THE UNIVERSITY OF NEW SOUTH WALES

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1 THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT5996 BUSINESS PROCESSES: ANALYSIS & IMPROVEMENT Course Outline Session 2, 2001

2 THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING Session 2, 2001 ACCT5996: BUSINESS PROCESSES: ANALYSIS & IMPROVEMENT INTRODUCTION Management accounting encompasses systems and processes that are intended to provide financial and non-financial information about value generation and resource consumption to people within organisations to facilitate improved decision making and implementation and thereby achieve organisational control and effectiveness. This subject seeks to locate management accounting in the contemporary production and operating environments. ACCT5996 focuses on: (a) (b) (b) the technical operation and design of management accounting systems; the evaluation of the role of such management accounting technologies in supporting contemporary production and operating strategies; the manner in which these systems affect and are affected by human (e.g.: social, political) processes within organisations. Management accounting systems support planning, control and the efficient use of resources. In this subject, topics include: at a macro level, the functions of management accounting, the planning and control of projects, cost allocation and cost charging, budgeting, and the management of inventory and quality; and at a micro level, design and operation of cost systems, emphasising process analysis, activity-based cost systems, standard costing, flexible budgeting, and performance management. We draw on textbook explanations which describe how management accounting techniques ought to function and on research-based insights, which indicate how they actually operate in practice. 1

3 OBJECTIVES 1. To develop skills (technical, analytical and appreciative) in using management accounting technologies relevant to typical planning and control contexts; 2. To explore issues associated with the design of cost management and product costing systems. 3. To develop critical and evaluative skills by reference to relevant literature; 4. To develop an understanding of (a) the ways in which management accounting practice is implicated in social and organisational functioning; and (b) the nature of management accounting theory and research. COURSE STRUCTURE The course consists of one three-hour seminar per week, comprising lecture, workshop and quiz periods. Lectures will provide instruction in the use of relevant management accounting techniques and will raise issues relating to the use of such techniques in complex organisational settings. Workshops will develop technical skills in computation, skills in the application of management accounting techniques to organisational situations and problems, and will canvass issues relating to the design of management accounting systems. Four quizzes will be held, from time to time. Further details are included under the heading "assessment". PREPARATION FOR LECTURES AND WORKSHOPS Students are required to read the textbook and other materials distributed, and undertake set assignments prior to each seminar. 2

4 ASSESSMENT Assessable Assignments 10 % Quizzes 20 % Case Study 20 % Final Examination 50 % Total 100 % In order to gain an overall pass in the subject, students must obtain a satisfactory result in all components of the course, and especially in the final examination. Failure to do so will result in the award of UF (Unsatisfactory Fail). In order to be awarded a graded pass (credit, distinction or high distinction) students must perform at a high level in the final examination. Assessable Assignments Each week, tutorial questions will be used in analysing the topic under consideration. These questions will be handed out at least one week in advance. You are required to prepare written responses to these questions prior to the seminar to which they are related. Five of these weekly responses will be collected, at random, and assessed. The work will be graded on a three-point scale: Very Good (A), Satisfactory (B), and Unsatisfactory (C). The best four out of the five written responses will count towards your assessable assignments. Note that written responses will be collected at the beginning of the seminar. It is therefore recommended that you make a copy of your work for reference during the seminar. Quizzes Four quizzes will be held, from time to time. The quizzes will be held at the conclusion of the seminar. These quizzes will contribute to the assessment. There will be no supplementary quizzes. The schedule for quizzes is as follows. Quiz No. Date of Quiz Topic 1 Week 6 Theory of constraints (Week 4) 2 Week 7 Project planning (Week 5) 3 Week 8 ABC- Resourcing of processes (Week 6) 4 Week 9 Budgeting (Week 7) 3

5 Case Study Details of the case study will be issued separately. Students should note that, where appropriate, penalties will apply for late lodgment of the case study and no late assignments will be accepted. Penalty for late submission of the case study will be as follows: ONE DAY LATE - 10%, TWO DAYS LATE - 20%, THREE DAYS LATE - 40%, FOUR DAYS LATE - 60%, FIVE OR MORE DAYS LATE - 100%. The penalty is calculated on the basis on the gross assignment mark and is deducted from the mark awarded. For example, a case study achieving an initial mark of 7 out of 10 but two days late will have 2 marks deducted (20% of 10) for a final awarded mark of 5. In order to gain an overall pass in the subject students must obtain a satisfactory result in all components of the course. Failure to do so will result in the award of UF (Unsatisfactory Fail). SPECIAL CONSIDERATION Students should consult the University Regulations for details of the relevant procedures when applying for special consideration. It should be emphasised that Special Consideration is intended to address the problems of students who encounter abnormal and significant difficulties in completing subject requirements. It is not an automatic compensation mechanism for students. In particular, students should note that illness or severe personal problems do not ensure the automatic granting of a supplementary examination. The following additional Special Consideration procedures will apply for this subject: 1. A written application for extensions and other forms of special consideration must be made to the Lecturer-In-Charge. This should give full details of the circumstances surrounding the case (in most cases this will be confidential between the Lecturer-In-Charge and the student). This application is in addition to any written application made under University Regulations. Extensions on the assessable assignments will only be given under extreme circumstances. 4

6 Students will be given adequate advance warning of the deadlines for submission of all continuing assessment items and should plan their workload accordingly. 2. Supplementary quizzes will not be given. ACADEMIC STAFF Name Dr Habib Mahama Lecturer in Charge Mr Hadrian Djajadikerta Room Number Quad 3104 Quad 3116 Telephone au Consultation Hours Wednesday 12:00 14:00 Wednesday 16:00 18:00 5

7 TEXT BOOK Briers M & J Macmullen (eds.), Management Accounting for Change: Process Improvement and Innovation, 2 nd ed., (School of Accounting, UNSW, 2001) OTHER REFERENCE BOOKS Atkinson, A.A., R.D. Banker, R.S. Kaplan & S.M. Young, Management Accounting 2 nd ed., (Prentice Hall, 1997) Barfield, J.T., C.A. Raiborn & M.A. Dalton, Cost Accounting: Traditions and Innovations (West Publishing, 1991) Bruns, W.J., Accounting for Managers: Text and Cases (South-Western, 1995) Burch, J.G., Cost and Management Accounting: A Modern Approach (West, 1994) Emmanuel, C., D. Otley & K. Merchant, Accounting for Management Control 2 nd ed., (Chapman & Hall, 1991) Hilton, R.W., R.W. Maher & F.H. Selto, Cost Management: Strategies for Business Decisions., (McGraw Hill, 2000) Hirsch, M.L. Jr., Advanced Management Accounting 2 nd ed., (South- Western, 1994) Langfield-Smith, K., H. Thorne, & R. W. Hilton, Managerial Accounting: An Australian Perspective 2nd ed., (McGraw Hill, 1998) Meredith, J.R. & S.J. Mantel Jr, Project Management: A Managerial Approach 3 rd ed., (Wiley, 1995) Morrow, M (ed), Activity-Based Management (Woodhead-Faulkner, 1992) Porter, M.E., Competitive Advantage: Creating and Sustaining Superior Performance (Free Press, 1985) Reeve J.M. & C.S. Warren, Managerial Accounting 3 rd ed., (South-Western, 1995) Tanaka, M., T Yoshikawa, J. Innes & F. Mitchell, Contemporary Cost Management, (Chapman & Hall 1993) 6

8 Usry, M.F. & H. Hammer, Cost Accounting: planning and control 10 th ed., (South-Western, 1991) 7

9 COURSE TIMETABLE WEEK STARTING TOPIC READINGS 1 23 rd July The Role of Management Accounting in Organisations 2 30 th July Workflow and Process Analysis 3 6 th August Quality as a Product/Process Attribute 4 13 th August 5 20 th August Managing Constraining Resources Planning and Control of Projects BM Ch. 1 BM Ch. 2 BM Ch. 3 Hansen and Mowen, pp ( Quality Defined ) BM Ch. 4 Koziol, How the constraint theory improved a job shop operation BM Ch. 5 Meredith and Mantel, pp th August 7 3 rd September 8 10 th September Resourcing of Processes BM Ch. 6 Vatter, pp Cambell,Janson & Bush Cost Assignment BM Ch. 7 Hilton, Maher & Selto, pp Tanaka, Yoshikawa, Innes & Mitchell, Ch. 4 Provision of Resources for BM Ch. 8 projects, and ongoing activities 9 17 th September In Class Exercise: Preparation of the master budget BM Ch th RECESS September 10 1 st October How Choices are made in Organisations th October Evaluating and Controlling Resource Consumption BM Ch. 9 Emmanuel, Otley, & Merchant, Ch. 7 BM Ch th October nd October Motivation, Performance and Control Systems Organisational Interdependencies BM Ch. 11 Fisher, The use of nonfinancial performance measures BM Ch. 12 8

10 14 29 th October Review of Course 9

11 DETAILED COURSE OUTLINE THE ROLE OF MANAGEMENT ACCOUNTING IN ORGANISATIONS Week 1 The objectives of organisations. Stakeholders, inputs and outputs. Control and organisational learning. The role of management accounting in process improvement and evaluation WORKFLOW AND PROJECTS Week 2 Workflow and process analysis. Processes within the business. Process analysis: objectives and tools- Process flow maps, Ishikawa diagrams, Pareto analysis. Focusing change. Week 3 Quality as a product/process attribute. Quality as a cost object. Quality as a driver of costs. Managing quality. Cost of quality reporting. Direct measures of quality. Statistical process control. Week 4 Managing constraining resources. Theory of constraints: the focusing process as a means of managing resources. Throughput accounting to support management of constraints. Elevating constraints. Week 5 Planning and control of projects. Projects and ongoing operations (work flow). Estimating project costs and time. Gantt charts and PERT. Resource loading and leveling. Controlling projects. UNDERSTANDING RESOURCE CONSUMPTION Week 6 Resourcing of processes. Assigning resource costs to activities. Understanding cost behaviour. Spending on, and consumption of, resources. Cost input drivers and activity level drivers. Activity-based costing. Use of resource drivers. The costing view versus the activity management view. Week 7 Cost assignment. The costing view versus the activity management view. Use of activity drivers. Target costing. 10

12 PLANNING RESOURCE PROVISION Week 8 Provision of resources for projects, and ongoing activities. Budgeting for profit planning and control. Preparation of the master budget. Week 9 In class exercise: Preparation of the master budget. Week 10 How choices are made in organisations. Multiple uses of budgets. Managerial uses of budgetary information. Flexible budgets. PERFORMANCE MANAGEMENT Week 11 Evaluating and controlling resource consumption. Identifying efficient and inefficient activities. Standard costs for control. Variance analysis: direct materials and direct labour. Week 12 Motivation, performance and control systems. Motivation and the design of performance measurement systems. Week 13 Organisational interdependencies. Decentralisation and responsibility centres. Types of organisational relationships and charging mechanisms Week 14 Review of course. Revision. 11