning

o    The process of creating a budget is a complex task. It involves the participation, support, and approval for mainly all the departments in a company. At the end it can result (show) something that the managers do not want to hear or know. The control of the activities is a controversial topic. All the high level managers need to support this idea and respect it as well.  The goals must be global for the company’s success; thus, the individual goals must be integrated to this vision.

Procedures and new rules must be established. All needs to be documented. Time is key, if we talk about budget and the people in charge need to input their information on a timely basis. They are always changes in the numbers; for this reason, they need to be prepare and be opened to possible modifications or changes. The information is collected and every segment is responsible to provide this information to create the master budget. Once everyone is okay and all the approvals are received, the budget is uploaded into the accounting system. Reports are created and distributed.


Responsibility Accounting              TOPIC

o    Describe the concept of responsibility accounting and explain how this might be implemented in your current organization. 



Responsibility Accounting                 TOPIC


o   Accounting tools defines responsibility accounting as “a reporting system that compiles revenue, cost, and profit information at the level of those individual managers most directly responsible for them.” This gives the control to those that are directly overseeing the process and allows them to react to situations faster. 


This is a concept that is somewhat implemented in my current organization. Because we are a small company every staff member is involved in decisions to some degree but we could implement a plan where each staff member is directly responsible for a specific part of our financial wellbeing to create ownership and reward based on their performance.


Budgetary Control      TOPIC


o    Budgetary control refers to how well managers utilize budgets to monitor and control costs and operations in a given accounting period. In other words, budgetary control is a process for managers to set financial and performance goals with budgets, compare the actual results, and adjust performance, as it is needed.

You can think of a budget like a report card in school. It shows how well you performed in that subject during the school year. The budget process does the same thing. Management can set goals and evaluate the progress. There are typically four steps in any budgetary control process that managers follow. First, a budget needs to be created. To put it simply, a company performance budget is really just a set of financial goals that management wants to achieve. These could be sales or spending goals.



 Standard Costs and Balanced Scorecard      TOPIC


o   Balanced scorecards can also be used by departments to track any number of things.  They are very versatile and can be used over the whole organization or they can pertain to one department, one job title or even individuals within the organization.  There are many uses for balanced scorecards. They can really enhance a manager’s ability to obtain data about the performance of the organization.


Standard Costs and Balance Scorecards       TOPIC

Response to Standard Cost and Balance Scorecards

o   The balanced scorecard is used to reinforce good behaviors in an organization by isolating four separate areas that need to be analyzed. These four areas, also called legs, involve learning and growth, business processes, customers, and finance. The balanced scorecard is used to attain objectives, measurements, initiatives and goals that result from these four primary functions of a business. Companies can easily identify factors hindering company performance and outline strategic changes tracked by future scorecards. With the balanced scorecard, they look at the company as a whole when viewing company objectives. An organization may use the balanced scorecard to implement strategy mapping to see where value is added within an organization. A company also utilizes the balanced scorecard to develop strategic initiatives and strategy objectives.



Class Poll                 TOPIC

o   Budgeting is an interesting and varied topic. Everyone tends to have their own process or little tricks that make it easier for them to help manage their budgets. Does anyone have a budgeting tip or trick that they use either in their personal or professional budgets that they’d like to share?

I’ll share one that I use to help me manage my Starbucks’ habit. Yes, it’s a habit, one I can’t seem to break. Every pay period, I put a set amount on a gift card. That way, once the gift card runs out, then I know that I’ve hit my budget limit. Then unfortunately, I have to wait until the next paycheck hits to put more on the card. This has two basic benefits. The first is that I hold myself to a set amount each period. It’s up to me if I get six cups of coffee in one day or spread it out a bit. But when I reach zero, I’m done until the next pay period. My husband likes this as it holds me accountable for my budget. The second advantage is that it means there a fewer transactions hitting our checking account. It’s less to reconcile. Two payments a month as opposed to ten or twenty. I find that this works well for us and just thought I’d share.


Ethical Considerations         TOPIC

o   National Products Corporation participates in a highly competitive industry. In order to meet this competition and achieve profit goals, the company has chosen the decentralized form of organization. Each manager of a decentralized investment center is measured on the basis of profit contribution, market penetration, and return on investment.  Failure to meet the objectives established by corporate management for these measures has not been acceptable and usually has resulted in demotion or dismissal of an investment center manager.


An anonymous survey of managers in the company revealed that the managers feel the pressure to compromise their personal ethical standards to achieve the corporate objectives. For example, at certain plant locations there was pressure to reduce quality control to a level which could not assure that all unsafe products would be rejected. Also, sales personnel were encouraged to use questionable sales tactics to obtain orders, including gifts and other incentives to purchasing agents.