The term”stakeholders” means an entity which can affect or be affected by actions of the company as a whole . They constitute the members without whose help the company would cease to exist, or they are interested individuals who are keen to find out what the business is up to. In this instance, this stakeholder would be Steve Morgan who is the controller of Newton Industries and is interested in cost of production reports.
What ethical questions are that are at stake in this particular situation?
Steve Morgan is involved in the ethical dilemma because he didn’t inform management of the fact that the cost for advertising is being incurred during the current time period. The net income would not be overstated and would allow the finance managers make decisions and keep the proper control over their resources.
Would you act if could be Steve Morgan ?
Management Accounting, also known as management accounting is a set of procedures and strategies aimed at providing managers with financial data to assist them in making decisions and ensure they have control over the resources of their companies.
Therefore, if I was in Steve Morgan’s shoes, I would have included the cost of advertising as an expense during the current time in order not overstate net earnings.
BYP 3 – 6
Who are the possible stakeholders that could be involved in this scenario?
The term”stakeholder” means an entity that has the ability to affect or be affected by the activities of the business as a whole . They represent the members with whom the company is not able to exist, or the people who are interested in knowing the activities of the business. In this instance, the possible stakeholders include Jan Wooten who is department director of the Moulding Dept. As well as Tony Ferneti who is quality control inspector in the moulding department. Both are keen on conserving the company’s cash.
What options do Tony have to consider in this scenario? What can your company be able to do in order stop this scenario from occurring?
Tony can choose between two options in this case. First alternative is to pass through the inspection process and then on towards the Assembly Department all the units with defects that are not visible by the human eye. Another alternative is that Tony can decide to reject all units with defects.
The company could reduce the salary of its employees to ensure that they are more vigilant and be more careful. Additionally, the company could utilize the additional money after cutting wages to give employees with better training and avoid a similar scenario at a later date.
Part B Part B: Essay on social responsibility of corporations
“CORPORATE SOCIAL Responsibility”
Corporate Social Responsibility (CSR) in the business world is a requirement of business and other organisations to improve their influence positively and decrease their negative impact on society. In this sense, although ethics is the responsibility of everyone within the field of business Social responsibility is linked to the effect of business decisions on the society. One of the most important fundamental principles upon which modern business operates is that of an organisation founded on responsibility. The business must accept responsibility for their contribution to society.
Corporate Social Responsibility is now an increasingly important aspect of companies both nationally and internationally. With the speed of globalization increasing and big companies are able to serve as global suppliers and service providers, corporations have increasingly realized the advantages of implementing CSR programs at their different areas. CSR initiatives are currently being conducted across all over the world.
The rationale behind CSR is explained in many ways. In essence , it’s about creating sustainable companies, which require strong markets, healthy economies, and communities. (megatrend)
The main drivers of CSR are:
Enlightened self-interest , resulting in the synergy between ethics and an enlightened society, and a sustainable global economy where markets, workers and communities to work well together.
Social investment, which contributes to social infrastructure and physical capital is now seen as an essential aspect of running a business.
Transparency and trust. Business is not well-regarded as trustworthy in the public’s perception. There is a growing expectation that companies will be transparent, accountable and will be prepared to share publicly on their progress in environmental and social issues.
Public expectations for business have increased Globally, businesses are expected to do more than just provide employment and help the economy via taxation and employment.”
Corporate social responsibility is now standardized and forms an integral part in integrated management system. The principles that are associated with the existing guidelines for corporate social responsibility comprise of these participating in community activities and transparency, accountability, sustainability and ethical behavior (without corruption) as well as honesty and inclusion. Socially responsible companies follow the “triple results” method, bearing in mind the economic, social and environmental impact of their business activities. (Weygand Kimmel, Weygand. 6th Ed., p. 21)
CSR Framework CSR
CSR is essential, because it is a foundation for creating CSR to management controls systems. The various phases are called steps. This is due to the fact that the framework functions as a continuum, where the various steps are linked and each step can’t be missed when it comes to a system that is working daily and helping achieve specific goals. In the third step, the managing control framework is created to represent the procedures, systems, and tools that management controls the organization’s and employees’ behavior to meet the established objectives and strategy. In order to facilitate management actions, the management must be able to report on the results of the third step. Once you have achieved CSR results, the outcomes should be communicated to people who are involved through CSR reporting. The process will be utilized to evaluate the results from the research. The phase of integrating CSR to management control systems in company will be examined in this structure. In this process of internal control, the role of accounting is an important role.
Social responsibility of companies and the the importance of accounting
AEURC/CSR is a way for companies to incorporate environmental and social concerns into their daily operations and in their interactions with their customers on an individual basis.
AEURC/CSR is “the management process that lets management within an organization contemplate and debate the relationships with stakeholders, as well as their roles with respect towards the good of the community and their behavior regarding the accomplishment and accomplishment in these roles as well as the relationships”
There are a variety of concepts that relate to CSR and CSR apply to accounting:
Environmental Management Accounting,
Social Environmental Accounting and
The Environmental Reporting System or the social Responsibility Accounting.
These concepts connect CSR with the system of accounting, and argue that CSR is one of the most important elements in the accounting work of accountants.
Businesses and non-profit organisations are conscious of the significance of effective CSR practices. CSR created a website that showcases and promoting well the experiences of CSR as well as international organizations working in this field. These companies in the country have been involved in numerous initiatives and projects.
CSR-related ideas influence the profession of accounting for example, Environmental Management Accounting is the control of economic and environmental performance using management accounting practices and systems which focus on physical information about the movement of energy, water wastes and materials in addition to financial information about the costs associated with them earning and savings. (tkf.org.in)
Management accounting is expressed in both physical data on the usage, flow and fates of water, energy and other materials, as well as monetary details on environmental-related costs as well as the earnings and savings side. It can be applied to such fields such as the assessment of annual environmental expenditures/costs price of products and budgeting, appraisal of investments and calculating savings, costs and environmental benefits and environmental performance evaluation benchmarking and indicators, as well as external disclosure of environmental expenses as well as liabilities and investments. This is evident and continues to evolve, it is vital that everyone that are in the accounting field take into consideration fostering these competencies among accountants, to ensure the greater good of the society.
Managerial accountability is an international standard for social accountability, developed by the Council on Economic Priority Accreditation Agency with the aim of creating an ethical source for items and products. The standard is a voluntary one and can be used by any business regardless of size or the area of operation. Additionally, the standard could be used to replace or as an addition to businesses or industries that have a particular code of social accountability. (amfiteatur.economic)
Part C Part C: Essay on budgeting
“Is an official statement in writing of the plan of management for a future period, written in terms of financials. It is the main method of communicating the agreed-upon goals across the entire organization. When a budget is adopted, it is an essential basis for assessing the performance. It helps to improve efficiency and serves as a deterrent against inefficiency and waste”. (Weygandt, Kimmel & Kieso, 6th Ed, p 384)
Some employees might be skeptical about the necessity of budgets. The process of budgeting can be viewed as complex and it’s difficult to know if the effort required can lead to a productive production. Additionally, budgets are considered as an imposing restrictions that are hard to manage and set targets that are difficult to attain.
In spite of these negative remarks It is crucial to plan your organization’s finances in order to ensure financial success. The plans are usually referred to in the form of “budgets.” Budgets are a detailed financial plan that outline future expectations and the actions related to the acquisition and use of resources. (Principles of Accounting)
In small organizations budgets that are formal are a rare thing. Management/owners of the individual business will probably manage just by referring to a shared mental budget. The person has a clear understanding of estimates for the cost of sales, finance and asset requirements. Each and every operation is under the control of the person in charge and he or she is able to maintain a clear direction. If things don’t go as planned and the owners or management are not able to fill in the gaps by not taking pay checks or engaging in another type of financial obligation. Of course, almost every small-scale businesses eventually fail regardless. Explanation for unsuccessful are several and varied, but are often pinned on “undercapitalization” or “insufficient resources to sustain operations.” Many of these post-mortem assessments reflect a failure to adequately plan! Even in small companies an effective business budget or plan will often lead to anticipating and avoiding disastrous results.
Large and medium-sized organizations always depend on budgets. The same is true for the realms of government, business and non-profit organizations. The budget is a formal quantifiable phrase of potential. It is a crucial element that is part of planning as well as controlling procedure. If there is no budget in place, a company will be extremely inefficient and inefficient. (Principles of Accounting)
Benefits of Budgeting with Detailed Detail:
There are many advantages to the detailed budgeting process for business that are.
The first thing to remember is that budgets is one that has a long-term view, therefore it helps to think about the long-term perspective and shifts away from setting short term goals. It also permits thinking about the of the long-term financial situation and the profitability of a company regardless of whether the budget fails. (Accounting Tools)
A detailed budget for business will help pinpoint which areas of the company earn most revenue, because in many instances it is not difficult to determine where management loses the most profitable part. This forces management to look whether to let go a non-productive part of the business, and also which new area should it invest its money into. (Accounting Tools)
Budgeting can help businesses consider what the main goal of the company is, and also to anticipate environmental elements that could impact the efficiency of the business. Forecasting allows you to create a strategies to counter the various environmental pressures. (Accounting Tools)
A well-planned budgeting system allows the business to anticipate what cash flows will be needed to grow the business , and also where to source funds to support the requirements for growth in the future. (Beyond)
Making a budget can also allow you to analyze the effectiveness of the company. What is the current state of the business and where it is going, as well as how to reach there. It offers step-by-step details that can be helpful to get the business to where it would like to be. Without a budget, it’s extremely difficult to assess the performance of business today. It compares planned performance by comparing it to actual performance, giving an accurate and complete view of the company. (Weygandt, Kimmel & Kieso, 6th Ed, p 385)
Budgeting allows managers to determine which funds to allocate since cash is always in short supply. It is a matter of whether it is to purchase fixed assets in order to increase production in order to meet the demands of the future or put money into working capital. Also, it allows business to choose what asset is worthy of investment. (Beyond)
A budget that is realistic and well-crafted increases chances that your business will be successful since it includes all the necessary elements and targets that need to be met and helps the business owner plan adhere to the plans. (Accounting Tools)
Furthermore, a detailed budgeting process assists in the formulation of departmental objectives and goals for different functional areas. The functions of all departments is essential to operate the business system. Budgets are the most fundamental way to create harmonious environment for all departments operating in a particular company. (Principles of Accounting)
A budget isn’t just beneficial for the owners or managers of businesses, but they are beneficial to investors as well. Budgets can help investors decide whether the company has enough potential, and whether the company is worthwhile to invest in. Investors can look over the budget to determine what the objectives of business , and investing in the business that is targeted increases the likelihood of higher returns with respect to interest. (Accounting Tools)
Budgets aren’t just helpful to compare your performance against the one you have planned but also to compare the performance of your company against the general industry for example, what is the current rates of labor on the market and what price you should charge from the customer, and in what amount to offer to maximize revenue. (Accounting Tools)
A solid budgeting system functions as a powerful control and planning tool that allows businesses to establish its short and long-term strategy for reaching its short and long-term objectives, through:
The setting of targets for the individual departments within the Company,
Monitoring and ensuring supply of resources necessary to achieve the stated targets,
An efficient way to align the objectives of different departments and aligning them with the goals of the overall organization
Inspecting the actual performance in relation to the budget
Redressing performance weaknesses by referring to the budget
Modifying the budget as needed to accommodate the changes in the work environment,
Continuously planning to ensure effective and more efficient performance.
Overall, the budget is a method of management that permits the management to develop the company by properly planning each step within the marketplace and maintaining an open and proactive approach to business. This is an added advantage in an environment of competition when managed efficiently and effectively. (Weygandt, Kimmel & Kieso, 6th Ed, p 385 & 386)