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CPA SMA 19 Aug 17 Homework









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发表于 2017-8-16 22:29:01 | 显示全部楼层 |阅读模式
Q1.What is the difference between external reporting and Internal Reporting?
It is important to be aware that strategic management accounting (Internal Reporting) does not have the direct guidance that exists for financial reporting. External reporting is guided by a conceptual framework and governed by specific standards and rules, whereas the structure of and information contained in internal reports are decided by management to suit its need.
External Reporting (Financial Reporting)
Used by various external groups to evaluate the organization’s performance, position and future outlook
Information presentation
Statement of comprehensive income, statement of financial position and statement of cash flows, notes to the accounts and auditor’s report
Information qualities
Financial focus, aggregated, historical focus and delayed
Internal Reporting (Strategic management reporting)
Used by management and employees to make decisions about running the organization
Information presentation
Budgets and forecasts, performance indicators, costings, combining industry data with internal data
Information qualities
Both financial and non-financial, specific to each situation, future oriented and timely

Q2. Description of evolution of strategic management accounting?
Stage 1: Prior to 1950- Technical activity
Management accounting was considered to be a technical activity. The two major areas of focus were determining costs and providing financial control. This was achieved through techniques including cost accounting and budgeting

Stage 2: 1950–1965- Management activity
Management accounting developed from being a technical activity to a management activity by expanding to include the creation and presentation of information for planning and control. This period also saw the development of responsibility accounting.
Stage 3: 1965–1985- Increasing efficiency
In addition to the previous information provision role, attention was focused on increasing the efficiency of business processes in an attempt to reduce and eliminate wasted resources. This expansion was aided by the reduced cost of technology and the availability of real-time information.
Stage 4: 1985–2000s- Value creation
The scope of management accounting expanded even further to include improving the effective use of resources to create value. Essential to achieving this was an understanding of the cause and drivers of customer value and shareholder value, as well as the effective use of technology. Management accounting moved from just providing information to becoming actively involved in improving strategic and operational decision- making and resource allocation.
Stage 5: 2000s to now- Strategic and externally focused
Management accounting has become more strategic with an increasingly external outlook and has focused on a broader range of stakeholders. Social, environmental and ethical issues continue to grow as do competitive pressures due to increasing levels of globalization. The emphasis is now on creating value in a responsible and sustainable manner.

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