Report on Management Accounting Practices for Performance Enhancement

This report provides a comprehensive overview of management accounting practices designed to enhance business performance. It delves into key strategies such as budgeting, which helps in estimating revenue, planning expenditures, and controlling spending to achieve business goals cost-effectively. Financial controls are discussed as essential processes for managing finance flow, ensuring accuracy in financial reporting, and protecting business resources. The report also covers investment appraisal, which assesses project viability and potential returns. Additionally, it explores price and product decisions, emphasizing the importance of competitive pricing and product quality for customer satisfaction and profitability. Project management, regulatory adherence, resource allocation, and risk management are also examined as critical components for effective performance management, ensuring compliance, optimal resource utilization, and the mitigation of potential risks. The conclusion highlights how these practices collectively contribute to improved business operations, quality, and goal achievement.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Practices which enhance performance management...................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Management Accounting ensure preparation of proper reports and accounts of the available
internal financial and statistical information of the company. This system aids in effective
decision making, improves and manages the performance of business operations as well.
Performance management can be done by adopting sound business strategies, plans such as
Budgeting, Financial controls etc. for maximising profit level in a cost effective manner.
MAIN BODY
Practices which enhance performance management.
Performance Management deals with the process of monitoring, evaluating and assessing
the operational efficiency and performance level of the business organisation. By making proper
use and management of the business resources helps in sustainable development of the company.
Following are the practices which can enhance the performance management in business:
1. Budgeting – The term Budgeting is a process which focus is on preparing or creating
projections, plans and strategies of future expenses and available amount. With the help
of proper budgeting, company can estimates revenue income, plans expenditure amount
and restricts spending on area which is not part of the plan. It helps company in
comparing the actual outcomes received with the estimated budget prepared to evaluate
the performance level of the company (Lalli, 2012). Thus, budget is a tool which helps in
estimating & controlling future income and expense amount for a definite period. It helps
in the proper and effective utilization of the resources available with the company for
achieving the over all business goals & objectives in a cost effective manner. It ensures
allocation of money to areas which support the objectives of business organization.
2. Financial Controls – The term Financial controls is defined as the processes, procedures,
methods, strategies or policies which are used by the company implemented for
managing the flow of finance in the company. Financial controls are considered as the
means by which the financial resources of company are controlled, directed, monitored,
and measured. It helps in ensuring the accuracy of report and accounts prepared by
eliminating all the errors or fraud done while recording of financial transaction of the
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business (Osadchy and Akhmetshin, 2015). It also supports in protecting the physical and
intangible resources of the business organization. With proper and effective management
and control of financial resources, company can achieve its goals by formulating strong
business strategies and plans.
3. Investment Appraisal – It refers to the collection of techniques which can be used to
identify the benefits or attractiveness of an investment. It helps in assessing the project
viability, making decisions related to the portfolio and value they are generating. The
main objective of investment appraisal is to place a value on benefits so that the costs are
justified. Thus, Investment Appraisal is the process which determines the whether
investment in project will yield profit (Baum and Crosby, 2014). It also helps in assessing
the rate of return, net present value, pay back period of the project invested.
4. Price and Product decision – When a company manufactures or produces products,
goods for meeting its customer expectations, it is very important to set price which will
benefit both its customer and company as well. Pricing strategy should be framed by
keeping in mind that maximum profit can be extracted by charging fair and competitive
prices from its customer (Andreti and et.al., 2013). The product decision should
emphasizes on the quality, packaging and designing factor of the company's product and
services. It is very important for a company to maintain and met the quality standards,
procedures laid down so as to increase the sales revenue and profitability. If company
charges fair price for its quality product and services, it will lead to customer satisfaction
and retention.
5. Project Management – It is the strategy which involves the process related to the
management, directing of project work in a cost effective manner which will lead to
increase in profitability situation of the company. It involves processes of making
initiative, planning, organising, executing and controlling the business operations of a
particular project. It helps in achieving business goals and objectives by applying
knowledge, skills, concepts, tools, and techniques for the betterment of business
organisation (Burke, 2013). It supports in managing the performance of company by
implementing skilful and expertise knowledge factor which leads to meeting the success
of project in a definite time period.
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6. Regulatory adherence and compliances – A company is considered as artificial person
incorporated under the provision of the Companies Act. Every company or business
organisation should comply with the laws and regulations as applicable to it for meting its
regulatory compliances. Thus, regulatory compliance for a company is considered as
adherence to policies, laws, regulations and norms required for carrying on the business
operations or processes (Kulkarni and Chandra Vemuri, 2014). It helps in achieving goals
and objectives by ensuring that all necessary steps are taken to comply with the relevant
laws, regulations etc. as applicable. It also ensures that governance documentation &
other requirements are met on time. On violating compliance requirements, company's
are liable for legal punishment, fines.
7. Resource Allocation – It is the process of making plans related to proper and wiseful
allocation of resources to business for carrying on business operations and processes.
Resource allocation is thus a method of allocating or assigning of available resources
such as tangible assets of business so that it supports in achieving organization's goals.
Resource allocation also emphasizes on managing of the available tangible assets of the
company in the best possible manner (Chen and Hsu, 2010). Every company should
makes use of available resources in such manner that it leads to sustainable development
and growth of the company.
8. Risk Management – The term risk management is a practice adopted by business
organisation for identifying, monitoring, assessing or evaluating the risk factor associated
with the project work. It is thus a process of forecasting and analysing the risk associated
with the financial business transactions along with remedial or preventive measures. It
also deals with identification of solution with helps in eliminating the risk factor and also
emphasizes on avoiding or minimizing the negative impact of such risk on the
performance of business organisation (Haimes, 2015). Company should always assess the
risk associated with business operations on time so that the physical and human assets
can be preserved for future use for successful continuation of its business operations.
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CONCLUSION
From the above report it can be concluded that effective performance management of
company can bring improvement in business operations, quality as well as helps in achieving
goals and objectives on time in a cost effective manner. The above report has discussed different
management accounting practices which can help a company in enhancing the performance level
and profitability of company's business. By adopting better and effective business strategies and
plans, resource allocation and project management a company can mitigate and eliminate risk
associated with business operations.
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REFERENCES
Books and Journals
Andreti, J., & et.al., (2013). The analysis of product, price, place, promotion and service quality
on customers’ buying decision of Convenience Store: A survey of young adult in Bekasi,
West Java, Indonesia. International Journal of Advances in Management and Economics.
2(6). 72-78.
Baum, A. E., & Crosby, N. (2014). Property investment appraisal. John Wiley & Sons.
Burke, R. (2013). Project management: planning and control techniques. New Jersey, USA.
Chen, H., & Hsu, C. W. (2010). Internationalization, resource allocation and firm performance.
Industrial Marketing Management. 39(7). 1103-1110.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Garrison, R. H., & et.al., (2010). Managerial accounting. Issues in Accounting Education. 25(4).
792-793.
Haimes, Y. Y. (2015). Risk modeling, assessment, and management. John Wiley & Sons.
Kulkarni, B., & Chandra Vemuri, R. (2014). Role of Quality Management System (QMS) for
Effective Regulatory Compliance. Applied Clinical Research, Clinical Trials and
Regulatory Affairs. 1(3). 157-168.
Lalli, W. R. (2012). Handbook of Budgeting (Vol. 562). John Wiley & Sons.
Osadchy, E. A., & Akhmetshin, E. M. (2015). Development of the financial control system in
the company in crisis. Mediterranean Journal of Social Sciences.6(5). 390.
Online
Management Accounting. 2018. [Online]. Available through:
<https://www.cpacanada.ca/en/become-a-cpa/cpa-prep-becoming-a-cpa/introductory-
management-accounting-cpa-preparatory-courses>.
MCDOWELL, B., 2017. Performance Management. [Online]. Available through:
<https://www.hrlocker.com/hr-software/blog/implement-effective-performance-
management-system/>.
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