ACC305 Management Accounting: Problems, Analysis and Solutions Report

This report addresses management accounting issues faced by the MAdE establishment group of companies, particularly concerning unpaid wages and salaries. The analysis highlights the company's failure to properly manage employee payments, including missed overtime and penalties, result...Read More

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Introduction
In this memorandum the management accounting problems which are faceing by the MAdE
establishment group of companies are explained. This group of companies provide services in
different fields of hospitality like restaurants, hotels and many other field. Management
accounting consist of the procedures which helps in analyzing the information for making
business decision. It also helps in guiding the business by providing advantage while it has some
disadvantages. With the proper implementation of the management accounting techniques, it will
provide flexible opportunities for decision making.
Issues in the Article
The most important issues which are raised in this article is that the MAdE establishment of the
celebrity chef George Calombaris having huge empire of hospitality and management has unpaid
wages and salaries of more than $8 million. They had made a huge hospitality group of
companies and made an empire in that field. But they didn’t paid of their employees as they
don’t have the proper arrangement for paying their staffs. They also misses the overtime and
penalties due to not having proper management in recording them. All the employees working
between 2011 and 2017 has been underpaid and many of them has been remain unpaid. More
than 500 employees filed legal suit against the MAdE group of companies for wage theft.

Employees don’t even received any document or records so that they can recover their money.
They identified the issue of incorrect payment in 2017 after a long period.
MAdE establishment has failed to keep the records of their workers while denying the overtimes.
There was a massive back payment of the bills which is an early warning of insolvency.
Solution for the issues
MAdE establishment has to paid $200000 after getting forced by the court to pay off the
payments under the Fair work Ombudsman act. They required to check all the data of the past
and present to solve the fault in their system so that the underpayment or non-payment issues
does not arises in the future. They need to ensure that their current staffs are getting their
payment on due time. They need to make a separate group of peoples to handle the payment
related matters and solve all the issues. Verifying the past employment records they need to pay
off the old staffs.
Made establishment need to establish a well-designed payroll system, new technology with
proper staff to handle the system. Proper training to the staffs are required so that they can handle
any situation by proper responsibility for human resources. Every branch or part of the Made
establishment need to be audited separately by the qualified auditor. There is also requirement of
new CEO and managers who are capable of ensuring the proper functioning of the organization
while promoting cultural and employee wellbeing. Employer organization and Industry group of
Australia need to strict their rules and regulation so that no other company will make this
mistakes again.

Management accounting tools and techniques
Some of the important tools and techniques of management accounting which could be helpful in
solving the problem of Made establishment are as follows:
Financial planning – Its main objective is to maximize the business profit which can be
achieved by making proper financial planning and it is considered to be the best tool in achieving
the business objectives. By having proper business objective most of the problems will be
solved.
Financial statement analysis – A proper financial statement analysis need to be made which
consist of the profit and loss account and balance sheet. Different period of statement need to be
analyzed in order to know the growth rate of business.
Cost accounting – Preparation of cost accounting in department and branch wise is necessary so
that the cost can be determined. By comparing the cost, management will be able to take
necessary decision when required.
Fund flow analysis – Fund flow analysis from one period to another helps to determine the
proper uses of funds. Working capital required to fund the operation can also be find form this
analysis.
Cash flow analysis – It shows the cash movement cash from of different period in the
organization. It will be helpful in taking steps regarding any unnecessary expenses.
Standard costing – Standard costing is the cost which is determined in advance. It will be
helpful in performing the actual task by staying in the correct path. It is the standard which is set
by the top management by making different analysis.

Marginal costing – This technique is used to fix the price of goods or services while selecting
the best process so that the buying decision can be made.
Budgetary control – Budgetary control technique is need to be implemented so that they can
estimate the budget required for performing a particular task. It also helps in minimizing the
wastage of the fund.
Revaluation accounting – Fixed assets need to be revalued by following the proper accounting
method while presenting the capital value.
Decision making accounting – This is an important factor on which all other factors depends.
This is the best and alternative way of solving most of the business plans. It can be taken by
comparing the cost and other alternatives. Most of the business problem can be solved by making
proper decision makings.
Conclusion
After the investigation made by the Fair Work Ombudsman, they found numerous number of
contract breaches, failed to pay the minimum wage, no penalty rate, no overtime rate, no detail of
the allowances and annual leave provided. This incident not only harming the individual and
employees but also making a poor reputation of Australia in the world. It is the responsibility of
the Made establishment to solve the issues related to their employees by giving them the priority
while ensuring that all the employees are rewarded for their work. Some of the tools which can
be used to solve the problem of Made establishment is by having integrated reporting system,
management information system and managerial reporting.

Bibliography
ABC News. (2020). 'He should be taken off MasterChef': Calombaris's group fined $200k for
$7.8m underpayment. [online] Available at: https://www.abc.net.au/news/2019-07-18/george-
calombaris-made-establishment-backpays-underpaid-workers/11320274 [Accessed 20 Jan.
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