Comparative Issues in Government Accounting

The assignment provides a detailed analysis of comparative issues in local government accounting. It discusses the importance of strategic management accounting techniques in enhancing business communication processes and determining progress. The document also explores the role of enterprise risk management in addressing challenges faced by local governments. Additionally, it examines the significance of sustainability accounting and accountability in local government settings. The assignment is based on a review of relevant literature from various books and journals, including 'Comparative Issues in Local Government Accounting' and 'Strategic Management'. It provides a comprehensive overview of key concepts and techniques related to management accounting and performance measurement.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Management accounting and essential need of management accounting system...................1
b) Presenting financial information.............................................................................................3
TASK 2............................................................................................................................................4
Cost techniques...........................................................................................................................4
TASK 3............................................................................................................................................6
a) Different type of budgets and advantages and disadvantages.................................................6
b) Budget preparation process containing determination of price and different costing system 9
c) Importance of budget as a tool for planning and control purpose..........................................9
TASK 4..........................................................................................................................................10
Use of management accounting system to deal with financial problems and issues................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is a concept which is considered important in organisational
concept subject to ordinate and manage the departments and operations of organisation. It is
utilized by supervisors for taking direction from the arrangements of data to get bolster while
taking choices for an association. By and large, it is a calling that includes association in
administration's division arranging, execution administration and basic leadership frameworks. It
likewise gives skill in the money related answering to help administration in usage of
authoritative techniques.
In this report, wage of Tech (UK) constrained which produces exceptional charger will be
distinguished on peripheral and retention costing techniques. There are four assignments
examined in this report out of which in Errand 1, a report is composed to Executive of Fund to
clarify the elements of Administration Bookkeeping Frameworks. There are 3 comprises of
count of minimal and ingestion costing to discover salary of an organization. Last errand
comprises of adjusted score card of organization. The fundamental goal of this report is to clarify
learning results of Administration Bookkeeping Reports and Planning Frameworks (Anandarajan
and Srinivasan, 2012).
TASK 1
a) Management accounting and essential need of management accounting system
1. Distinguish management accounting from financial accounting
Basis Financial Accounting Management Accounting
External
Review
Evaluators and Controllers survey this
report every year to check its precision.
Nobody survey these administration
bookkeeping reports.
Focus It is for the most part reliant and
concentrated on the past exchanges.
Its fundamental spotlight is on data
to get bolster in basic leadership.
Frequency It is required Quarterly, Month to
month and Yearly.
It is set aside a few minutes of its
prerequisite by Supervisors and
leaders.
Primary
Audience
All the outside partners like banks,
investors, budgetary foundations and
Its fundamental group of onlookers is
just inward workers like best
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financial specialists are its essential
group of onlookers.
administration, line directors and
bookkeeping divisions.
Purpose Its primary intention is to educate
business concerning finance related
position of the organization.
Its fundamental target is to offer help
to top administration of an
organization in basic leadership
process.
Regulations IFRS, GAAP and IAS It doesn't take after any directions
Scope Its extension is wide as it is helpful for
different organizations in that specific
industry.
Its degree is restricted as its
utilization is constrained to item
portion as it were.
Uses It is required for each organization's
which are associated with finance
sector.
It is discretionary as it is just required
or utilized at the season of
composing an answer to the
administration.
2. Management accounting information as a decision making tool
Utilizing the Data: A portion of the cases of these apparatuses are planning, monetary
explanation projections and adjusted scorecards. This device enables administration on settling
on choices on the most proficient method to develop their electric business.
Relevant Cost Analysis: These instruments likewise help administration in choosing
whether to include product offerings or stop activities. Administrative Bookkeeping Data is used
by administration of an organisation to settle on choices on what ought to be sold and how to
offer it.
Make or Buy Analysis: It examinations different expenses of making and purchasing an
item and picks that choice which comprises of less expenses (Bebbington, Unerman and
O'Dwyer, 2014). This instrument helps organization in deciding if to purchase or make an item
or not.
Activity-based Costing Techniques: This apparatus additionally underpins organization
in choosing the exercises required to deliver a specific product offering. This instrument of
Administration Bookkeeping Data enables chiefs in settling on choices to distinguish to whom to
organization should offer the items.
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3. Cost accounting system
Actual: It designates these expenses by utilizing real amount of distribution base. This
costing framework is the account of item costs which depends on real expenses of work,
materials, overhead and plant.
Normal: It generally recognizes foreordained assembling overhead rate in light of
evaluated costs. This costing is utilized for the valuation of made items like material, coordinate
work and assembling overhead expenses.
Standard costing: It is essentially used to esteem the cost of products sold and
inventories. This cost bookkeeping framework write works like typical cost bookkeeping yet the
fundamental contrast is that it predetermines material, coordinate work and assembling overhead
costs in view of the past data.
4. Inventory management system: this is one of the important accounting system which
helps to manage the inventory levels and flow of stock with in organisational context. A
stock administration framework includes the utilization of work area programming,
standardized tag scanners, scanner tag printers and cell phones keeping in mind the end
goal to oversee stock administration like stock, merchandise, consumables, supplies, and
so forth. There are type of inventory methods are used to manage and control the
minimum level of stock, raw material requirement and units to be produced for required
output.
5. Job costing: This costing framework is utilized as a part of request to indicate the
assembling costs for bunches of individual items or items, for the most part the cost
arrangement of the activity arrange is utilized just when the fabricated items are very not
the same as each other.
b) Presenting financial information
1. Type of management accounting reports
There are different administrative bookkeeping reports which are talked about as follows:
Records Receivable Maturing Report: It is utilized as a measure to decide money
related state of the clients of an organization. Capable maturing is an intermittent report that gets
an organization's record every once in a while which is a receipt extraordinary.
Job Costs Reports: They have been colonized by sellers to help the cost of an
occupation for bookkeeping framework. It is not quite the same as the quantity of employments
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and income of products ought to be allocated. These reports list a wide range of occupation costs
that are for each activity or undertaking (Bennett and James, 2017).
Budget Reports: A spending report is a period that is an inward report utilized by the
administration, which contrasts and the real execution number acquired amid the genuine period
contrasted with the evaluated, assessed gauges. At the end of the day, the spending report is
intended to think about how shut the spending execution was for the genuine execution.
2. Essential need of particular presentation format to present the financial information
Consistency: Consistency implies an organization needs to deal with its exchanges of
business similarly as the past exchanges happens (Caperchione and Mussari, 2012). The
understandability of informations is essential since it could prompt consistency in budgetary
revealing.
Comparability: If the data is reasonable than partners may survey two distinct
organizations money related informations by contrasting their announcements.
Considerations: Understandability of informations is essential for various gathering of
people. Like managers would inspired by just understanding to examine business informations,
speculators keen on net income left for investors and bookkeeper would be occupied with
knowing different money related figures (Ward, 2012).
TASK 2
Cost techniques
1. Absorption costing
These costs use to considered both variable and settled expenses. As a result of
this nature they are known as full costing technique. It alludes to be most extreme vital costing
procedures which are pertinent to all generation related cost. Having every single solid paradigm
however can't be thought about for important basic leadership in not so distant future time
(Retention costing, 2018).
Calculation of profit by using absorption costing technique
Particulars Amount
Sales 52500
Less: cost of goods sold (W/N 1)
Cost of opening inventory
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Direct labour 10000
Direct material 16000
Variable production overheads 4000
Fixed overheads 10000
Less: cost of closing inventory -10000 -30000
Profit before deduction fixed overheads and selling and distribution
expenses 22500
Less: under/over absorption -5000
17500
Less: selling and distribution expense
fixed overheads -10000
variable overheads -7875
Net profit or loss -375
Working note 1:
Calculation of cost of goods sold under absorption costing technique
Particulars Details Amount
Cost of opening inventory -
Direct labour (2000* 5) 10000
Direct material (2000*8) 16000
Variable production overheads (2000*2) 4000
Fixed overheads (2000*5) 10000
Less: cost of closing inventory (500*20) -10000
Cost of goods sold 30000
Working note 2:
Calculation of selling and distribution expenses
Particulars Details Amount
fixed overheads 10000
variable overheads (52500*15%) 7875
Total selling and distribution expenses 17875
2. Marginal costing
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A large portion of the financial specialists use to take these strategies more solid
for settling on significant choice for their business ventures. It is known as those costing systems
which is use for creation of one extra unit. These are mostly finish up factor costs not settled in
view of this nature, it is said be period costing strategy.
Calculation of profit by using marginal costing technique
Particulars Amount
Sales 52500
Less: cost of goods sold
Cost of opening inventory
Direct labour 10000
Direct material 16000
Variable production overheads 4000
Less: cost of closing inventory -7500 -22500
Profit before selling and distribution expenses 30000
Less: selling and distribution expense
variable overheads -7875
Net profit or loss 22125
Less: Fixed cost -25000
Profit/loss -2875
Working note:
Calculation of cost of goods sold under marginal costing technique
Particulars Details Amount
Cost of opening inventory -
Direct labour (2000* 5) 10000
Direct material (2000*8) 16000
Variable production overheads (2000*2) 4000
Less: cost of closing inventory (500*15) 7500
Cost of goods sold 22500
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TASK 3
a) Different type of budgets and advantages and disadvantages
Incremental Budgeting
This technique for planning utilizes organizations current spending plan and includes a
specific rate or increase cost which otherwise called increase, to get new spending plan
(Chapman, 2011). For instance, in the event of Tech (UK) Restricted, the month to month
spending plan for their business is £5000 and in the wake of allowing swelling by adding 5% to
introduce business spending plan, at that point its new spending will be £5250. It is
straightforward this streamlined spending process. A portion of the favourable circumstances and
disservices of this planning technique is examined as follows:
Advantages
 The expenses of getting ready spending plan of this technique for planning
is typically low.
 It is straightforward by each one.
 It is anything but difficult to get ready and summed up a financial plan.
 It can lessen clashes between different staffs since all bureaus of an
organization have rise to measure of cash to spend on their business
exercises.
Disadvantage
 The financial backing made through this strategy isn't precise, as just increasing
the value of a financial plan isn't sufficient.
 There's no motivating forces given to representatives who is putting their
endeavours in diminishing expenses of generation, expanding benefits and
enhancing profitability of a business.
 This financial plan is unbending, on the grounds that this strategy doesn't permit
any further changes after the readiness of a financial plan.
Zero-based Budgeting
A zero-based spending plan or zero-whole is a well known strategy that gives individuals
a financial plan for their very own and home costs, yet it can likewise be utilized for business
spending plans. In this technique, the monetary allowance inspects the estimation of a business
with a specific end goal to guarantee that they are fundamental (Chiarini and Vagnoni, 2015).
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Zero-based spending plan is made in following three stages given as follows:
Stage 1: Exercises are controlled by supervisors. There exercises are later uses in basic
leadership process.
Stage 2: In this progression administration offers positions to every procedure all
together, this request later sort in sliding configurations of advantages.
Stage 3: Here in this last stage, reserves are allotted to various spending
recommendations in view of their needs.
Advantages
 Asset and assets are productively dispensed.
 It perceives inefficient exercises and later wipes out such exercises.
 It helps supervisors in driving cost decrease techniques.
Disadvantage
 It's anything but a simple technique, it contains complex advances and
expends heaps of labour and time (Chiarini, 2012).
 It isn't reasonable for huge associations, as huge measure of informations
are there. Utilizing these informations may requires basic points of interest
of it.
 Because of the circumstance of over spending plan, inside clashes between
various representatives may rises.
 Workers and administrators requires fundamental preparing to actualize
such a financial plan.
Top Down Budgeting:
The fundamental favourable position of this technique is that, an administrator does not
have to believe others to give spending data and it can spare time. In any case, if administrators
are not all around engaged with the everyday organization's business, at that point they won't not
have all the data expected to utilize this spending strategy (Damodaran, 2012). This may bring
about the distribution of assets in a few regions and the assignment of assets in others.
Under this planning technique, the most abnormal amount of business is done inside the
business, individual can work with any overhead administration, spend gauges and the assessed
benefit of your business and make a financial plan in like manner.
Advantages
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 This technique advances upper-level designation of experts.
 It requires less investment to make a financial plan.
 It helps administration in tending to hierarchical targets.
Disadvantage
 Because of disposing of contribution of subordinates, it can bring down
their spirits.
 The real impediment of this strategy may be ascends because of wrong
choices of upper administrators in view of inadequate information. This
could bring about inadequate assignment of planned assets among
different divisions and their execution may likewise diminish (Shields,
2015).
Bottom up planning: It raises the odds of working out of assets and prerequisites of store. This
technique begins with assurance of all the accessible dangers that are included and affecting
amid usage of a task.
Advantages
 All representatives are included which builds their spirit and inspiration
level.
 It gives clear and point by point informations to top administration.
Disadvantage
 Lower level administrators may not fit to cover every basic territory.
 Top administration has a less control over entire planning procedure of
this strategy.
 This strategy could overstated a few sections of spending plan.
 It is tedious and expensive technique.
b) Budget preparation process containing determination of price and different costing system
This is the process which remain associated with proper alignment and implementation of
strategies and plans
Step 1: this is the step in which basic framework is prepared by collecting information
Step 2: in this step the information and data are aligned in specified format
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Step 3: there is a particular order is setted and prepared in specific format so that effective
management and operation be done in effective manner.
Step 4: In this step the important aspects are rectified before implementation.
Step 5: this is the stage in which reviews and checks are validate and constructed in
predetermined format.
c) Importance of budget as a tool for planning and control purpose
Arranging is a fundamental procedure by which an association can accomplish their
targets by legitimate using assets of the organization. To determine them as quickly as time
permits is essential focus of the organization. For this reason, they are utilizing key execution
markers and money related administration to manage those issues. Equalization scorecards is a
fundamental arranging devices which are considered in charge of control all monetary related
issues those are having tremendous effects on the general execution of an organisation. In each
business there are sure kinds of business issues that are emerge without giving earlier signs.
There are different devices, for example, determining which use by administrators to assess up
and coming estimation of their expenses. Though situation and possibility instruments are
another significant devices that are useful for TECH Ltd.
TASK 4
Use of management accounting system to deal with financial problems and issues
It has been seen that "TECH Ltd" is connected with the generation of versatile charges
and other electronic contraptions. They are additionally connected with create unique sort of
charges to the clients. The administration of association has chosen to embrace adjust scorecard
technique to diminish their present misfortunes. As per back record, it has been watched that the
refered to organization has recorded a net loss of £ 1.5 million amid the year. Along these lines,
wide number of budgetary issues is emerging in association office in agreement to reserves. In
this stage, administration bookkeeping assumes a famous part to determine those issues and
make legitimate getting ready for boosting by the utilization of different strategies. This happens
to be a most extreme critical procedure which is useful in confronting all sort of money related
and non-monetary issues (Leitner, 2013).
Balance scorecard technique:
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It would give incredible open door in understanding to making of direct association
among association inner capacities and their points by powerful control and correspondence to
decrease those issues. It is a basic technique which is use by administration for making change in
their inner task and accomplishment of want results. There are different points of view which are
characterized under this:
Financial: This would learn with respect to the association current fund position and
their different clients those using asset of the organization.
Client: It is important to take data with respect to the all partners about execution of an
association (Weygandt, Kimmel and Kieso, 2015).
Inner process: gathering data from inside division on regular routine to look at nature of
their merchandise and ventures.
Authoritative volume: Social affair criticism with respect to hierarchical execution through
capital, framework and different perspectives.
CONCLUSION
The above report is prepared to illustrate management accounting in organisational
context. Dimensions of use of management accounting system subject to decision making
process and analysing the financial stability with in the organisation. Each cost ought to be
legitimized or it ought to be disposed of. The operational approach of adjust scorecard is
basically in light of the smooth task of the exchange association. This can lessen business
consumption in light of the fact that the financial backing has been decreased deeply. At last,
individuals' approach includes sets of objectives that help the business' point of view of business.
This is a vital key arranging and administration apparatus that is to enhance the correspondence
procedures of the capacities utilized by the firm, determine to work, measure advance and
screen.
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REFERENCES
Books and Journals:
Chiarini, A. and Vagnoni, E., 2015. World-class manufacturing by Fiat. Comparison with Toyota
production system from a strategic management, management accounting, operations
management and performance measurement dimension. International Journal of
Production Research. 53(2). pp.590-606.
Chapman, R. J., 2011. Simple tools and techniques for enterprise risk management. John Wiley
& Sons.
Caperchione, E. and Mussari, R. eds., 2012. Comparative issues in local government
accounting. Springer Science & Business Media.
Bennett, M. and James, P. eds., 2017. The Green bottom line: environmental accounting for
management: current practice and future trends. Routledge.
Bebbington, J., Unerman, J. and O'Dwyer, B. eds., 2014. Sustainability accounting and
accountability. Routledge.
Banerjee, B., 2010. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Bac, A. ed., 2013. International comparative issues in government accounting: The similarities
and differences between central government accounting and local government
accounting within or between countries. Springer Science & Business Media.
Anandarajan, M., Anandarajan, A. and Srinivasan, C.A. eds., 2012. Business intelligence
techniques: a perspective from accounting and finance. Springer Science & Business
Media.
Ward, K., 2012. Strategic management accounting. Routledge.
Shields, M. D., 2015. Established management accounting knowledge. Journal of Management
Accounting Research. 27(1). pp.123-132.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Fowzia, R., 2011. Strategic management accounting techniques: Relationship with business
strategy and strategic effectiveness of manufacturing organizations in
Bangladesh. World Journal of Management. 3(2). pp.54-69.
DRURY, C. M., 2013. Management and cost accounting. Springer.
David, F. R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Damodaran, A., 2012. Investment valuation: Tools and techniques for determining the value of
any asset (Vol. 666). John Wiley & Sons.
Chiarini, A., 2012. Lean production: mistakes and limitations of accounting systems inside the
SME sector. Journal of Manufacturing Technology Management. 23(5). pp.681-700.
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