Unit 14: Advanced Management Accounting - Accounting Advisory Report

This accounting advisory report evaluates the benefits of producing accurate and timely financial information, justifies the value of costing techniques, and assesses the rationale for presenting financial information appropriately for decision-making and investment. It uses Marks & Spencer as a case study to illustrate these concepts, emphasizing the importance of financial reporting for debt management, accountability, trend identification, and overall business performance. The report also details various costing methods like historical, standard, and marginal costing, highlighting their role in maintaining business productivity. Ultimately, the report underscores how proper financial information presentation aids informed investment decisions and credible planning.

ID
Unit Number and Title Unit 14 – Advanced
Management
Accounting
Credit Value 15 Unit Level 5
Project Title Accounting Advisory
Report (Part 1)
Statement of
Authenticity:
I certify that the work
submitted for this unit
is my own and the
research sources are
fully acknowledged.
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Table of Content
Assessment Part 1: Report
1.0 Introduction 3
2.0 An evaluation of the benefits of producing accurate and timely
financial information in a professional format 3
3.0 A detailed justification of the value of costing, with description
and application of a range of costing techniques, and the role that
costing plays in helping to maintain business performance and
productivity 5
4.0 Evaluate the rationale for presenting financial information
appropriately for decision making and investment 7
5.0 Conclusions 8
References p
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1.0 Introduction
Accounting advisory refers to the advice given by a third party adviser to any
organization on the basis of the standards that are requisite to be followed for the
accounting practices (Baret, Songini and Pistoni, 2022). In this report, an explanation
of the benefits of accurate and timely reporting of the accounts in a business are
mentioned. The company taken in this report to explain the various concepts and
elements is Marks & Spencer. This also contains a justification of the term costing,
the various costing techniques and the role played by accounting to maintain the
performance and productivity of the business is given. Further in the report, the
presentation of the financial information for the purpose of decision-making is also
described. This gives an overview to understand whether the business is worth
investing or not.
2.0 An evaluation of the benefits of producing accurate and
timely financial information in a professional format
Providing an accurate and timely financial information in a prescribed format
is also known as financial reporting. It is a crucial aspect of accounting in the modern
business organizations. An accurate and timely availability of financial analysis
provides businesses with some valuable insights and assists Marks & Spencer to
remain flexible and manageable in the working of their organizations. It also helps to
make more efficient and fruitful decisions in relation to the expenses and investment
decisions since the actual position of the company is available to the business and
its managers (Calado, Leite and Silva, 2019). The evidence based maintenance of
the accounting reports helps Marks & Spencer to improve the accuracy and timely
reporting of the financial statements. This in a way helps businesses to make and
implement the required crucial changes in the areas which the business lacks in its
working. Producing Financial statements in an accurate and timely manner within the
professional format given allows the business and the management to make
informed decision which aim for company growth and future development. The
maintenance of these reports aids the business of Marks & Spencer and its owners
to be safe of any fraud or malpractices which may ham the business, its working and
its image. It also ensures transparency and compliance with all the rules and
regulations prescribed by the government and industry standards (Chan, 2019).
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The benefits of maintaining such accurate and timely reports to the
organization of Marks & Spencer are: Better Debt Management: Preparation of accurate financial statements
provides the business of Marks & Spencer with a financial lucidness and the
ability to maintain accurate financial records and reports to be able to manage
company debts in the best way possible. Accountability – Preparation of such financial reports assists Marks &
Spencer to maintain employee accountability and credibility as these reports
are many times utilized to hold the company employees accountable and
responsible for their actions and performance. Easy identification of trends: The accuracy and timely financial reports
helps the business managers of Marks & Spencer to ascertain and analyze
the financial trends in the company finances to make better future decisions. Increase Financial Perception- Financial reports are sometimes utilized to
gain some particular and essential insights for the business that assist in
running the business of Marks & Spencer more effectively and efficiently in
the future scenarios. Liquidity- The accuracy of financial statements provides the investors,
customers and even the tax authorities with the liquidity status of the company
that d the company has the capacity to and whether it will be able to pay off its
debts and liabilities. Gain financial insights: The accuracy of financial reports in a timely manner
helps the business of Marks and Spencer to evaluate the business on all the
crucial parameters in the best ways possible and take the necessary steps
possible (De Luca and Prather-Kinsey, 2018). Better management of Cash flow- Accurate and timely financial reports in a
professional format helps with an effective and efficient management of the
cash flows of the company. With the help of these financial statement Marks &
Spencer can have a strong hand on its overspending in the areas where the
company lacks any cash requirements.
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 Differentiation: Proper management of the company reports and accurate
financial reporting gives the business of Marks & Spencer the freedom to
decide upon the trends which differ the company from its competitors in the
market.
Hence it can be said that an accuracy in the maintenance of the financial reports
gives the business of Marks & Spencer the access to various benefits. This in a way
assists to improve and implement many effective and efficient results in the
business. It also benefits the overall business of Marks & Spencer and its market
image to assist the company in identifying and being aware of any changes or
problems that may occur in the future with the help of these accurate financial
reports and management of timely statements (DeFond, Lennox and Zhang, 2018).
3.0 A detailed justification of the value of costing, with
description and application of a range of costing techniques,
and the role that costing plays in helping to maintain
business performance and productivity
Costing is referred to as the techniques and methods of processing and
determining the costs. It can also be referred to as the systematic process for
ascertaining the unit cost of the produced outputs or the services provided. Costing
as a subject relates to examining the expenditure sustained while producing the units
or providing the services. It enables the business of Marks & Spencer and its
managers to ascertain the total cost as well as the cost relating to all the constituents
involved while manufacturing the units of output. Therefore, costing as a method is
the constituent of all the rules and procedures that are utilised ascertain the costs
incurred (El-Bannany, Dehghan and Khedr, 2021).
The costing techniques utilised and help in application in the business of Marks &
Spencer are as following:
 Historical costing: Determining and recording the costs of the business after
they have been obtained and incurred is referred to as historical costing
techniques. It supplies the business management with all the essential data
and report of what has happened in the business and hence acts as the
afterward discussion of the actual costs that has been incurred in the
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business of Marks & Spencer. Since this technique of costing is a traditional
one, it is also known as actual costing.
 Standard costing: The formulation and usage of the Standard costs, their
comparability with the actual costs, and the analysis of variances to their
causes and points of incidence. In standard costing, the costs are measured
in advance on the grounds of some normal or other probability of
expectations. These costs are termed as either standards or standard costs.
They are then held in comparison with the actual business costs when they
are actually incurred to ascertain the deviations and differences in the two
costs. These variances are then analysed and evaluated to assess the
reasons that caused these differences. Hence enables the management of
Marks & Spencer to take the corrective and necessary measures and follow
upon the essential corrective measures (Nielsen, Kristensen and Grasso,
2021).
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 Marginal costing: The determination of marginal costs and of the outcomes
on profit of changes in the volume or form of output by distinguishing between
the fixed and variable costs. Under the head of marginal costings, these costs
are classified in two different groups as fixed costs and variable costs. The
fixed costs of the business are always constant even with the changes taking
place in the output levels whereas the variable costs differ with each and
every level of output in the business. The variable cost acts proportionally to
the changes in the output as it varies with the output changes. The primary
objective of marginal costing is to assess and deal with the changes that take
place in the volume of the output on the costing and profits of the company.
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The role of costing in serving to maintain the business performance and
productivity is very essential. Costing helps the business of Marks & Spencer with
the assistance of the entire cost data needed by the organisation for various
essential purposes. It also performs the requisite cost functions necessary in the
workings of the organisation (Suryady and Limbunan, 2022). Costing helps in
standardising, analysing, recording and comparing the reports available with the
organisation and aids in making the necessary recommendations to the business. A
good system of cost accounting gives the business of Marks & Spencer the
assistance needed to perform in an efficient manner in the following ways: Classification of various costs: Costing as a method helps the business of
Marks and spencer to ascertain and classify all its costs into their respective
various categories and heads. This gives an important aspect of the type of
the costs that the business has and helps to determine the value of all the
costs incurred in the business. Costing also helps in determining the
profitability of all the different sectors and area of activity for each of the
products. Control of the costs: Costing guides the management to keep a check and
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control on all the costs that the business incurs on its material, labours and
overheads. It helps to classify the labour costs in two ways as machine costs
and labour capacity. The overheads of the business are also distributed as
variable overheads and fixed overheads to help the business to control its
costs.
Price determination: One of the primary objectives of costing while maintaining the
business performance is the role of price determination. As costing differentiates
between the fixed and variable business costs, this allows the business and the
management of Marks & Spencer to fix the prices in a way that generates the most
amount of profits for their products on the basis of the economic situation prevalent
in the industry and market (Tsai and Jhong, 2019).
4.0 Evaluate the rationale for presenting financial information
appropriately for decision making and investment
The financial information's are an essential part of any business organizations
operations. These information's gives the business owners, its customers, investors
and the interested government authorities an insight to what is the financial health of
the business is. These financial statements in the form of the requisite information's
help the business in effective decision making. It also gives the external investors
and interested customers an option to choose whether they want to invest in the
business or not. The financial information's when presented appropriately and
accurately help in giving the business managers the authority to make the best
decisions for the business on the basis of the past results that the business acquired
(Zhou and et. al., 2019). Better informed investing decisions: The financial information's of the
business provides the external investors and business analysts interested in
the business with the required information to decide whether they want to
invest in in the company or not based upon its valuation and creditworthiness
(Yang, 2018). Credible planning authorities: The financial information of the business
gives the management f the company the authority and freedom of planning
upon the future business operations based upon the prior financial data and
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information that the business has. This helps the company to effectively plan
upon the areas that the business lacks in a better manner.
 Acts as a financing derivative: The preparation of strong financial
statements gives the business the option to obtain easy credits if it secures a
strong financial position in the books. It assists the investors in the market to
invest in the company if the financial information of the company gives a
sound positional analysis of the business (Yohn, 2020).
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5.0 Conclusions
From the above report, it can be concluded that accurate and timely
presentation of financial information's play a very major role in the financial and
economic health of the business. The various benefits that the business of Marks
and Spencer receives when the financial statements are prepared in a timely manner
have been identified and concluded upon. It acts as an aid to give business the
opportunity to build for decision making and also provides with the freedom to the
external customers and investors to decide for investing in the business. The report
also explains the concept of costing, its techniques and the importance it holds in the
performance and activities of the business. The final explanation in the report is
based on the importance that the financial information's holds in company's decision
making and investing decisions.
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References
Baret, P., Songini, L. and Pistoni, A. eds., 2022. Sustainability Accounting,
Management Control and Reporting: A European Perspective. Taylor &
Francis.
Calado, E.A., Leite, M. and Silva, A., 2019. Integrating life cycle assessment (LCA)
and life cycle costing (LCC) in the early phases of aircraft structural design:
an elevator case study. The International Journal of Life Cycle
Assessment, 24(12), pp.2091-2110.
Chan, J.L., 2019. Reforming American government accounting in the 20th century.
In Handbook of Public Management Practice and Reform (pp. 97-121).
Routledge.
De Luca, F. and Prather-Kinsey, J., 2018. Legitimacy theory may explain the failure
of global adoption of IFRS: the case of Europe and the US. Journal of
Management and Governance, 22(3), pp.501-534.
DeFond, M.L., Lennox, C.S. and Zhang, J., 2018. The primacy of fair presentation:
Evidence from PCAOB standards, federal legislation, and the
courts. Accounting Horizons, 32(3), pp.91-100.
El-Bannany, M., Dehghan, A.H. and Khedr, A.M., 2021, March. Prediction of
Financial Statement Fraud using Machine Learning Techniques in UAE.
In 2021 18th International Multi-Conference on Systems, Signals & Devices
(SSD) (pp. 649-654). IEEE.
Nielsen, H., Kristensen, T.B. and Grasso, L., 2021. Performance effects of value
stream costing and accounting performance measures in lean production
companies–accounting for time compression. Production Planning & Control,
pp.1-17.
Suryady, A.T.Y. and Limbunan, E., 2022. Basic Concept of Fair Value Accounting
Method and The Impact on Financial Statement. Available at SSRN
4010159.
Tsai, W.H. and Jhong, S.Y., 2019. Production decision model with carbon tax for the
knitted footwear industry under activity-based costing. Journal of cleaner
production, 207, pp.1150-1162.
Yang, C.H., 2018. An optimization portfolio decision model of life cycle activity-based
costing with carbon footprint constraints for hybrid green power
strategies. Computers & Operations Research, 96, pp.256-271.
Yohn, T.L., 2020. Research on the use of financial statement information for
forecasting profitability. Accounting & Finance, 60(3), pp.3163-3181.
Zhou, Z., and et. al., 2019. Model development of sustainability assessment from a
life cycle perspective: A case study on waste management systems in
China. Journal of cleaner production. 210. pp.1005-1014.
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