P1 Explain management accounting and give the essential requirements of different types of management accounting systems.

P2 Explain different methods used for management accounting reporting.

M1 Evaluate the benefits of management accounting systems and their application within an organisational context.

D1 Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes.

LO 1Demonstrate an understanding of management accounting systems

Case Study 1 - Zoom Video Conferencing Co. - A 'Game Changer'

The teleconferencing company Zoomhas seen a massive increase in profits and has doubled its annual sales forecast, driven by a surge in users as more people work from home and connect with friends online during the coronavirus crisis.

The once-obscure Zoom Video Communications, rapidly emerged as the latest Silicon Valley gold mine, as its financial results depicts an astronomical growth turning it into a stock market icon.

Zoom's boom has comedespite privacy & security problemsthat enabled outsiders to make uninvited and sometimes crude appearances during other people's video conferences.

Financial Performance of Zoom Inc at a Glance.-

Zoom Video Communications(NASDAQ:ZM)has been one of the biggest winners of pandemic-driven social distancing. Over the last 12 months, the share price has surged 220%, and the stock currently trades at 39 times sales and 154 times earnings.

This may have some investors asking themselves: is Zoom overvalued?

Fourth Quarter Fiscal Year 2020 Financial Highlights:

• Revenue:Total revenue for the quarter was$188.3 million, up 78% year-over-year.
• Income from Operations and Operating Margin:GAAP income from operations for the quarter was$10.6 million, compared to GAAP income from operations of$5.5 millionin the fourth quarter of fiscal year 2019. After adjusting for stock-based compensation expense and related payroll taxes, non-GAAP income from operations for the fourth quarter was$38.4 million, up from$9.8 millionin the fourth quarter of fiscal year 2019. For the fourth quarter, GAAP operating margin was 5.6% and non-GAAP operating margin was 20.4%.

• Net Income and Net Income Per Share:GAAP net income attributable to common stockholders for the quarter was$15.3 million, or$0.05per share, compared to GAAP net income attributable to common stockholders of$1.2 million, or$0.01per share in the fourth quarter of fiscal year 2019.

Some Issues that are worrisome

The biggest issue with Zoom is its valuation. It currently trades at over 320 times forward earnings and about 45 times this year's revenue estimate. Those "cult stock" valuations are too high relative to Zoom's growth, and could deflate if its growth decelerates, or if it loses users to rival platforms, or it stumbles over new security and privacy issues.

Zoom's second major issue is trust. It falsely claimed that the platform offered end-to-end encryption, which it wasn't true as some of its own employees could still access the video streams., while quietly revising its "daily active user" count to"daily active participants," since the former metric actually counted the same user's multiple times. Those missteps raised troubling questions about the way Zoom markets itself to consumers and investors.

Zoom's security flaws -- which include routing streams through Chinese servers, failing to block attacks on video conferences, andphishing scams - that have already tarnished its brand. Several countries -- including the U.S., Germany, Australia, andTaiwan -- have all asked their government agencies to stop using Zoom. Big companies like Google and Space X have also ordered their employees tostop using Zoom.

Fast forward to 2025, Zoom's user growth could decelerate once the pandemic is conquered or if people go back to work or if bigger rivals continue to expand their competing platforms, then Wall Street's expected projections of 34% revenue growth on a consistent basis could prove

just too high given that the stock could crumble under the weight of its hefty valuations in the years ahead.

Excerpts from source: CSI Market, techrepublic.com, The Venture Capitalist, Yahoo Finance)

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Based on the above case study, students are required to critically evaluate how management accounting systems and management accounting reporting are integrated within Zoom Communications Company future business plans, when responding to the following questions: -

Evaluate the concept of 'management accounting' and give the essential requirements of different types of 'management accounting' systems, as well as different methods used for 'management accounting reporting' while examining the evolving landscape of higher Revenues, mind numbing Operating Profits(EBIDTA) being reported by video teleconferencing platforms, amidst the Covid-19 pandemic. With all the major players offering "freemiums or additional time" to individuals, corporates, educational institutions and celebrities critically evaluate the benefits of 'managementaccounting systems' and 'management accounting reporting', by assessing how these systems if integrated within the Zoom Video Conferencing Company's organizational processes can lead to improved operational efficiencies.

(Answers will be graded for application within the company's context)