UNIVERSITY OF ALBERTA SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING AND MIS
Accounting 426
Advanced Managerial Control Concepts Syllabus
FALL 2010
Instructor: Patricia (Trish) Stringer, CMA, CA Class
Office: Bus 1-27B A2: MW 8:00 am-9:20 am (BUS 3-6)
Office Hours: MW 1:00 pm to 1:50 pm or by appointment Email: [email protected] 1. Course Description and Objectives
Providing consulting and business advice requires accountants to be able to design control systems and evaluate their effectiveness. External auditors have to form an opinion on control systems and could be expected to provide advice on issues such as the quality of an organization’s cost system, its methods of investment decision making, and the effects of an organization’s reward system on the trustworthiness of division managers. These issues are the core of this course.
Many students in this course aspire to a career in accounting, and as accountants they would be expected to provide expert advice to management on the design and implementation of management information, planning and control systems. Those students interested in general management will also find it useful as managers should be aware of which information is most relevant, how that information is developed, what its core assumptions are, and under what circumstances it is best used.
The cases used in this course deal with management’s informational needs for planning, control and decision making. Students should be familiar with the topics and techniques underlying the cases presented. The required textbook provides general ideas and some good cases but does not review many techniques that you have already encountered; for these you should consult your textbook from ACCTG 424 or ACCTG 322. ACC424 is a prerequisite for ACC426.
Specific skills developed in this course include the abilities to:
1. Review and apply in practical settings some key management accounting concepts. In general, it will be assumed that students have already acquired a good understanding of the relevant management accounting concepts and techniques.
2. Develop communications skills by means of discussion, case reports and presentations.
3. Bridge the gap between highly structured and typical textbook problems (where many factors bearing on a problem are held constant or excluded) and the complex real world where it is often difficult to identify best solutions to problems, and sometimes difficult even to identify the precise nature of the problem or its causes.
2. Evaluation
Your grade in this course will be based on the marks you obtain on one (1) introductory case, three (3) case reports, general contribution and a final exam. These marks will be weighted as follows to determine your percentage mark in the course:
Introductory case 5%
Case Reports (3 cases at 15% each) 45%
General contribution 15%
Final Exam 35%
Total 100 %
Letter grades will be assigned to the percentage marks in accordance with University Regulations [Section 23.4(5) of the University Calendar]. Grades in this course will be based on a combination of absolute achievement and relative performance.
2.1. Examination
The details of the final examination will be announced on the course web site and announced in class.
The format of the exam will be a case analysis; therefore class attendance is integral to exam success.
Students are responsible for all material related to the assigned topics, including any additional material introduced in class. The final examination date is scheduled by the Office of the University Registrar.
Section 23.5.1 of the Calendar provides the University Regulations for the conduct of exams. At an exam, students must be able to present their student ID cards or other acceptable photo identification.
Cell phones, iPods, and other electronic devices must be turned off and put away prior to the exam (the only permitted electronic devices are non-programmable calculators).
2.1.1. Absence from Examination
Section 23.5.6 (2) of the Calendar provides the University Regulations regarding procedures in the case of a missed final examination.
2.1.2. Case Re-marking Policy
After marked cases have been returned, the answer key will be posted on Blackboard.
Students should review the marking carefully and bring to his or her instructor’s attention any questions about their marks as soon as possible. No remarking requests will be accepted more than one week after the results have been made available. All appeals must be in writing and the original copy of the case must be attached.
2.1.3. Final Exam Viewing and Reappraisals
For information regarding applying for a reappraisal of your final exam please see Section 23.5.4 (2) of the Calendar.
2.2. Introductory Case and Case Reports 2.2.1. Groups
Group discussion provides an opportunity to share ideas, test your views in a small group, and to learn from each other. Effective groups work on cases together; ineffective groups merely try to subdivide tasks, which typically results in a failure to obtain an integrated analysis and view.
Students must work together in groups of no less than two (2) and no more than five (5). The groups will be formed on the group portion of Blackboard. Students are expected to form groups on their own or via the discussion board area on Blackboard. You can also use Blackboard to communicate with people in your group as well as the instructor.
In choosing your group members, try and select people who are responsible and with whom you can work. In addition, you may wish to consider your schedules, so that all group members have some common time available for preparing the case.
If a group member is not pulling his/her weight please discuss this with the individual. If the problem persists, I will be willing to meet with the entire group to discuss the problem.
Ultimately, however, groups are free to leave the name of a member off of a submission or to
2.2.2. Case Reports
Groups will be required to hand in four (4) formally written case reports. All cases are to be prepared in groups.
Each case report is limited to five (5) pages. Please use 1.5 spacing, and Times New Roman 12 pt font. The page limit excludes any exhibits, cover page, bibliography, etc. The page limits will keep your report focused and concise. (Do not try to aim for five pages immediately but reduce the text through editing.)
Submit two (2) printed copies for each group case. One (1) marked copy will be returned to the group. I will retain the second copy.
Case reports will be evaluated not only on content, but also on presentation (including spelling, grammar structure and format). Case reports are to be written in complete sentences; point form and lists are not appropriate.
Case reports must reflect the group’s own ideas and research, although they may be supported by references and sources, to provide more substance to your analysis and arguments. All references and citations, no matter the origin: journals, newspapers, magazines, periodicals, Internet sites, etc., must be included in the report. Do not conduct any interviews as we do not have ethics approval for human research and interviews.
2.2.3. Cases and due dates
The introductory case report is Private Fitness, Inc. (pg 20). This case will be handed in by every group at the beginning of class on Wednesday, September 29th, 2010.
The three (3) additional case reports will be chosen from each of the following groups of cases (please see the table on the next page); one from cases 1 through 4, one from cases 5 through 8 and one case from cases 9 through 11. These cases must be handed in at the beginning of class on the due date (the day in which that case is to be discussed).
Case # Case Due date
1 Houston Fearless 76, Inc. (pg.68) October 13
2 Alcon Labs, Inc. (pg.99) October 18
3 Philip Anderson (pg.216) October 20
4 Toyota Motor Sales, USA, Inc. (pg.294) October 25
5 Borealis (pg.367) November 1
6 Tsinghua Tongfang Co. Ltd. (pg.426) November 8
7 Berkshire Industries PLC (pg.464) November 15
8 Axeon (pg.111) November 17
9 First Commonwealth Financial Corporation (pg.512) November 22 10 Pacific Sunwear of California, Inc. (pg.596) November 29 11 USC: Revenue Center Management System (pg.826) December 6
3. Course Materials and Activities 3.1. Textbook
Merchant, Kenneth A. and Wim Van der Stede, Management Control Systems: Performance measurement, evaluation and incentives (2nd edition, Prentice Hall, 2007).
3.2. Additional References
The following are good additional references on management accounting; refer to appropriate chapters as needed:
• Horngren, C.T., G. Foster, S. M. Datar, H. D. Teall and M.P. Gowling, Cost Accounting: A Managerial Emphasis (4th Canadian Edition, Pearson Education, 2007; 5th Canadian Edition, 2010).
• Kaplan, R. S., and A. A. Atkinson, Advanced Management Accounting (3rd. edition, Prentice Hall, 1998).
For those interested in a more conceptual approach to management control, and one that stresses its links to strategy and organisational design and analysis:
• Macintosh, N. Managerial Accounting and Control Systems: An Organizational and Behavioural Approach (John Wiley, 1994).
As this course lays some emphasis on quality of presentation, you may find it helpful to refer to
• May, C.B., and G.S May, Effective Writing: A Handbook for Accountants (7th edition, Prentice Hall, 2005). [Early editions of this book are in the first author’s former name, Aravelo, C.B.]
3.3. Other resources
You will be able to obtain supplementary readings and related materials from Blackboard at https://ulearn.ualberta.ca/ Blackboard also provides a web forum (Discussion Board) for posting questions.
3.4. In-class Activities
Our classes will be a combination of lectures and discussions of cases. Most of the concepts and techniques taught in this course are best illustrated and learned through case discussion. In addition to attending the classes and participating (see General Contribution, below), it is expected that you will read the relevant chapter(s) of the textbook, any assigned reading and any cases being reviewed before coming to class.
3.5. General Contribution
Active learning is a vital aspect of the course, both in and outside the classroom. The majority of communications in business and the interactions of managers are oral. All individuals are expected to join in class discussion and to be fully prepared for each case. Being an effective speaker and presenter is important in all forms of life, and can no longer be regarded as a discretionary activity. There is a value to people being able to make positive interactions and to support or connect to the comments of others. As such, you may be called to comment, critique, or lead discussion of the reading material and cases. The general discussion forms a separate component of your mark. It also gives you an
opportunity to demonstrate your skills and your ability to think on your feet. Your contribution grade is assigned individually.
Your contribution mark is not allocated using the number of words spoken as the base. While regular participation in class discussion is a factor, the content and timing of your remarks is more critical.
Good content involves relating your comments to the subject at hand. The ability to incorporate a concept from relevant readings, or support your position using specific evidence from the case is preferred to a contribution presented off the top of your head. One particularly insightful comment,
reference, calculation, or conceptual application of relevant material may be the most valuable contribution made in a session.
The timing of remarks is also important. Individuals who demonstrate attentive listening, by
developing the ideas of others, make a significant contribution not only through their comments but also by facilitating the process. This can be done by extending ideas, proposing variations, outlining
inconsistencies, or suggesting alternatives. Such efforts are generally preferred to comments that may be thoughtful in terms of content but ill timed in relation to the on-going discussion in the class.
There are certain behaviours that can contribute to a poor discussion and will be viewed as negative contribution. The first is a lack of courtesy. If you expect others to be quiet and attentive while you are speaking, please extend this courtesy to all participants. Some individuals will have had little experience with oral presentation of their ideas and will be less apprehensive if they do not have to compete with background conversations. Other potential negatives are absenteeism and tardiness. Students that are absent from class are not contributing. Individuals who are late, interrupt the session upon their arrival and generally do so again by pestering their seat mates for a recapitulation or by raising an issue dealt with earlier in the class. Finally, those who talk too much – filling the class with their views and not providing space for the contributions of others (or not listening to them) – will be evaluated negatively.
The discussion portion should be relatively informal. Feel free to interject witty comments or even some good-natured heckling, with the one provision that they be shared with the entire class. If we all come prepared each week, the experience should be both pleasant and rewarding.
4. Academic Integrity
Absolute and complete academic honesty is expected of you in this course. It is important for you as a student to behave in an ethical manner. The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at
http://www.uofaweb.ualberta.ca/governance/StudentAppealsRegulations.cfm) and avoid any behaviour that could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
5. Other
Recording of a lecture is permitted only with the prior written consent of the professor or if recording is part of an approved accommodation plan.
Policy about course outlines can be found in Section 23.4(2) of the University Calendar.
TENTATIVE CLASS SCHEDULE
Class# Dates Topics Readings Case
1 W Sep 8 Introduction to the course
2 M Sep 13 What is Management Control? Chapter 1
3 W Sep 15 Case Analysis how-to Reading #1 Leo’s Four-Plex Theater (pg 19)
4 M Sep 20 Universal Approaches to Control Reading #2; Reading #3 5 W Sep 22 Contingency Approaches to Control Reading #4
M Sep 27 No Class Session - Reading and Prep Time Chapters 2 to 6, Reading #5
6 W Sep 29 Introductory Case Review Private Fitness, Inc. (pg 20)
7 M Oct 4 Results Control & Action, Personnel and
Cultural Control Chapters 2 & 3
8 W Oct 6 Control System Tightness Chapter 4 Controls at the Bellagio Casino Resort (pg.153) M Oct 11 No Class – Thanksgiving Day
9 W Oct 13 Control System Costs Chapter 5 Houston Fearless 76, Inc. (pg.68)
10 M Oct 18 Design and Evaluation Chapter 6 Alcon Laboratories, Inc. (pg.99)
11 W Oct 20
Financial Responsibility Chapter 7 Philip Anderson (pg.216)
12 M Oct 25 Toyota Motor Sales, USA, Inc. (pg.294)
13 W Oct 27
Planning and Budgeting Chapter 8, Readings 6 & 7 Citibank Indonesia (pg.349)
14 M Nov 1 Borealis (pg.367)
15 W Nov 3
Incentive Compensation Systems Chapter 9; Readings 8 & 9
16 M Nov 8 Tsinghua Tongfang Co. Ltd. (pg.426)
17 W Nov 10 Performance Measurement Chapters 10 to 12
18 M Nov 15 Investment Centres Chapter 10 Berkshire Industries PLC (pg.464)
19 W Nov 17 Transfer Pricing Chapter 7, Reading #10 Axeon N.V. (pg.111)
20 M Nov 22 Balanced Scorecard Approach Chapter 11, Readings 11&12 First Commonwealth Financial Corporation (pg.512)
21 W Nov 24 Corporate Governance Chapters 13 to 15
22 M Nov 29 Governance and Boards of Directors Chapter 13 Pacific Sunwear of California, Inc. (pg.596)
23 W Dec 1 Contextual Differences Chapters 16 and 17
24 M Dec 6 Management Control in Not-for-profits Chapter 17 University of Southern California: Revenue Center Management System (pg.826) 25 W Dec 8 Summary and review session
Supplementary Readings (posted on Blackboard):
Reading # Title
2 Covaleski, M.A., M.W. Dirsmith and S. Samuel (1996). Managerial accounting research: The contributions of organizational and sociological theories. Journal of Management Accounting Research (8): 1-35.
10 Eccles, R. (1983). Control with Fairness in Transfer Pricing. Harvard Business Review 61 (6): 149-161.
6 Hansen, S., D. Otley and W. Van der Stede (2003). Recent Developments in Budgeting. Journal of Management Accounting Research (15): 95-116.
7 Hope, J. and Fraser, R. (2003). Who Needs Budgets?. Harvard Business Review 81 (2): 108-116.
8 Indjejikian, R. (1999) Performance Evaluation and Compensation Research. Accounting Horizons 13 (2): 147-160.
11 Kaplan, R.S. and D.P. Norton (1996). Using the balanced scorecard as a strategic management system. Harvard Business Review (January-February): 75-85.
12 Kaplan, R.S. and D.P. Norton (2008). Mastering the Management System. Harvard Business Review (January): 63-77.
9 Kohn, A. (1993). Why incentive plans cannot work. Harvard Business Review (September-October): 54-60.
3 Martinez, M. (2002). Summary of Covaleski et al: Managerial accounting research: The contributions of organizational and sociological theories. University of Southern Florida; accessed August 20, 2010 from MAAW
http://maaw.info/ArticleSummaries/ArtSumCovaleski96.htm, 3pp.
5 Merchant, K. (1982). The Control Function of Management. Sloan Management Review 23 (4): 43-55.
1 Merchant, K. (2002). The Case Method of Instruction: Suggestions for Students. University of Southern California A202-01, 5pp.
4 Simons, R. (1995). Control in an Age of Empowerment. Harvard Business Review 73(2): 80-88.