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13 minExplore what value means, why shareholders, customers and other stakeholders each see value differently, how an organisation's value chain creates it, and how strategic management accounting differs from the management accounting you may already know.
▤ Value and strategic management accounting →▤ Value to different stakeholders →▤ Tidewater Kayaks' value chain →▤ Inward versus outward-looking →
12 minExplore the strategic management process and its four stages, how strategic and operational management differ but depend on each other, how management accounting supports day-to-day planning and control, and what changes when an organisation sells services or works in the public sector.
▤ The strategic management process →▤ The strategic management process →▤ Plan, evaluate, analyse, control →▤ The three Es →
12 minExplore how the management accountant's role has grown, how strategic management accounting differs from the traditional kind, the tension between acting as a business partner and acting as an independent overseer, and the skills and four value roles that today's management accountant needs.
▤ The management accountant as business partner →▤ Traditional versus strategic →▤ Business partner or overseer →▤ Four ways to support value →
12 minExplore the three big challenges facing management accountants, which are technology, managing resources and innovation, and then the first group of forces reshaping the business environment: turmoil in the global economy, structural change and globalisation.
▤ Challenges and the changing global economy →▤ Three challenges →▤ Causes of change →▤ Four drivers of globalisation →
12 minExplore how technology is changing organisations through new capital equipment and new information and communication technology, and then how sustainability, environmental management accounting and ethics are changing what organisations measure, report and decide.
▤ Technology, sustainability and ethics →▤ New equipment, new cost problems →▤ Cloud, devices and big data →▤ Environmental accounting →
11 minExplore how organisations are structured, how responsibility accounting holds managers to account through cost, revenue, profit and investment centres, and how flatter hierarchies, outsourcing, offshoring, virtual teams, alliances and faster management reporting have changed the management accountant's job.
▤ Internal structures and responsibility centres →▤ Responsibility centres →▤ Offshoring versus outsourcing →▤ A modern management report →
12 minExplore how management accountants support strategic analysis, starting with value analysis of the organisation's own value chain and of the wider industry value chain, and then SWOT analysis, with a closer look at the internal side: distinctive capabilities and core competencies.
▤ Value analysis, SWOT and internal analysis →▤ Improving the value chain →▤ An industry value chain - coffee →▤ SWOT for Glacier Bay Gelato →
10 minExplore product portfolios: why organisations hold a mix of products, how the product life cycle shapes cash flow and profit at each stage, and how the Boston Consulting Group's growth share matrix sorts products into stars, cash cows, question marks and dogs.
▤ Product life cycle and the BCG matrix →▤ The product life cycle →▤ The BCG growth share matrix →▤ Strategy by life cycle stage →
11 minExplore external analysis: why strategic management accounting looks outward, how to define an industry and choose the right time frame, and how Porter's five forces explain why some industries are far more profitable than others.
▤ Industry analysis and Porter's five forces →▤ Porter's five forces →▤ Barriers to entry →▤ Five forces scorecard →
11 minExplore PEST analysis and its wider versions, and then three issues that turn up in almost every PEST analysis: regulation, corporate social responsibility and the business cycle. We'll finish with how management accountants use the business cycle to test the assumptions behind long-term plans.
▤ PEST, regulation, CSR and the business cycle →▤ PEST and its wider versions →▤ Business cycle phases →▤ Four scenarios →
12 minExplore who needs information from an organisation, how the needs of external and internal stakeholders differ, what the management accountant does to meet those needs, and how corporate social responsibility and integrated reporting widen the information an organisation provides.
▤ Who needs what information →▤ External stakeholders →▤ What internal stakeholders need →▤ The six capitals →
10 minExplore how management accountants manage stakeholders: the power and interest grid, where stakeholder power comes from, why a stakeholder's position can change almost overnight, and how simple risk management helps a busy accountant decide which requests to tackle first.
▤ Managing stakeholders: power, interest and risk →▤ The stakeholder grid →▤ Power, legitimacy and urgency →▤ Ranking information requests →
11 minExplore how information systems shape the support a management accountant can give, what information really costs, the five functions every information system performs, and the different levels of system, from transaction processing right up to decision support and knowledge management.
▤ Information systems from transactions to decisions →▤ Five system functions →▤ Levels of information system →▤ Is the system broad enough →
11 minExplore where management accountants find information, how combining information from different systems creates something more valuable than any single source, the five common ways of aggregating information, and why drill-down and the balanced scorecard matter when you integrate it.
▤ Sourcing, aggregating and integrating information →▤ Integrating two systems →▤ Five forms of aggregation →▤ Drilling down Pinnacle's sales →
11 minExplore how to judge the quality of information: its three dimensions, the limitations of external data, the twin tests of validity and reliability, the qualitative characteristics that make information useful, a four-way way of classifying information quality, and the security and ethical duties that come with handling it.
▤ Judging the quality of information →▤ Three dimensions of information →▤ Validity and reliability →▤ Four quality categories →
10 minExplore the newer platforms that have changed what management accountants can do with information: data warehousing and data mining, big data and its challenges, the legal and ethical risks of using personal data, and business intelligence tools for slicing information many different ways.
▤ Data warehousing, big data and business intelligence →▤ Data warehouse versus database →▤ The three Vs of big data →▤ Roll-up and drill-down →
10 minExplore how management accountants deliver information so that it actually influences decisions: getting the delivery, format and impact right, understanding how people really behave with information, and matching information to the strategic, tactical and operational levels of the organisation.
▤ Delivering information at the right level →▤ Delivery, format and impact →▤ Fire danger ratings →▤ Three levels of information →
11 minExplore how management accountants link information to strategy, using both the financial and the performance management approaches, how four simple questions help an organisation use information strategically, and the two roles that make a management accountant influential: trusted business partner and custodian of information.
▤ Linking information to strategy as a trusted partner →▤ Two ways to cascade strategy →▤ The trust equation →▤ Drucker's four questions →
11 minExplore what the management accountant should do when someone says the information system isn't good enough: what usually triggers that complaint, how to run a preliminary assessment, and the main ways of establishing what information people actually need, including data flow diagrams, the critical success factor approach and the analysis of decisions.
▤ Assessing information needs before changing systems →▤ Preliminary assessment →▤ Missing or inadequate reports →▤ Three types of decisions →
13 minExplore how to evaluate a proposed information system: the systems development life cycle, common pitfalls when collecting information needs, the three tests of feasibility, the criteria and goals for a new system, when modifying the existing system is the smarter choice, and how to weigh costs, benefits and risks.
▤ Evaluating, upgrading or replacing an information system →▤ Three tests of feasibility →▤ Modify or replace →▤ Lidl - when fit fails →
10 minExplore how strategic plans, operational plans, budgets and forecasts fit together, what a master budget contains, why every budget is shaped by a limiting factor, how rolling budgets keep planning alive, and the many jobs a budget does inside an organisation.
▤ Plans, budgets and forecasts →▤ From strategy to budget →▤ A rolling budget →▤ What budgets are for →
10 minExplore how budgets connect with responsibility accounting: how revenue, cost, profit and investment centres each own part of the budget, why only controllable costs should be used to judge a manager, how direct and indirect fixed costs differ, and how budgets support planning and control without becoming too rigid or too slack.
▤ Budgets, responsibility accounting and control →▤ PawPrint Vets centres →▤ Controllable profit report →▤ Budget planning and control →
10 minExplore how a master budget is built, the internal and external factors that shape it, and the first three steps of a manufacturer's operating budget: the sales budget, the production budget and the direct materials budget, worked through with one business from start to finish.
▤ Master budget formulas guide →▤ The sales, production and materials budgets →▤ Operating budget steps →▤ Blue Wren production budget →▤ Direct materials budget →
9 minExplore the remaining steps of a manufacturer's operating budget: the direct labour budget, the manufacturing overhead budget, the finished goods inventory budget, the cost of goods sold budget and the period costs budgets, and then how retailers, wholesalers and service businesses budget differently.
▤ Labour, overhead, inventory and cost of sales budgets →▤ Standard cost per bottle →▤ Cost of goods sold budget →▤ Budgeted income statement →
9 minExplore the financial budgets: the budgeted income statement, the cash budget with its schedules of collections and payments, the budgeted balance sheet and the capital expenditure budget, then how budgets are built up across departments, and how flexible budgets help with planning.
▤ Cash, financial and flexible budgets →▤ Blue Wren cash budget →▤ Profit versus cash →▤ Flexible overhead budget →
10 minExplore variance analysis: what favourable and unfavourable variances mean, which variances deserve investigation, why comparing actual results with the original static budget can badly mislead, and how a flexible budget and a simple three-column framework separate price effects from efficiency effects.
▤ Variance analysis guide →▤ Static versus flexible budgets →▤ Static versus flexible budget →▤ The three-column framework →▤ Favourable or unfavourable →
6 minExplore the first pair of variances: the sales-volume variance and the selling-price variance, what each one measures, why the volume variance uses contribution margin, and why the two should always be read together.
▤ Variance 1: sales price and sales volume →▤ Sales variances →
6 minExplore the direct material variances: the price variance and the efficiency variance, how to calculate each one, who is responsible for each, and how to judge whether a cheaper material was really a saving.
▤ Variance 2: direct material price and efficiency →▤ Direct material variances →
5 minExplore the direct labour variances: the labour rate variance, which is the price variance for labour, and the labour efficiency variance, how to calculate them, and the trade-off between paying more per hour and needing fewer hours.
▤ Variance 3: direct labour rate and efficiency →▤ Direct labour variances →
6 minExplore the variable overhead variances: how variable overhead is allocated using a standard rate and a cost driver, how to calculate the spending variance and the efficiency variance, and why responsibility for them is shared.
▤ Variance 4: variable overhead spending and efficiency →▤ Variable overhead variances →
6 minExplore the fixed overhead variances: why fixed overhead has no efficiency variance, how to calculate the spending variance and the production volume variance, and what the production volume variance really tells managers about capacity.
▤ Variance 5: fixed overhead spending and production volume →▤ Fixed overhead variances →
10 minExplore how to interpret variances once they're calculated: how they connect to each other across the value chain, why a favourable variance isn't always good news, how to reconcile the budget with actual profit, and how to turn variance analysis into improvement rather than blame.
▤ Interpreting variances and taking action →▤ Blue Wren variance summary →▤ From budgeted to actual profit →▤ Linked variances →
10 minExplore the human side of budgets: goal congruence, the top-down and bottom-up approaches to setting budgets, the games people play, including pseudo participation and budgetary slack, how to set realistic targets, and how monetary and non-monetary incentives can help or harm.
▤ The behavioural side of budgets →▤ Top-down versus bottom-up →▤ Testing a budget for slack →▤ Incentives and goal congruence →
10 minExplore the criticisms of traditional budgeting and the main alternatives: incremental budgeting, zero-based budgeting, activity-based budgeting, and the Beyond Budgeting approach, which manages without fixed annual budgets at all.
▤ Alternatives to traditional budgeting →▤ Four approaches to budgeting →▤ Use it or lose it →▤ Activity-based budgeting →
11 minExplore what makes a piece of work a project, why projects are so hard to deliver, the four stages every project passes through and the management accountant's role in each, the six ways organisations structure their projects, and what changes when a project crosses borders.
▤ Projects and the four stages →▤ Characteristics of a project →▤ Four stages and the accountant →▤ Six project structures →▤ International projects →
12 minExplore the three key roles in a project, the sponsor, the project manager and the management accountant, why leading is different from managing, the two ways of organising a project team, and the extra challenges facing international and virtual teams.
▤ Project roles and teams →▤ Three key project roles →▤ Task-force versus matrix →▤ Trust in virtual teams →
11 minExplore the four tasks of project selection, what a business case is and what it should contain, how to test whether a project fits the strategy, who a project's stakeholders are, and why ethical choices are harder in projects than in day-to-day operations.
▤ Business case and strategic fit →▤ Inside a business case →▤ Testing strategic fit →▤ Project stakeholders →▤ Five ethical questions →
9 minExplore how project risks are assessed before a project is approved: where risks come from, how to identify them, how to rank them by probability and impact, how to avoid counting the same risk twice, how to plan mitigation, and how a risk register records it all.
▤ Assessing project risk →▤ Seven questions to identify risk →▤ Risk classification matrix →▤ Scoring and ranking risks →▤ A risk register entry →
5 minExplore net present value, the main tool management accountants use to judge whether a project creates value: why money in the future is worth less than money today, how to discount future cash flows, and how to read the result.
▤ Net present value →▤ Saltwater Tours NPV →
6 minExplore what belongs in a project's cash flows and what doesn't: project costs and risk reserves, working capital, sunk costs, finance costs, tax and depreciation, the project's life, and its residual value.
▤ Getting the cash flows right →▤ Include or exclude →
5 minExplore how to choose the discount rate for a project: why it matters so much, how the cost of capital and the opportunity cost of capital set it, how to calculate a weighted average cost of capital, and the danger of loading the rate with extra risk.
▤ Choosing the discount rate →▤ WACC worked example →
5 minExplore the internal rate of return and the profitability index: what each one tells you, how to estimate the internal rate of return by trial and error, and why net present value wins when the measures disagree.
▤ IRR and the profitability index →▤ NPV profile and IRR →
4 minExplore payback and discounted payback: how to calculate each one, what they really measure, and why relying on them alone can be a strategic trap.
▤ Payback and discounted payback →▤ Payback and discounted payback →
5 minExplore two accounting-based measures, return on investment and residual income: how to calculate them for a project, and why discounted cash flow measures are still preferred.
▤ ROI and residual income →▤ ROI and RI worked example →
4 minExplore sensitivity analysis and scenario analysis: how each one tests a project's financial results against changing assumptions, what makes a decision robust or sensitive, and why public sector analysts routinely test more than one discount rate.
▤ Sensitivity and scenario analysis →▤ Testing the Saltwater NPV →
4 minExplore how to compare mutually exclusive projects with different lives, using the equivalent annual cash flow, also called the equivalent annual annuity, and why the project with the bigger NPV isn't always the better choice.
▤ Projects with different lives →▤ Swift versus Sturdy →
8 minExplore the steps in project planning, how Gantt charts present a schedule, what a project budget does and how to keep it fair, the role of project management software, and how different supplier contracts change what the management accountant needs to watch.
▤ Gantt charts, budgets and contracts →▤ Four planning steps →▤ Gantt chart for a sports hall →▤ Supplier contracts →
5 minExplore the first steps of the program evaluation and review technique, known as PERT: drawing a network diagram, and calculating an expected time for each activity when durations are uncertain.
▤ Network diagrams and PERT times →▤ Museum network diagram →
5 minExplore the last two steps of PERT: finding the critical path, which sets the project's completion time, and calculating slack, the room some activities have to start late without delaying the project.
▤ The critical path and slack →▤ Critical path and EOTs →
6 minExplore crashing a project with the critical path method: what crash durations and crash costs are, when crashing pays, how to decide which activities to crash first, and what happens when a second critical path appears.
▤ Crashing a project →▤ Crashing the museum project →
7 minExplore how management accountants monitor project cost and time: the project iron triangle, why committed costs matter, and earned value analysis, which shows in one framework whether a project is over budget, behind schedule, or both.
▤ Earned value analysis →▤ The project iron triangle →▤ Committed costs →▤ Earned value chart →▤ Earned value calculations →
9 minExplore the rest of project control: managing specification and quality, the four types of quality cost, the challenges of measuring project performance, the five fundamentals of probity, managing risk during the project, and managing stakeholders and scope creep.
▤ Quality, probity and risk →▤ Three stages of quality →▤ Four quality costs →▤ Five probity fundamentals →▤ Risk management strategy →
9 minExplore the final stage of a project: deciding whether completion is still the right choice, closing out the remaining tasks, reaching agreement on the deliverables, assessing strategic fit and stakeholder satisfaction, closing the project's finances, dispersing its resources, writing the final report, and capturing knowledge for the future.
▤ Project completion and review →▤ Eight completion activities →▤ Finish or walk away →▤ Strategic fit at completion →▤ Knowledge management →
10 minExplore what performance really means, the difference between measuring, monitoring, reporting and managing it, how performance links to strategy, why financial measures need non-financial partners, and why not everything that matters can be measured.
▤ Performance and its measurement →▤ Measure versus indicator →▤ Four dimensions of performance →▤ Financial versus strategic →▤ The performance process →
9 minExplore the three roles of performance management: supporting value creation, reporting on sustainability through integrated reporting, and sending signals to investors and other stakeholders. We'll also look at how reporting standards have changed in recent years, and what a dramatic corporate collapse teaches us about signals.
▤ Value, sustainability and signalling →▤ Three roles →▤ Six capitals →▤ Reporting timeline →▤ Lessons from collapses →
9 minExplore how performance management connects with corporate governance and risk management, how a board sets its appetite for risk, the ethical principles and threats every professional accountant must manage, and two theories that explain how performance management works in practice: agency theory and contingency theory.
▤ Governance, risk, ethics and theory →▤ Conformance and performance →▤ Governance and risk cycle →▤ Principles and threats →▤ Agency and contingency →
9 minExplore how strategy shapes performance management, how performance measures can be built around the value chain, what management control is and how feedback control works, the elements of a performance management system, and the limitations of traditional accounting controls such as return on investment.
▤ Strategy and management control →▤ Strategy shapes measures →▤ Value chain measures →▤ Feedback control →▤ ROI can mislead →
8 minExplore the difference between operational and strategic performance, why leading measures matter as much as lagging ones, and a tour of the main performance management frameworks: the tableau de bord, the performance pyramid, the results and determinants framework, the EFQM excellence model, Six Sigma, the performance prism and the Business Model Canvas.
▤ Leading measures and frameworks →▤ Leading versus lagging →▤ The maintenance trap →▤ Performance frameworks →▤ Business Model Canvas →
5 minExplore the balanced scorecard's four perspectives: what each one covers, which measures are leading and which are lagging, where a measure belongs, how many measures to use, and the chain of cause and effect that links the perspectives together.
▤ Scorecard 1: four perspectives →▤ Four perspectives →
5 minExplore what balance means in a balanced scorecard, the five main benefits of the scorecard, the main criticisms of it, and how organisations add extra perspectives to suit their stakeholders.
▤ Scorecard 2: benefits and criticisms →▤ Benefits and criticisms →
5 minExplore how to design a balanced scorecard, step by step, with a worked example, and how scorecards are adapted for government agencies and charities.
▤ Scorecard 3: designing a scorecard →▤ Five design steps →▤ Kestrel Coffee scorecard →
8 minExplore strategy maps: how they show cause and effect, and how they're built through workshops. We'll also study cascading performance measures through the organisation, the role of information systems, and what makes strategy implementation succeed or fail.
▤ Strategy maps and cascading →▤ Strategy map →▤ Cascading measures →▤ Barriers and keys →
6 minExplore how to choose performance measures: the principles behind good choices, the seven types of measure, the balance between efficiency, effectiveness and equity, and why every measure must earn its keep.
▤ Measures 1: types and the three Es →▤ Seven types of measure →▤ The three Es →
4 minExplore how to set performance targets using the SMART test, with examples of targets that pass and targets that fail.
▤ Measures 2: SMART targets →▤ SMART test →
5 minExplore the six characteristics of effective performance measures: validity and reliability, clarity and timeliness, and accessibility and controllability, and why no single measure can tick every box.
▤ Measures 3: six characteristics →▤ Six characteristics →▤ Testing one measure →
8 minExplore how management accountants help improve performance, using three levels of analysis: targets, trends and benchmarks. We'll also look at the benchmarking process and its pitfalls, and why organisations must learn, and sometimes unlearn, to keep improving.
▤ Targets, trends and benchmarks →▤ Three levels of analysis →▤ Six benchmarking steps →▤ Benchmarking pitfalls →
8 minExplore how performance measures shape behaviour: the difference between diagnostic and interactive control, how power and culture shape what gets measured, the common dysfunctional behaviours that measures can trigger, and how to design incentives and rewards that support sustainable performance.
▤ Behaviour, incentives and rewards →▤ Diagnostic versus interactive →▤ Six dysfunctional behaviours →▤ Reported versus actual waits →▤ Designing rewards →
8 minExplore how organisations create value for their different stakeholders, Porter's organisational value chain with its primary and support activities, and how supplier, channel and customer value chains link together into a wider industry value chain.
▤ Value and the value chain →▤ Stakeholder value →▤ Porter's value chain →▤ The industry value system →▤ Moving activities to customers →
8 minExplore why accurate product costs matter, how traditional volume-based overhead allocation can distort them, the logic of activity-based costing including the cost hierarchy and cost drivers, value engineering, and when activity-based costing is worth the effort.
▤ Costing systems and activity-based costing →▤ Traditional versus ABC →▤ The cost hierarchy →▤ Cost pools and drivers →▤ When ABC pays off →
6 minExplore the seven steps of activity-based costing, by working through one complete example from activity analysis to a cost per unit, and comparing the result with traditional costing.
▤ ABC 1: the seven steps →▤ Seven steps of ABC →▤ Lantern and Wick ABC →▤ Traditional versus ABC cost →
6 minExplore time-driven activity-based costing: why it was developed, how theoretical capacity differs from practical capacity, how to calculate a capacity cost rate, and how the method reveals the cost of unused capacity.
▤ ABC 2: time-driven activity-based costing →▤ TDABC in five steps →▤ Capacity cost rate →▤ Used and unused capacity →
5 minExplore time equations: how time-driven activity-based costing handles activities that take different amounts of time in different situations, and how this information supports pricing, process improvement and customer decisions.
▤ ABC 3: time equations →▤ Building a time equation →▤ Two customers compared →▤ Common variations →
9 minExplore strategic revenue management: hard and soft product functions, how product features shape the pricing approach, customer value and surplus value, the four pricing strategies on the price and promotion map, and the legal limits on setting prices.
▤ Pricing for value →▤ Hard and soft functions →▤ Features shape pricing →▤ Surplus value →▤ Pricing strategy map →
7 minExplore strategic cost management: why across-the-board cuts rarely last, five questions for finding sustainable cost reductions, the spare capacity dilemma, and the difference between structural and executional cost drivers.
▤ Cost drivers and lasting savings →▤ Cuts that last →▤ Five cost questions →▤ The spare capacity dilemma →▤ Structural and executional →
6 minExplore life cycle costing: the product life cycle and its cash curve, why most costs are committed long before they're incurred, and how reverse flows at the end of a product's life are becoming a major cost, and opportunity.
▤ Costing 1: life cycle costing →▤ The cash curve →▤ Committed versus incurred →▤ Reverse value chain flows →
6 minExplore target costing: its five steps, a worked example of finding and closing a cost gap, its advantages, and a real lesson about what target prices must include.
▤ Costing 2: target costing →▤ Five steps of target costing →▤ Porchlight cost gap →▤ Closing the gap →
6 minExplore kaizen costing: how it achieves small, continuous cost reductions during production, where the savings come from, how it differs from target costing, and how life cycle, target and kaizen costing fit together across a product's life.
▤ Costing 3: kaizen costing →▤ Target versus kaizen →▤ Extent of change →▤ Life cycle decisions →
8 minExplore activity-based management and how it differs from activity-based costing, the factors that shape value chain costs, business process management, activity value analysis for separating value-adding from non-value-adding work, continuous improvement and productivity ratios, and social and environmental value chain analysis.
▤ ABM, BPM and continuous improvement →▤ ABC versus ABM →▤ ABM in three steps →▤ Five value questions →▤ Ford accounts payable →▤ Productivity ratio →
9 minExplore supplier management: the hidden costs that sit behind a supplier's invoice, the supplier cost performance ratio, supply chain risks and disruptions, global sourcing and supplier codes of conduct, minimising inventory, and how to choose and work with suppliers.
▤ Supplier management →▤ Hidden supplier costs →▤ Total procurement cost →▤ Supply chain risks →▤ Global sourcing trade-offs →▤ From contract to partnership →
9 minExplore total quality management and the four categories of quality cost, why rework can be worth doing even though it adds no value, and outsourcing and offshoring: the costs, risks and strategic limits of handing activities to someone else.
▤ Quality costs and outsourcing →▤ Four quality costs →▤ Rework or scrap →▤ Outsourcing pyramid →▤ Outsourcing pros and cons →
7 minExplore customer profitability analysis: why gross margin isn't enough, what makes customers differ in revenue and cost, and how activity-based costing reveals each customer's cost to serve, through a worked example.
▤ Customers 1: cost to serve →▤ Gross versus net margin →▤ Margins compared →▤ The whale curve →
7 minExplore how to manage customer profitability: what makes a customer expensive to serve, the four types of customer on the net margin and cost to serve map, why you might keep an unprofitable customer, the six steps of customer profitability analysis, and its benefits and limits.
▤ Customers 2: profit strategies →▤ Margin and cost to serve →▤ High and low cost to serve →▤ Six steps →▤ Keeping unprofitable customers →