Management Accounting for Sustainability

This assignment delves into the crucial role of management accounting in driving sustainable business practices. Students are tasked with analyzing different frameworks and approaches, such as carbon management accounting and life-cycle cost accounting, used to integrate environmental considerations into financial reporting and decision-making. The emphasis is on understanding how management accounting can facilitate organizational success while minimizing negative environmental impacts.

Management Accounting

EXECUTIVE SUMMARY
The Boot it in United should be able to increase its efficiency by improving its
performance and making better growth so that it may achieve its goals in effectual manner. It is
required by it that it should rely on management accountant so that it may prosper in the football
club world. It is facing several issues related to low income as gate receipts are not up to the
mark. As such, management should make well structured strategies so that deviations from better
performance may be analysed and it may achieve its goals and vision in effective way. This will
provide it with more efficiency and more revenue may be earned by it in the most proficient way.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
.........................................................................................................................................................1
VISION- FOR THE BALANCED SCORECARD.........................................................................1
STRATEGY TO GET THE FOOTBALL CLUB GO AND GET MORE PROFIT.......................1
Kaplan and Norton's Balanced Scorecard..............................................................................1
Critical evaluation and advantages and disadvantages of balanced scorecard......................3
Target costing.........................................................................................................................5
Management accountants adding to value to club..................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Every organisation wants to succeed in their functioning so that they may satisfy
customers and capture huge profits at large basis. The enclosed report deals with Boot it in
United which is a football club. It is facing issues related to low income and consecutively facing
issues related to player's income more than gate receipts (Ward, 2012). The profits of this club is
reduced and this may be overcome by effective strategies which are to be formulated and
implemented by it in effectual manner. Target costing will be reliable to it so that costs may be
determined in effective way. Several other methods may be used to increase efficiency.
Management accountant may be helpful to club as it will provide management reports which are
useful for managers to take valuable decisions in enhanced way.
VISION- FOR THE BALANCED SCORECARD
The vision of Boot it in United is that it wants to succeed in future prospects so that it
may lead to success. For this it needs clear vision so that it may succeed in the future and profits
of Boot it in United is maximised too much extent. This done by having a clear perspective of
future going and performing better than the present. This will provide it with maximum growth
and it will lead in further working in the future.
STRATEGY TO GET THE FOOTBALL CLUB GO AND GET MORE
PROFIT
For accomplishing the goals of football club, it needs to prepare a competitive strategy
for more accumulating more profits. The success of club may only be maximised when it will
implement better and competitive strategy. In simple words, game plan may be formulated so
that it may achieve its goals and vision in the best possible way (Parker, 2012). To analyse
revenue forecast, NPV (Net Present Value) may be useful technique to analyse future earnings
in effectual manner.
Kaplan and Norton's Balanced Scorecard
 Financial perspectives
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The financial perspectives is vital for stakeholders and other financial stakeholders such
as investors and creditors of organization. Here, benchmarking is used to determine figures from
the past financial statements. It supports operations department and provides sustainability to
organisation as it helps to achieve strategies in effective way. It adds to the value of Boot it in
United club and is able to achieve its objectives and goals in the best possible manner. In the
balanced scorecard directed by Kaplan and Norton's, increase value indicates higher profits
which is the ultimate vision of club.
 Customer's perspectives
This perspective is one of the essential part of club (Burritt, Schaltegger and Zvezdov,
2011). Every firm wants to meet the expectations of its potential customers so that it may earn
huge profits in effective manner. The target market of customers is identified by it so that the
needs and demands of customers may be achieved and as such customer satisfaction is
accomplished eventually. Thus, customer's perspective is an important part in the balanced
scorecard given by Kaplan and Norton's. The perspective here is that how customers may be
attracted to football club so that it may earn huge revenue in effectual manner. Customers are
attracted towards organisation by analysing quality, service and price which are driving factors
which is necessary for club to get accomplished in right possible way to deliver them delightful
and premium experience.
 Internal process
The internal business process is helpful in adding value to organisation so that it may
target market in significant manner. The question arouses that is club had added value to it by
considering various business process such as different activities and decisions in effectual
manner. Optimal alignment between these processes supports and adds value to club in the best
possible way and customers are imparted better satisfaction as value is added effectively. The
internal business process may be made effective so that satisfaction may be provided to
customers, stakeholders and other external parties in effectual way (Granlund, 2011).
 Knowledge and growth
The Learning and growth is also an essential requirement of Boot it in United football
club so that it may innovate new ideas and implement the same to accomplish success. In current
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scenario, when there is cut throat competition in the market, it needs to be efficient in learning
new things so that growth may be achieved. Also, several rules and laws keep on changing day
by day and it needs to address those rules so that results will be attained successfully.
 Human resources perspective
The human resources' perspective is much vital for the company. It includes leadership index,
personnel turnover rate, number of employees in the organisation. The strategy should be
formulated so that employees' increases productivity of organisation. It then ensures better and
balanced performances of them so that revenue may be earned and absenteeism rate may be
consecutively reduced.
Critical evaluation and advantages and disadvantages of balanced scorecard
Advantages
Kaplan and Norton's balanced scorecard is useful in judging and assessing the
performance of club by analysing four perspectives in effective way. Club may be able to set its
objectives with four perspectives in the best possible way (Otley and Emmanuel, 2013). It is
helpful in assessing and communicating goals of club at all levels. The strategies related to
achievement of goals is evaluated by balanced scorecard. Management comes to know about the
discrepancies or deviations if any in the club and suggest ways to improve performance of it by
taking corrective action. It helps management to never divert from the performance of club.
Balanced scorecard is also reliable to draw out conclusion as it integrates financial and
non - financial goals together which helps organisation to be efficient and this cannot be done by
traditional methods. As such, it is very dynamic technique as it takes several factors and integrate
into one single system which provides clarity to organisation in the best possible way. Balanced
scorecard as given by Kaplan and Norton's is a straightforward concept which is helpful to
managers as no additional training is needed to implement balanced scorecard effectively in the
firm. It raises innovative and process improvement methods such as internal business process
which gains useful insight to managers to assess and improve performance.
Balanced scorecard is helpful in bridging the gap between mission and over embracing
goals of organisation and about how daily functioning support to objectives in effective manner.
Customers may be lured by providing them satisfaction by improving the technical performance
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of club. Six sigma technique eventually fall under this balancedd scorecard and is helpful
technique in assessing performance (Weißenberger and Angelkort, 2011). It also takes into
account customer's satisfaction as the chief objective. It helps in clear goals such as maximising
sales gradually increases the profits and enhancement of customer's service helps in
accomplishing voice of them and it helps club to improve its performance in effective manner.
It is also helpful in aligning departments and divisions in the club. As such, these
departments must be aligned to common strategy which is the essence of Kaplan and Norton's
balanced scorecard in the organisation. Also, individual's goals are interlinked with
organisational goals. As a result, this link is measured by balanced scorecard which assess
performance in effective manner.
Disadvantages
Balanced scorecard given by Kaplan and Norton's is concerned with four perspectives
such as financial, customer's, internal process and knowledge and growth only. There are more
perspectives which are required to assess the performance of club in effective way. Other
methods are responsibility towards society, management developing perspective and several
other (Fullerton, Kennedy and Widener, 2013). It needs to consider other these perspectives also
so that performance may be monitored but is ignored by club. Another demerit is that balanced
scorecard is an indefinite concept in assessing club's performance as there are no set of goals or
measures in above said four perspectives indeed.
Kaplan and Norton's balanced scorecard only includes on assessing performance of
football club but it does not suggest ways buy which performance of it may be improved. As
such, it does not provide concrete and reliable conclusions of the performance of Boot it in
United in effectual way. It just provides casual results of performance but so not provide ways to
make improvement in it. Thus, balanced scorecard is not sound enough to generate and produce
results.
This technique requires strong leadership and new leadership is not entertained. It is the
limitation that existing structure of leadership is favourable and not suitable for new leaders. This
is demerit of balanced scorecard as new leaders are not entertained. As, total efficiency is
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required by leaders and new ones cannot resist to it. balanced scorecard does not involve
financial analysis to measure risk. It also ignores economic value which is must in evaluating
performance of firm in effective manner (Tappura and et.al, 2015). As such, it results into
disadvantage to organisation as results drawn are not viable and not reliable.
Over arching of goals are hard to accomplish in real world and it is criticised on this
basis. When a club is not able to meet its objectives, then it tries to modify them but this
modification is not easier to achieve and it results in poor performance as it is difficult to alter
such changes in balanced scorecard. The four perspectives are not enough and balanced
scorecard is limited and as such, it does not provide conclusive results. The critical evaluation of
balanced scorecard is summarised as it is better technique but it should include more
perspectives to assess the performance of organisation in effectual way.
Target costing
Issue of player salaries more than gate receipts-
The issue of player's salaries being more than fate receipts is a serious issue to take into
consideration by Boot it in United football club so that its revenue are not reduced too much
extent (Brown-Liburd, Issa and Lombardi, 2015). The football players are getting superior and
high salaries because of their good physical strength. This is tolerable as they are paying off with
high wages and salaries because of their good physical strength. But this should not be more than
the gate receipts as if it is more than from where club will pay their salaries to them without the
income achieved by selling tickets of matches to customers.
This should be improvised as when income is lower in gate receipts than club is engaged
in serious repercussions while paying salaries and it may lend itself to problems. The pays of
footballers are high because it is seen by customers at large but it should not be greater than the
income greater than the gate receipts which are available to Boot it in United club. The football
clubs should not give many salaries to them which must be conveyed by management to the
players and as such, the issue will be solved too great extent.
Ways to control costs-
The club should be able to control its costs so that it may achieve higher growth by
having control on costs and eradicating unwanted expenses so that it may conquer its goals in
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effective way. The miscellaneous costs on various activities should be minimised so that Boot it
in United may be able to cut down its unwanted expenses and may be able to make savings by
controlling the expenses in effective way.
By controlling the overhead costs such as electricity, and club's telephones and other
expenses, it will be in good position and as a result, costs will be cut down up to much extent.
For cost cutting, goal should be set so that club may work upon it in effective way. It means that
how much is the savings, club is planning to maximise by reducing costs (Figge and Hahn,
2013). Wastage of resources should be minimised too great extent so that club may not spend in
unnecessary expenses and incur additional costs which does nothing but increases the costs of it.
Critical evaluation of target costing-
Target costing is an effective method in controlling the cost of club in the best possible
manner. By this, it may be able to determine its cost which is related to target market price. It is a
management technique which helps to determine prices by analysing market conditions that are
brought by similar products in the market. It is a tool to determine product life cycle cost in
effectual manner (Schaltegger and Zvezdov, 2015). Target costing is helpful tool to Boot it in
United as it provides them with useful insight to management to make effective target cost. The
formula of target costing is- Selling price - Profit margin or Selling price / 1+ Profit percentage.
Where profit margin may include cost or selling price.
From the extract, target costing may be calculated for both the financial years which is
2016 and 2017.
For 2016
Gross Profit margin = 27,600
Turnover = 103,600
Target cost per unit of percentage = 27600 / 103600
= 0.266 or 26.6 %
This means that the club will require 26 % on selling price of tickets for ensuring target cost.
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For 2017
Gross Profit margin = 17,500
Turnover = 128,500
Target cost per unit of percentage = 17500 / 128500
= 0.136 or 13.6 %
Operating profit margin-
This ratio is used to assess company's pricing strategy and efficiency. Moreover, it is
more helpful than target costing as in this, selling price is not known to the management. For
Boot it in United, it is much useful technique so that problems faced by it may be resolved too
much extent. Moreover, it is helpful for comparison as well with other company. This will
provide clear idea to management so that it may have higher operating profit margin.
Calculation of operating profit margin
Formula: Operating profit/ Net sales * 100
For Manchester United plc
Particulars Formula 2017 2016 2015
Operating profit
margin Operating profit / net sales * 100 13.90 13.36 8.01
Management accountants adding to value to club
Management accountants are important personnels of organisation as they provide
valuable information to it in effective way. The points are listed below:
1. Identify trends-
Management accountants are useful for firm as they provide them with identifying social
trends that will impact on club's value over period. It provides club to achievement of goals by
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supplying management accounting information to managers so that they may take better and
effective decisions to control internal factors (Anderson and et.al, 2015).
2. Useful for management-
The management accountant provides much needed information to managers so that they
may take decisions for internal management of the club in effective way. This helps it to be
effective in achieving its goals. This information is required for better decisions.
3. Determine the KPI (Key Performance Indicator)-
KPI is determined by management accountant which helps club to analyse whether it is
performing well or not and the KPI which helps it to identify which are the better performance
indicators which are contributing to growth of club. This information is helpful to management
as it guides them to carefully analyse the key performance indicators.
4. Life cycle costing-
Management accountant helps to add value to organisation by providing life cycle costing
technique or tool. It is a method which helps firm to analyse its cost in effective way so that
revenues and costs may be identified which is needed for planning, designing and acquisition
which are related to the costs of assets or other things in club. As such, it provides effective
results to management in analysing life cycle costing which is provided by management
accountant in effectual manner.
5. Generate reports-
The reports are generated by accountant which are essential for managers as it guides
them relating to many factors which are important part of the business (How management
accountants can lead their organisation towards sustainable success). Boot it in United should
rely on management reports so that it may be able to improve its performance. The management
reports are product cost reports, performance reports etc. which are produced by management
accountant in effectual manner. As a result, it provides managers a conclusive information which
is helpful for them in taking right decisions.
6. Assessing performance-
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The technique of budgetary control is useful to management which is provided by
accountant. This method helps to analyse the budgeted cost and actual cost which is then
compared with each other. If any deviations exist in actual performance, then effective and
corrective measures are taken by managers which aids to decision making process.
7. Maximising efficiency-
Management accountant adds to the efficiency of club and it helps to increase its grwoth
in the best possible way. The targets of several divisions of business are evaluated un advance
and accomplishment of these targets are made by organisation which gradually increases
efficiency (Chan, Wang and Raffoni, 2014). As a result, Boot it in United should use
management accountant reports and should rely on it so that it may add the value to it in
effective way.
Contingency theory
This theory states that there is a coordination and match between design of components
of accounting system and contingencies related to it. Contingency theory states that management
should have specific control and should have specific model so that in the event of any
contingencies, this model may be used by the management.
CONCLUSION
Hereby it can be concluded that organisation will be required management accounting
information so that it may flourish and managers may be able to take better and valuable
decisions for future growth. The club should be able to make good decisions so that efficiency
may be maximised in the best possible way. Also, several other methods such as budgetary
control and standard costing should be used by club so that it may enhance its profitability and
maximise growth which is needed for further working. Moreover, management reports should be
prepared by it so that managers may take good decisions for betterment of club.
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REFERENCES
Books and Journals
Anderson, D.R. and et.al, 2015. An introduction to management science: quantitative
approaches to decision making. Cengage learning.
Brown-Liburd, H., Issa, H. and Lombardi, D., 2015. Behavioral implications of Big Data's
impact on audit judgment and decision making and future research
directions. Accounting Horizon. 29(2). pp .451-468.
Burritt, R. L., Schaltegger, S. and Zvezdov, D., 2011. Carbon management accounting:
explaining practice in leading German companies. Australian Accounting
Review. 21(1). pp .80-98.
Chan, H. K., Wang, X. and Raffoni, A., 2014. An integrated approach for green design: Life-
cycle, fuzzy AHP and environmental management accounting. The British
Accounting Review. 46(4). pp .344-360.
Figge, F. and Hahn, T., 2013. Value drivers of corporate eco-efficiency: Management accounting
information for the efficient use of environmental resources. Management
Accounting Research. 24(4). pp .387-400.
Fullerton, R. R., Kennedy, F. A. and Widener, S. K., 2013. Management accounting and control
practices in a lean manufacturing environment. Accounting, Organizations and
Society. 38(1). pp .50-71.
Granlund, M., 2011. Extending AIS research to management accounting and control issues: A
research note. International Journal of Accounting Information Systems. 12(1). pp .3-
19.
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Otley, D. and Emmanuel, K.M.C., 2013. Readings in accounting for management control.
Springer.
Parker, L. D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp .54-70.
Schaltegger, S. and Zvezdov, D., 2015. Expanding material flow cost accounting. Framework,
review and potentials.Journal of Cleaner Production. 108. pp .1333-1341.
Tappura, S. and et.al, 2015. A management accounting perspective on safety. Safety science. 71.
pp .151-159.
Ward, K., 2012. Strategic management accounting. Routledge.
Weißenberger, B. E. and Angelkort, H., 2011. Integration of financial and management
accounting systems: The mediating influence of a consistent financial language on
controllership effectiveness. Management Accounting Research. 22(3). pp .160-180.
Online
How management accountants can lead their organisation towards sustainable success, 2015
[Online] Available Through: <https://www.cgma.org/magazine/2015/jan/201511533.html>
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