Question #4

British Motor Company: Organization of Accounting Department s from an address made by an oflicor of the Brtish Motor Compary We can all, I think, take pride in the wary development in this country cost accounting has kept pace with business made during the last quarter t Tremendous strides have been and I'm sure that much more progress wll be made in the future. In fact, times. The whole of industry is now operating on a difterent level than we progress will have to be made if we are to keep the science of management abreast of the have known before-a accounting -a higher plateau, on which management accounting appears in a new light and becomes more and more significant as a factor in business management. t is my experience that the function ot cost determination is basic to every other function of a modern business. Cost factors thread their way through every phase of a business and, to a large extent, influence the makeup of the entire enterprise-ts products, its markets, and its methods of operation. We must, of necessity, have rather complex and extensive costing orgarizations, but the principle according to which they work is the same-finding out what each of the operations costs before it is too late to avoid doing the wrong thing. I am sure you would be interested in knowing that regional controllers now report to the regional managers not to the corporate controller as local organizations prepare to assume the responsibities involved ...accounting offices are being placed under the direct jurisdiction of the managers of the operations they serve. Each region, division, and activity has its own complete accounting service separate activity, such as each assembly plant, has been provided with an accounting ffice to compile its own internal operating reports for its own use, and to forward the financial statements required by the central office. Required 1. What do you think is meant by the statement that "the whole of industry is now operating on a different level than we have known before-a higher plateau..? 2. (a) What are the advantages of each region, division, and activity having its own accounting functions? Does this pose any ethical challenges? (b) Are there any areas of responsibl- ity of the CFO described in Chapter 1 that you would not transfer to the local accounting organization? Draw three boxes on an organizational chart, one each for the corporate controller, the plant controller, and the plant manager. Draw appropriate lines between the boxes that would accord with the system described in the quotation. Use a dashed line to denote staff management" relationship and a solid line to denote "line management" relationship. Describe some major advantages and complications of the new organization arrangements. 3. manager and as a spy for the corporate controller. How can accountants' duties be orga- nized to cope with these conflicting roles? 4. The plant controller must frequently fulil two roles simultaneously, as a helper of the plant Source: From IMA Statement of Ethical Professional Practice, Institute of Management Accountants, www.imanet.org. Reprinted with permission