(solved) Assigmment on Management Accounting
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Added on 2021-06-16
(solved) Assigmment on Management Accounting
Added on 2021-06-16
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Running head: MANAGEMENT ACCOUNTINGManagement AccountingUniversity NameStudent NameAuthors’ Note
2MANAGEMENT ACCOUNTING Executive summary:The report is prepared for evaluating the remuneration report of chosen organization that isQantas airlines listed on Australian stock exchange. Such analysis is compared by referencingthe review of literature concerning the methods used for computation of performancemeasures and performance pay. The remuneration report of organization is analyzed byconsidering different aspects such as its alignment with organizational performance, incentiveplans and shareholder value. Four different views in relation to remuneration structure arepresented in the report by analyzing the annual report of company. Such review includeelements such as shareholder involvement, financial and non financial measures, performanceof company and executive pay. Comparison between the analyses is discussed in the part ofsummary of findings and later part of report deals with recommendation on how theorganization can broaden their performance measures. In addition to this, there is no deferredtax liabilities recorded in the balance sheet in current year.
3MANAGEMENT ACCOUNTING Table of ContentsIntroduction:...............................................................................................................................3Discussion:.................................................................................................................................3Review of literature:...................................................................................................................3Company review:.......................................................................................................................3Summary of findings:.................................................................................................................3Analysis of remuneration method used:.....................................................................................4Details of remuneration committee and its membership:..........................................................4Allocation of executive remuneration:.......................................................................................4Mix of performance measures:...................................................................................................4Reporting any changes in executive remuneration reporting-2016 versus 2017.......................4Performance of company versus executive pay:........................................................................4Recommendation:......................................................................................................................4Conclusion:................................................................................................................................4
4MANAGEMENT ACCOUNTING Introduction: The study intends to elucidate the evaluation of executive’s performance andremuneration in public listed companies in Australia. The main purpose of conductinganalysis of the remuneration framework of company is to determine the effectiveness ofcontrol system by drawing attention toward reward system and performance of executives.For the evaluation of effectiveness of remuneration, the study has incorporated discussion onthe review of literature regarding methods that are used for computing the performance pay.This particular paper has contributed to literature research by way of providing much neededevidence on importance of disclosure of remuneration that has been made mandatory and theexplicit and formal disclosure requirement has also been released. Secondly, it has alsocontributed in general to literature related to disclosure. Furthermore, the analysis of annualreport of chosen company is done for evaluation the remuneration framework and structure.The company that have been selected for conducting the research on annual report for thisassignment is Qantas Airlines. Qantas airlines are the largest airline company operating inAustralia in terms of international destination, international flights and fleet size. Some of thesegments of company involve Qantas freight, Qantas flight, Qantas loyalty, Qantas domestic,Qantas international and corporate (Qantas.com.au 2018). The main operation of company isin domestic and international services of air transportation and freight services provisions infrequent flyers. The nature and level of remuneration payments to executives in Australia has alwaysbeen a newsworthy issue for regulators, investors and financial press. Companies wererequired to provide with a detailed disclosure of executive remuneration with the fiscal yearending on or after July 1998.
5MANAGEMENT ACCOUNTING Discussion:Review of literature: This particular section of study depicts the analysis of review of literature on themethods used for computation of performance pay. Discussion also incorporates position andguideline of Australian shareholder association on the remuneration of executive. There is a literature body that is increasingly seeking to identify the relationshipbetween system of human resource management and strategy of organization. It depicts howthe performance of organization is enhanced by the practices of human resources. There aredifferent approached used for paying for employees performance that will have considerableimpact on organizational and individual behaviour. The organizational context forms thebasis of determination of pay for performance system. Making payment for individualperformance involves two common approaches. The popularity of incentive pay is decliningand on other hand, the popularity of merit salary is increasing. Incentive pay- The plans of incentives are based on making bonus payment toemployees depending upon the number of units that are produced by them. This method isperhaps the most direct way that is used for relating pay to performance and it is evident fromliterature that incentive payment would motivate the individual behaviour. This is so becausesuch plans help in selecting and attracting good performers as they end up being paid more. Adetailed description is provided in the literature on pay incentive plans of thecounterproductive behaviours that is produced by piece rate incentive plans. However, thiskind of issue arises when service personnel and sales are put on incentive pay. In manyrespects, such concepts are not the only reason for the occurrence of such behaviours.Nevertheless, on the general idea of incentive payment, it is difficult to create distinctionbetween particular plans and practical problems.
6MANAGEMENT ACCOUNTING The incentive plans are associated with some problems such as beating the system,divided workforce, cost of maintenance, and culture of organization and incentive plan ofsmall groups. Incentive pay is regarded as mixed blessings although it generates has variousdrawbacks associated with it. This particular approach is not implemented by manyorganizations because the performance increase by performance incentives is outweighed bycost of maintenance and negative effects of the plan. Sometimes, incentive pay is regarded asbest fit for organization in situation where work is designed for individuals and is repetitive,simple and can be measured comprehensively. This particular plan helps in differentiating forcreating small or isolated groups when competing with one another. Furthermore, it isassociated with the control approach to management and its is perceived that incentive plancan be more effective if there is more involvement oriented management style that stressesdue process, fairness and participation incentive pay (Appuhami and Bhuyan 2015). There are two types of incentive plans designed under this system that comprise ofshort term incentives plan (STI) and long term incentives (LTI) plan. STI are the scheme ofincentives where the measurement period is usually one year and the payment is done in cashsuch as profit share, gain share, commission and bonus scheme. Organization makes use ofshort term incentives are gain sharing scheme, bonus scheme and profit sharing scheme. Suchcriteria of performance can be qualitative, non qualitative and non financial measures. Usingthe methods of profit sharing helps employees to give priority to the bottom line and becomewell aware of the profit margin (Chen and Jermias 2014). If the organization generates higherlevel of profits, then a larger share of percentage of profits are received by employees. Organization generally make use of long term incentive plans for focusing on longterm goals and creating linkage between bonus scheme and the overall long termperformance. Such plans are based on stocks and options. In such schemes, the performancemeasurements are associated with the executive rights to receive or exercise options and
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