Line authority

- It is the authority to command action or give orders to subordinates.

- Its managers are directly responsible for attaining the objectives of the business firm as efficiently as
possible. (ex: sales and production manager)

Staff authority

- It is the authority to advise but not command others.

- Exercised laterally or upward.
- Its managers give support, advice and service to line departments. (ex: personnel, purchasing,
engineering and accounting)

Functional authority

- It is the right to command action, laterally or downward, with regard to specific function or specialty.

Chief Financial Officer (CFO)

- Also called the finance director

- He/she is the executive responsible for overseeing the financial operations of an organization.

RESPONSIBIITIES OF CFO:

1. Controllership – includes providing financial information for reports to managers and to shareholders.
2. Treasury – banking and short- and long-term financing, investments, and management of cash.
3. Risk management – managing the financial risk of interest-rate and exchange-rate changes and
derivatives management.
4. Taxation – includes income taxes, sales taxes, and international tax planning.
5. Internal audit – reviewing and analyzing financial and other records to attest adherence to its policies
and procedures.

Controller

- Is the financial executive primarily responsible for management accounting and financial accounting.
- Proves reports for planning and evaluating company activities and provides information needed to
make management decisions.
- An integral part of the top management

Controllership

- It is the practice of the established science of control which is the process by which management
assures itself that the resources are procured and utilized according to plans in order to achieve the
company’s objectives.

BASIC FUNCTIONS OF CONTROLLERSHIP

1. Planning
2. Control
3. Reporting
4. Accounting
5. Other primary responsibilities

Treasurership – concerned with the acquisition, financing and management of assets of a business concern to
maximize the wealth of the firms for its owners.
Treasurer

- Has custody to cash and funds invested in various marketable securities.

- Generally responsible for maintaining relationships with investors, banks, and other creditors.
- Plays a major role in managing cash and marketable securities, preparing cash forecasts and
obtaining financing from banks and other lenders.

RESPONSIBILITIES OF TREASURER

1. Funds procurement – this involves raising funds in accordance with the firms planned capital
structure.
2. Banking and custody funds – this involves direct management of cash and cash equivalents and
maintenance of good relations with banks and other non-bank institution.
3. Investment of funds – this involves management of the company’s placements and securities or
purchase of debt or equity instruments such as ordinary or preference shares in other corporate
entities.
4. Operating responsibilities related to:
a. Credit and collection
b. Inventory management
c. Corporate pension and retirement fund
d. Investor relations
e. Insurance
f. Compliance with legal and regulatory provisions

“Standards of Ethical Conduct for Practitioners of Management Accounting and Financial

Management”

- Issued by the Institute of Management Accountants of the United States.

- Competence, confidentiality, integrity, objectivity, resolution of ethical conduct

“Guidelines on Ethics for Professional Accountants”

- Issued by the International Federation of Accountants in July 1990.

- This governs the activities of all professional accountants throughout the world.
- This outlines the accountant’s ethical responsibilities in matters relating to taxes, fees and
commissions, advertising and solicitation, the handling of moneys and cross-border activities

*The Board of Accountancy of the Professional Regulation Commission approved the implementation of the
Revised Code of Ethics for Professional Accountants in the Philippines effective January 1, 2016.

CHANGES IN THE BUSINESS ENVIRONMENT

1. Increase in global competition

2. Advances in manufacturing technologies
3. Advances in information technologies, the Internet, and e-commerce
4. A greater focus on the customer
5. New forms of management organization
6. Changes in the social, political, and cultural environment of business

Speed-to-market – it is the ability to deliver the product or service faster than the competition.
 Prior business environment Contemporary business
environment
MANAGEMENT OF ORGANIZATION
Type of information recorded Almost exclusively financial data Financial and operating data,
the firm’s strategic success
factors
Management organizational Hierarchical, command and control Network-based organization
nature forms, team-focus
Management focus Emphasis on the short term, short- Emphasis on the long term,
term performance measures and focus on critical success
compensation, concern for factors, commitment to the
sustaining the current stock price long-term success of firm
MANUFACTURING
Basis of compensation Standardization, economies of Quality, functionality, customer
scale satisfaction
Manufacturing process High volume, long production runs Low volume, short production
runs, focus on reducing
inventory levels
Manufacturing technology Assembly-line automation, isolated Robotics, flexible
technology applications manufacturing systems,
integrated technology
applications connected by
networks
Required labor skills Machine-paced, low level skills Individually and team-paced
Emphasis on quality Acceptance of a normal or usual Goal of zero defects
amount of waste
MARKETING
Products Relatively few variations, long Large number of variations,
product life cycles short product life cycles
Markets Largely domestic global

Changes in the Social, Political, and Cultural Environment of Business

 Includes more ethically and racially diverse workforce

 Renewed sense of ethical responsibility among managers and employees
 Increased deregulation of business by the national government
 Requires firms to be flexible and adaptable and to place greater responsibility in the ahnds of a more
highly skilled workforce.

PHASES OF THE DEVELOPMENT OF COST MANAGEMENT SYSTEMS

STAGE 1 Cost management systems are basic transaction reposting systems.

STAGE 2 Cost management systems focus on external financial reporting.
STAGE 3 Cost management systems track key operating data and develop more accurate and relevant
cost information for decision making; cost management information is developed.
STAGE 4 Strategically relevant cost management information is an integral part of the system.

Critical success factors – measures of those aspects of the firm’s performance essential to its competitive
advantage and to its success.