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Organisational Context of Management Accounting - Essay Example
Author : auerskyla
Finance & Accounting
Pages 9 (2259 words)
This research is being carried out to evaluate and present organisational context of management accounting and major issues that were related to the management control and accountability of Ivy League University which are high audit risk; management control; accountability…
This paper illustrates that the governance framework of Ivy League University is decentralized where the various departments are separately administered and consolidated centrally for the purpose of financial reporting and regulatory requirements. The university receives research grant funds for which it has a fiduciary responsibility. The revenues from grants and contracts constitute 30% of the total operating budget of the University. The consolidated grant activity is reported other university funds because improper management of grant funds increases the risk position of Ivy. The grant activities are strictly assessed by the legal counsel and the internal as well as external auditor. The University’s Central leadership works towards decreasing inconsistencies in grant activities. Ivy has made an effort in business process redesign and system modernization within three functional areas i.e. financial management, administration of grants and contracts, and HR and payroll. Therefore, in order to create an integrated administrative system, Ivy had introduced ERP that was expected to decrease audit risk and increase fiduciary control. These efforts were driven by the fact that Ivy is a highly leveraged and highest graded financial institution in US and the bond-holders have trusted it with their money. However, the introduction of ERP has also brought along problems of adjustments to a more centralised management accounting system where it was more decentralised previously and followed the legacy commitment accounting. ...