Management Accounting Management Control

Question: Discuss about the Management Accounting for Management Control. Answer: Introduction: The Role of Management Accounting and Six Capital are of immense importance for all companies which target to perform in the best possible professional manner. The management control is the best technical way to understood business condition at any point of time. Our target will be to find out the role of management accountant in the companys growth in Australia. In this case we will discuss for the Australian Securities Exchange or ASX listed company Woolworths Limited listed on 12.07.1993 in the Food Staples Retailing industry classification. We will also try to ascertain the areas of Six Capital and how this Six Capital is demonstrated and how it is important for Woolworths Limited. The results of the company are directly or indirectly affect the future growth and sustenance of the future of the company. Woolworths Limited is in the areas of business names like Woolworths-the fresh food people, Woolworths Petrol, Cellarmasters, Countdown Shop Smarter, BWS, Dan Murphys-Lowest Liquor Price Guaranteed, BIGW, Ezibuy, Masters-Home Improvement, ALH Group, Langtons-Fine Wine Since 1988, and Home Timber Improvement. These are the names of Woolworthss business which ranges from Australian Food, Liquor and Petrol, New Zealand Supermarkets and also General Merchandise. Body: Its employees and management can be dependent on both Management Accounting and Six Capital for further improvement and sustenance in all its business frontiers and the portfolios thus handled. The management accountants are primarily responsible for applying certain special techniques to evaluate the real situation of any business in the modern world. The target is always to locate the loopholes the management needs to take care of after such detection and this rectification in many cases save the company from either great loss situation or also from winding up or closure. The techniques thus followed are business performance evaluation, strategic management accounting, and variance analysis, budgeting and forecasting, rolling forecasts, operational budgeting, financial reporting, computer system experience like ERP or SAP (Theage, 2008). The most important role the management accountant always plays in any business whatsoever are bit detailed here for better understanding Strategy maker or formulator Analyst of business Advisor (or Business Partner) internal consultant Acting as change agent Information provider or knowledge worker the for various data compilation Manager and interpreter of different types of business complexity Manager and designer of various information systems Controller and designer of various systems of performance measurement Educator, Teacher and guide for various stakeholders of the business Business Analyst The most important trend of the management accountants functions are related to the following activities Customer Satisfaction Measurement techniques High Emphasis of business analysis Capital Budgeting detailing Balanced Scorecard for Business status Variance Analysis Planning and control Budgeting Return on Investment Techniques Costing and management on activity performance Variable and Absorption costing Value analysis of shareholder Benchmarking of business The future of management accounting will be looking into the usage of adaptation of new forms of manufacturing process, managing organisational changes by using modern information technology , deeper understanding of organisational structuring and making improvements where necessary, innovation gathering, better functioning and structuring. Computational, statistical, interpretive, analytical and financial information system designing skills are newly introduced in newer formats for better management of accounting information with highly extensive technological developments (Accounting for management, 2016). The special nature of management accountants include better analytical skills, solid understanding of accounting, greater understanding of all business functions, ability to work in team, making forecasts and projections, process analysis, developing assumptions, data modelling, being forward looking and strategic ,adaptable, and not at all resistant to any change or should be open to any sort of change and make others understand that any change is always good and not bad if analysed properly in grater development perspective. The capital is very important business element of all times. Capitals are of different types and nature and their usage depends on the type and size and nature of each and every business and sometime they are also country specific also. These capitals are key inputs of any business without which can be compared to a human body without any blood or may be compared to a dead body. Hence capital plays the most important part in the development of the business (Managementstudyguide, 2016). The major Capital that we refer in the perspective of Australian business is Six Capital. The Six Capital are as detailed below Financial CapitalThe fund available to any business for use in the production of goods and provision of services and these funds are collected from various sources like equity, debts, grants, investments, generated through various operations. All organisations need various types of Financial Capital which are to be used in the form of Working capital, Project Capital, Vendor financing capital, long term project capital financing. Human Capitalthe people are the 2nd important capital of any organisation as without human capita it cannot function at all. Human competencies, motivations to innovation, experience, and the ability to understand, implement, manage, collaborate and maintain ethical values are very much required. Employees are the greatest asset of any company. Intellectual CapitalThe intangibles in a business like intellectual property which can be stated as rights and licences, softwares, copyrights, patents, systems, procedures and protocols, brand reputation, etc. Manufactured Capitalthere are assets like buildings, equipments, infrastructure like road, ports, bridges, waste and water treatment plants are some of examples. These help in the operational efficiency and effectiveness in the form of productivity, cost containment, enhanced safety and environment stewardship. Natural Capitalthis comprise of air, water, land, forests and minerals, biodiversity and ecosystem health which gets positively or negatively affected by an organisations activities. Hence these mostly include all renewable and non renewable environment stocks that provide goods and service that support current and future development of organisation (ASX, 2016). Social and relationship capitalthese mostly include the common behaviours and key relationships and trust or faith building among various stakeholders of the business like creditors, debtors, fund providers, suppliers, customers, bankers, etc (Telecomitalia, 2016). The Six Capital is very much important as per the Woolworths Limited is concerned. It has already shown that it has implemented the six capitals in its organisational functioning as per the data we have placed above in the details of the company (Bazerman et al., 2002). The Financial Capital needs to be refurbished to make the financial position more viable as per the loss is very concerning for a company like this status. The Human capital is already very mush taken care of as per the data we have received from the company report FY16 which is already discussed above. Manufactured Capital is already acting very positively thats why the company have generated such a huge asset base which helps it to further help growth process. Natural capital is also taken care of by the company by making usage of Solar Power generations by using reclining theory in its business. Social or community capital is also very much taken care of by the company by making usage of star rated health brands for the community and also by using its workforce to involve in community development and social improvement (Tutorialspoint, 2016). Intellectual capital is also taken care of by using the branding, protocol procedure introduction, etc. The management accountants need to play a very important role in the improvement of the financial capital of the company with such a base as the company is in net loss and the business needs to find the ways which will make or reduce its losses in all possible manners. The report shows that there is $1,235M net loss for the group although it has dropped by 157.5 % from FY15. That means the company have already taken serious steps to control loss despite there is a fall in total group sales. That means the management accounting needs to use current techniques like Cost-volume profit analysis, capital budgeting, cost of quality, detailed financial reporting and weekly analysis of the same and forecasting in detailed manner, variance analysis, operational budgeting, and activity based management functions (Limited, 2016). The integrated report provided by WHL indicated concise and clear overview of the performance of the company. In the report WHL considered information of previous reports also. It is a part of the legislative requirements according to International Integrated Reporting Council. The company is subsidiary of Woolworths Holdings. The company has operation in New Zealand and in Canada. The company started its operation in South Africa. The company mainly retails food products. The key areas of the business are understood to be facilitating value for money. The key areas that are highlighted in the business are from various points of views: The key external factors of the organization The desired outcome of the company The terms of capital in the organization The financial capital of the company represents the capital available for the production of the goods and services. The manufactured capital is nothing but physical objects including those objects available for the production of the goods. The important part of the capital includes human capital. The employees should be aligned with the organizations governance framework and risk management approach. The value creation is another important part of the business object. The need of the intellectual capital for future development of the product is also relevant and there is the need to create that intellectual capital based as tacit knowledge, systems, procedures and protocols. The social and the relationship capital is another i8mportant area of the business which clearly suggests that there is need to develop the business and along with that customer relationship (Limited, 2015). The Company is a great actor in the Food and Staple industry where the Australian Customers are 75% satisfied with Woolworths as per the report for FY16. There are more than 3400 products from local sourcing and have 450 product lines since September, 2014. 96% of its source of fruits and vegetables are Australian grown. Their best thing is price competitiveness and they have reduced their overall prices by 2.7% in Q4 for FY16. The salient information about the company is as given Customer related: Customers served per week are 29.6 M. Overall satisfaction of customers as on June, 16 is 75%. Customer voicing for team work85% Lower price investments in FY16--$500 M+. Renewal stores opened in June, 16 6 nos. Sales related Continuing operations sales--$58 B which is 1.2% down from FY15 Australian food and petrol--$39,410 M Endeavour Drinks group--$7,589 M. BIGW--$3,820 M Hotels--$ 1,512 M New Zealand Food--$5,592 M Group Financial related Net profit towards shareholders--$1,558 M which is down by 39.2% from FY15 Total group Net Loss towards shareholders--$1,235 M which is down by 157.5% from FY15 Operating Capital expenditure--$ 1,484 M which is up by 2.8% from FY15 Earnings before Interest and Tax--$ 2,564 M which is down by 35.5% from FY15 Employees related 205,000 plus Management positions by women38.9%. Indigenous employees2,200+ Young employees79,000+ Community or society related Brand products with health star rating1,300. Solar Power Generation1,560 Mwh Food saved for meals6.4 M. Material recycled274,930tonne. Value of employee time for social work--$7.4M According to the sustainability reporting; WHL has achieved significant reduction in carbon emissions. The company proudly states that it has achieved 42% lesser carbon emission in last year. The car fleet emission of the company is reduced by 30%. The company has managed to save 200million liters of water annually, largest since 2010. These are significant reflection of the business. The strategy of the company can be the brain child of good management practice. This represents the actual financial and other capital strengthening practices of the company (Integratedreporting, 2016). Conclusion: As the world witnessed the accounting scandals rocked the world and corporate communities. The target of the business and of the enterprise is to ensure that accounting plays more constructive role than destructive. In most of the occasions it is seen that errors to deliberate corruption and accountants have become rife with crooks. That tag about the accounting profession need to be removed. The reflection of the financial capital is mainly annual reports of the company. Apart from financial inclusions in the report there are other factors which are discussed in the annual reports and that include report on the stakeholders, customers, shareholders and the other reporting. The sustainability reporting may not be a part of annual report but it includes the social responsibilities that they have performed which can be called social capital. References: Accounting for management, 2016. Target profit analysis, break-even point. [Online] Available at: https://www.accountingformanagement.org/exercise-1-cvapr/ [Accessed 10 September 2016]. ASX, 2016. WOOLWORTHS LIMITED (WOW). [Online] www.asx.com.au Available at: https://www.asx.com.au/asx/statistics/announcements.do?by=asxCodeasxCode=WOWtimeframe=Dperiod=M6 [Accessed 10 September 2016]. Bazerman, M.H., Loewenstein, G. Moore, D., 2002. Why Good Accountants Do Bad Audits. [Online] hbr.org Available at: https://hbr.org/2002/11/why-good-accountants-do-bad-audits [Accessed 10 September 2016]. 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