brewer4e prologue
TRANSCRIPT
-
8/3/2019 Brewer4e Prologue
1/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Introduction toManagerial Accounting
Fourth Edition
Brewer/Garrison/Noreen
-
8/3/2019 Brewer4e Prologue
2/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Importance of Ethics in Business
Ethical practices in business build trustand promote productive relationships.
They are necessary for the functioningof a market economy.
-
8/3/2019 Brewer4e Prologue
3/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Code of Conduct for Management AccountantsIMAs Statement of Ethical Professional Practice
Part One
Competence
ConfidentialityIntegrity
Credibility
Part Two
Resolution of Ethical Conflict
-
8/3/2019 Brewer4e Prologue
4/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Standards of Ethical Conduct
Competence
Maintainprofessional competence.
Follow applicable laws,regulations and
standards.
Prepare accurate, clear,concise, and timely
decision supportinformation.
Recognize andcommunicate
professional limitationsthat preclude responsible
judgment.
-
8/3/2019 Brewer4e Prologue
5/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Standards of Ethical Conduct
Do not disclose confidentialinformation unless legally
obligated to do so.
Ensure that subordinates donot disclose confidential
information.
Do not useconfidential
information forunethical or
illegaladvantage.
Confidentiality
-
8/3/2019 Brewer4e Prologue
6/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Standards of Ethical Conduct
Integrity
Mitigate conflicts of interestand advise others of
potential conflicts.
Abstain from activities thatmight discredit the
profession.
Refrain fromconduct that
would prejudicecarrying out duties
ethically.
-
8/3/2019 Brewer4e Prologue
7/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Standards of Ethical Conduct
Credibility
Communicate informationfairly and objectively.
Disclose all relevantinformation that could
influence a users
understanding of reports
or recommendations.
Disclose delays or
deficiencies ininformationtimeliness,
processing, orinternal controls.
-
8/3/2019 Brewer4e Prologue
8/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Guidelines for Resolution of anEthical Conflict
Resolution of Ethical Conflict
Follow the established policies of the organization.
For unresolved ethical conflicts: Discuss the conflict with immediate superior.
Initiate discussion with levels above immediate supervisoronly with the supervisors knowledge (assuming the
supervisor is not involved).
-
8/3/2019 Brewer4e Prologue
9/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Standards of Ethical Conduct
Resolution of Ethical Conflict (Continued)
Follow the established policies of the organization.
For unresolved ethical conflicts:
Discuss the conflict with immediate superior.
Initiate discussion with levels above immediate supervisoronly with the supervisors knowledge (assuming thesupervisor is not involved).
Maintain confidentiality.
Clarify relevant ethical issues by confidential discussion with anobjective advisor.
Consult your own attorney.
-
8/3/2019 Brewer4e Prologue
10/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Company Codes of Conduct
Many companies have adopted formalethics codes of conducts that provide
broad guidelines for proper behavior.
-
8/3/2019 Brewer4e Prologue
11/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Codes of Conduct on theInternational Level
The International Federation ofAccountants (IFAC) Guidelines on Ethics
for Professional Accountants governs the
activities of all accountants throughoutthe world.
-
8/3/2019 Brewer4e Prologue
12/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Governance
Corporate governance is thesystem by which a company is
directed and controlled.
If properly implemented, it shouldprovide incentives for the board
of directors and top managementto pursue objectives that are in
the interests of the companysowners and it should provide for
effective monitoring ofperformance.
-
8/3/2019 Brewer4e Prologue
13/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is intended toprotect the interests of those who invest in publiclytraded companies by improving the reliability and
accuracy of corporate financial reports anddisclosures.
-
8/3/2019 Brewer4e Prologue
14/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Sarbanes-Oxley Act of 2002
1.Requires CEO/CFOcertification.
2.Establishes the PCAOB.3.Places power to hire,
compensate andterminate auditors with theaudit committee.
-
8/3/2019 Brewer4e Prologue
15/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Sarbanes-Oxley Act of 2002
4.Prohibits a variety ofnon-audit services for
audit clients.5.Requires annual report on
internal control.
6.Establishes severepenalties for criminal acts.
-
8/3/2019 Brewer4e Prologue
16/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Enterprise Risk Management
A process used by acompany to
proactively identifythe business risksthat it faces and to
develop responses tothose risks that
enable the companyto be reasonably
assured of satisfyingstakeholder
expectations.
-
8/3/2019 Brewer4e Prologue
17/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Enterprise Risk Management
Companies shouldidentify foreseeable
risks before they occur.
Once a risk has beenidentified, a company
can respond in variousways such as
accepting, avoiding,sharing, or reducing the
risk.
Examples of Controls to Reduce
-
8/3/2019 Brewer4e Prologue
18/20McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Examples of Business Risks
Examples of Controls to Reduce
Business Risks
Intellectual assets being stolen from
computer files
Create firewalls that prohibit computer
hackers from computing or stealing
intellectual property
Products harming customers Develop a formal and rigorous new
product-testing program
Losing market share due to the
unforeseen actions of competitors
Formalize an approach for legally
gathering information aboutcompetitors' plans and practices
Poor weather conditions shutting down
operations
Develop contingency plans for
overcoming any disruptions due to
weather
A website malfunctioning Develop a pilot testing program before
going "live" on the Internet
A supplier strike halting the flow of raw
materials
Establish a relationship with two
companies capable of providingneeded raw materials
An incentive compensation system
causing employees to make poor
decisions
Create a balanced set of performance
measures that motivates the desired
behavior
Financial statements unfairly reporting
the value of inventory
Count the physical inventory on hand
to make sure that it agrees with the
accounting inventory
An employee stealing assets Segregate duties so that the sameemployee does not have physical
custody of an asset and the ability to
account for it
An employee accessing unauthorized
information
Create password-protected barriers
that prohibit employees from obtaining
information not needed to do their jobs
Inaccurate budget estimates causing
excessive or insufficient production
Implement a rigorous budget review
processFailing to comply with equal
employment opportunity laws
Create a report that tracks key metrics
related to compliance with the laws
Identifyingand
ControllingBusinessRisks
-
8/3/2019 Brewer4e Prologue
19/20
McGraw-Hill /Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Certified Management Accountant (CMA)
RigorousProfessional
Exam
GreaterResponsibilities
HigherCompensation
Information about becoming a CMA and theCMA program can be accessed on the IMAs
website at www.imanet.org or by calling1-800-638-4427.
http://www.imanet.org/http://www.imanet.org/ -
8/3/2019 Brewer4e Prologue
20/20
McGraw Hill /Irwin C h 2008 b h G ll C All h d
End of Prologue