Financial Governance and Management Accounting

This assignment analyzes the role of financial governance and management accounting tools in achieving sustainability and competitive advantage at Zylla Co. It compares Zylla's operations with Unicorn Grocery, highlighting the importance of KPIs for effective financial monitoring and control. The report emphasizes the benefits of financial governance in mitigating risks, ensuring compliance with government policies, and driving economic efficiency. Additionally, it delves into the use of budgeting and planning tools to enhance Zylla's performance.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Different types of management accounting and its essential needs:.................................1
P2 Different methods of reporting system used in Zylla company.......................................2
M1...........................................................................................................................................3
D1...........................................................................................................................................4
P3 Calculate cost using appropriate tools:..............................................................................4
M2...........................................................................................................................................5
D2...........................................................................................................................................5
P4 Advantages and disadvantages of various planning tools:................................................6
M3...........................................................................................................................................7
D3...........................................................................................................................................8
P5: Use of management accounting in reducing financial problems....................................8
M4...........................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management accounting is the tool which is used by each firm's in order to attain the
sustainability. There are certain tools which are used by the firm in order to attain the objectives
in order to gain the sustainable advantage in an effective manner (Ahmad and Kamilah, 2013).
Under this, the manager of the firm uses various tools that could be used for smooth running of
operations. Management accounting officers used various management accounting tools that can
be used by the firm for gaining the sustainable development. The company needs to assures that
the management accounting tools are used in an effective manner so that the manager can
achieve its pre-set targets so effectively.
P1 Different types of management accounting and its essential needs:
Management accounting provides the information which associated with the financial
data given to the mangers of company so, they take the effective decisions regarding the
operation of company.
As management accountant of Zyalla company for more than 10 years, management
accounting information provides them platform to use this information for proper planning of the
strategies and plans which helps the company to increase their performance. The management of
company use this information to know about the actual performance of different departments and
compared with the standards which re made by company (Caglio and Ditillo, 2012). This helps
the management of company to know about the deviations in their actual performance and
provide the solutions to improve them. Information provide by management accounting helps to
make critical decision on the basis of revelation of performance report. It can be noticed that the
nature and size of accounting system improves the quality of the performance of different
departments and reach the goals of company effectively. The information provide by them
incudes information related to costing, inventory, finance etc. If the manager of company uses
this information in right sense then the results would be more accurate and reliable (DRURY,
2013). Wrong interpretation of the information by the management of company effects the
profitability and growth of company. So, there is need to be separate department which takes
care of the information. There are different type of accounting system is used by company to
control financial records and transactions. These different types of accounting system are
described below:
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 Cost accounting system: This system is used by cited company to determine the total
cost which incur by the company during production of the product and services. This
helps the management of company to evaluate the profit volume ratio, cost control and
other cost related matters. Different costing methods are used by the management of
company during the manufacture of their products like normal, standard and actual
costing.
 Price optimisation: It is important in statistical planning. This provides the crucial
information about change in price at each unit produce. This helps the management of
conman to determine the correct price of their product (Herzig and et. al., 2012). It helps
in fixing the correct price of the product which increases the profitability and help to
achieve the targets in stipulated time.
 Inventory management system: This system helps the management of company to
control the inventory. Inventory management ids the biggest challenge faced by Zyalla
company. So, to properly manage this company uses ABC costing and EOQ to manage
their stocks. This problem arises with the company which manufacture large number of
products.
 Job costing system: This helps the management of company to determine the each lot
size of product produce during the year. This provide the opportunity to company to
produce the products as per the resources available to them.
P2 Different methods of reporting system used in Zylla company
The management of company is going to change its transactions to increase the
profitability and growth of company (Kotas, 2014). For this purpose the management of
company is requires to adopt organised reporting system which record every transaction. This
reporting system is prepared by the support of various statements like profit and loss account and
balance sheet. It provides the important information which enables the management of company
for optimum utilisation of resources by minimise the wastage. Different reports prepared by
accountant of company is used by company to take effective decisions. These reporting system
contributes in effective appraisal of the performance of employees and find out the deviations by
compare with standards (Renz, 2016). This helps the management of company to provide the
solutions and improve the overall performance of company to achieve organisational targets.
Financial and non financial resources are available to company to collect data from there
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regarding preparation of different reports. After collection of data they are evaluate by the use of
different tools before posting it to the books of account. This helps the management of company
to reduce the chance of mistake and fraud. These data are collect from various departments
which are working for the accomplishment of common organisational objectives (Nixon and
Burns, 2012). To gather more accurate results it is the duty of accountant of company to prepare
more reliable financial reports. The future investment of the company is depends upon these
reports. This helps the company to increase their goodwill in market. Different reporting system
which are used by the mangers of Zylla company are described below:
 Performance reporting system: This system includes the important information
regarding past and current transactions of company and important contract made by them.
This shows about the actual performance of company in market and how it performs in
future. This information contributes in decision making regarding the future investments
made by the management.
 Operational reporting: This system includes the information regarding the operations of
different departments of company. This includes about the cost and expense that incur by
departments in production process (Burritt, Schaltegger and Zvezdov, 2011). This helps
the management of company to determine the actual cost incurred for manufacture
products in stipulated period of time. This will be called as internal reporting system.
 Job cost reporting: This includes the information about the such costs which are
charged over material, labour and other production overheads. This helps the
management of company to control the different costs which are levied on production
process.
 Inventory management reporting: This helps the company to control the stock of
company. This helps to provide the accurate resources to all the departments according to
there needs and guide them for their optimum utilisation.
M1
Management accounting tools have various advantages which are going to be applied by
the firm in order to assess the performance of the firm. This assist the firm's managers to gain the
positive outcomes by using the available resources. For such aim, they are required to implement
diverse management accounting tools which would assist them to meet out their long term
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objectives. As these management accounting tools helps the firm to maximise their profits in an
effective manner.
D1
An effective outcome is achieved by implementing adequate financial data which could
assist the firm to plan their future targets. For such purpose, reporting is said to be the useful
tools under which firm's decisions is based. Financial reports are made by implementing
essential information which are based on the existing and previous year performance. This is
implemented by investors for making effective capital investment plans.
P3 Calculate cost using appropriate tools:
Cost is an essential thing which is used in the cost of production. The cost is effectively
used by the management of the Zylla company so that it can effectively lower the per unit cost.
However, this can be said that the company needs to implement various activities which are used
by the firm for maximising the profits of the firm (Quinn, 2014). Under this report, absorption
and marginal costing methods are used by the company in order to optimise the profits. These
are discussed in details:
Absorption costing: This is the costing method under which entire costs which are
related to the production of goods are covered. These may be variable and fixed costs. However,
this also cited that the company by using this techniques, maximise the costs in an effective
manner. This is also required to be known as full costing methods because under this, all
production costs are known as the product costs.
Marginal costing: This is connected with the costs that covers by the firm with
manufacturing of extra units of production. If prices are charged by the firm for per unit cost then
in such a case this reflects the positive sign.
Calculation by using marginal costing
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
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Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Computation through Absorption costing
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
M2
There are different components which are influencing the benefit of an association. They
can be connected with interior and additionally outer components (van der Steen and Martijn,
2011). So as to overcome these, directors are utilizing different bookkeeping procedures, for
example, microeconomic systems that are connected with taken a toll volume benefit, adaptable
planning and cost related fluctuations. By applying these strategies in business operation each
issue can be settled. Some different instruments are movement based costing and overhead cost
systems which are straightforwardly related with the generation procedure. It is done to make
positive examination amongst real and standard cost that are use by company's. With the goal
that wastage of assets can be controlled.
D2
In the above utilized money related data is taken as on assumption based. It is done to
decide net benefit for the organization by utilizing different costing strategies. Zylla organization
is having two essential techniques (Ward, 2012). For example, absorption costing and marginal
costing. On the off chance that they are utilizing absorption costing they getting benefit of 7800
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while, with marginal costing they are accepting benefit of 7500. The distinction of 300 is break
down which is watched on account of settled cost. With the end goal of future choice minimal
costing is more compelling. As, they are giving more dependable results as contrast with
retention costing.
P4 Advantages and disadvantages of various planning tools:
Budget is the forecasting of all the expenditures and earnings for the specified period of
time. However, this can be said that the Zylla company is required to effectively make certain
tools which are useful by the firm in order to overcome all the issues. However, this can be said
that the company is using their effective planning system in order to effectively implement their
operations (Merchant and Kenneth, 2012). There are so many planning tools which are used by
the firm in order to gain the efficiency of the firm. Some of them are as follows:
Static budget: This is the budgetary tool which is used by the firm in order to effectively run the
operations so that the business can get the sustainable development in a firm.
Advantages:
This can be said that the company is acquiring this tool in an effective manner. However, this
can be said that the management of the firm uses this budgetary tool which are totally based on
the firm operations so that the business can attain their pre-set objectives.
Disadvantages:
This is the fixed budgetary plan and does not change as per the requirement of the firm.
That is the reason, this is not effective tool for analysing the performance of the firm.
Variable budget: this is the budget which change as per the change in the production
units for a certain period of time (Herzig and et. al., 2012). This can be said that the company
needs to have proper budgetary planning about the firm operations so that the firm can optimise
their operations related incomes and limit the expenses. However, this can be said that the
company needs tom make certain tools which are used by the firm so that the business can gain
the sustainable development.
Advantages:
Variable budget is one of the most crucial planning tool which change as per the change
in the firm production which helps the firm to know about the variable cost. As this is rightly
stated that the variable budget provides an accurate figures to the company's managers and top
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level authorities which will help out to make certain strategies and also overcome the variances if
any occurs. This would bring the sustainability in the firm.
Disadvantage:
This always does not provides the tools which can provide an exact figures to the firm.
However, this is static in practise and does not change during the year. The outcome which this
budget provides does not always reflects an exact figure.
There are various planning tools which is useful in budgetary control system. Some of
them are mention underneath:
Forecasting tools: It is known as effective process of making valuable estimation of
future based past and present information by analysing common data. These are statistical
techniques employing time series and cross-sectional.
Advantages: Every organisation must use a wide variety of forecasting techniques to
assess best possible results for the company.
Disadvantage: Future as uncertain through because of which company in some situation
cannot able to get sufficient amount of results.
Scenario tools: The primary method is to evaluate forecast based on mentioned
situations. In this relation two previous techniques where helpful in generating more effective
outcomes to overcome with any low probability of occurrence.
Advantages: It would be determine as origin of exact scenario and make proper
development of managers understandings.
Disadvantage: Manager sometime face plenty of issue while dealing with any critical
situations.
Contingency tool: It is more crucial for the company to determine their risk which is
present in an organization. This will make huge impacts on the productivity of the department.
Advantages: It helps to minimise losses of the company by formulating a new
contingency plan for an organisation.
Disadvantage: It would cause management to unpredictable underestimating sales and
revenues.
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M3
In order to get more positive and better results budgets are prepared and used by
enterprises. Various planning tools are there which can be consider by firms for this such as
cash, master and operating budgets. All these are prepared by firms to implement effectively the
evaluation of business's performance for introduce necessary improvements. All this help
enterprise in pay its long term debts and provide various long term advantages. Operating
budgets are prepared by firms to determine the cost incur by firm during process of production.
On the other hand, cash budgets are prepared by firm to analyse total cash inflow and outflow
during the year.
D3
In order to evaluate the performance of business, different factors are there which must be
consider manger related with routine operations of enterprise. Overall performance of business
get affected by various financial and non financial issues (Burritt, Schaltegger and Zvezdov,
2011). To achieve positive outcomes and better results it comes under the responsibility of
manager to identify financial issues and manage the same in order to manage the profitability of
enterprise. For this, a system called balance scorecard can be used by managers. Various factors
are there such as debt burden and lack of cash which directly the growth of business and its
activities.
P5: Use of management accounting in reducing financial problems
In each and every enterprise, there are different issues and problems are available which
is faced by company and its workers (Nixon and Burns, 2012). Due to this difficulties, business
entity not achieve higher productivity and profitability as well as they can attain long term and
desired goals or objectives. Financial issue is a big problem in the company because without
money business can not grow and success in competitive market place. There are certain
techniques are available which is used by given enterprise in order to reduce all issues and
uncertainty in minimum time period.
Some financial problems are:
 Profit level: This is most related with the company profitability level. Without having
proper finance support a company cannot be able to generate better gains in future times.
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 Productivity level: Some other aspects are associated with the total production which is
done by proper flow of funds which will be affected if they are not having amount to
produce sufficient amount of goods.
KPI: It is decade as a key performance indicators which support company in evaluating
performance of different resources like: funds, assets, labour, inventories etc. It will calculate
the execution lay on returns which is accepted by organisation after investing specific resources
(Renz, 2016). It could sort out all financial problems such as non-performing of possession &
assets and debts by KPI application to reduce these problems at opening phase.
Financial governance: It is a better system of practices, rules and processes which is used by
company is controlled and directed all issues in an effective manner. With the use of this tool,
business entity balancing their interests of different stakeholders like: customers, management,
financiers and community. They are give better framework for archiving objectives and goals of
the company.
Comparison between Zylla company and Unicorn Grocery
Zylla company Unicorn Grocery
It is a big organisation which is principally
dealing in different transaction in an effective
manner. They needs an correct system which
monitor all financial transaction.
It can be described as small business enterprise
which operates there activities at medium level.
They generally focus on those locations which
is deficiency.
Under such kind of company basically using
key performance indicators because with the
use of these techniques they can reduce all
issues in effectively.
They are use financial governance, because in
the market the face different financial
problems. So in this, such tools help business
in regards to decrease all problems.
They keep to control their transaction
effectively and efficiently. Due to this
minimum wastage that can be go on
systematically.
In the organisation, manger required budgeted
and actual data in order to determined their
actual positions.
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M4
To ensure effective formulation and implementation of various activities related with new
project it is very essential for enterprise to first collect relevant information and data. This ensure
attainment of end goals and objectives in an effective way. Different type of risks are there
related with various project (Herzig and et. al., 2012). In this case, it comes under the
responsibility of researcher to use various issues in order to overcome with these issues. All this
help in create a positive image of company and provide various competitive advantages.
Financial governance made by government play a key element in solve these issues. Every
enterprise is liable to obey policies and standards set by government in order to attain economy
of scale.
CONCLUSION
From the above-mentioned report, this is rightly stated that the company's management
accounting tools in the firm for achieving firm sustainability and also get the competitive
advantage over the competitors over the rivals. Under this report, various management
accounting reports are made so that Zylla operations are done effectively. However, this has been
observed that various planning tools are used in order to improve the performance of the cited
company.
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REFERENCES
Books and Journals:
Online
The Advantages and Disadvantages of Budgeting. 2017.[Online]. Available
through:<http://www.bifa.org/library/freight-management/finance/budgeting/the-
advantages-and-disadvantages-of-budgeting> .
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