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. Issues in Management Control & Accountability Major issues that were related to the management control and accountability of Ivy League University are: High Audit Risk: As Ivy was involved with decentralized governance framework in which every department was administered separately in its grant funds and its uses. There was a gap between funds actually used and those reported. The inconsistencies in spending process were quite high. Despite this disadvantage, the commitment accounting was an essential part of the management accounting system at Ivy, removing which from the ERP system presented institutional risk. Management Control: In Ivy, FSS (Faculty and Support Staff) were responsible for the actual expenditure of Principal Investigators (PIs) and the decided budget. The funds that were asked by PIs for project activities are known as commitments (commitment accounting). The negotiation between PIs and administrators to allocate the funds was a result of many subjective factors such as individual temperaments, departmental norms, available time, professional relationships, nature and stage of research. Therefore, the management control over the variations in research expenditure was very low. The ERP financial management was introduced without the feature of commitment accounting which posed problems of faculty’s control over their finances. The problem was that the new management accounting system focussed more on providing information to the Central leadership than the faculty, as expressed by the academic manager. Accountability: The University is responsible for the grants it gets every year for research work. The grant providers have a right to know that their funds are utilized in an efficient manner. The problem of accountability has been associated with the variances in
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…
Contemporary Management Accounting System Table of Contents Overview 3 The Concept of Management Accounting 5 The Drivers for the Changing Role of Management Accounting Practices 7 The Contemporary Business Environment 8 Role of Management Accountants in Contemporary Organizations 10 References 14 Overview Anthony G.
It has been observed that the three universities worked efficiently for the allocation of resources during 1985-1992. In 1991, the government declared that the number of students in the universities has to be increased in a cost effective and flexible manner (Jones, 1994).
For instance, Matarasso, (1999) defined the holistic view of the sustainable impact of arts related activities that have sustainable impact that also changes over time. Wealth of the literature has been developed in this context where visual arts have been performing not role of entertainment development but at the same time has social and economic impact (Kay & Watt, 2000; Jermyn, 2001).This dual responsibility lending on the form of arts requires considerable resources.
Strategic changes to the basic structural framework which may alter core business activities' processes had to be followed by the proper administrative procedural changes which could accommodate the changes in the proposed direction.
Through history, various trends in production and management strategy have guided manufacturing sectors through the adoption of new approaches which has facilitated the business procedures in the various ways.
How does the interpretation of the case differ between each theoretical perspective
Organizational change or change in general can be defined from a variety of points depending on the perception of the user. An individual or employee in an organization may look at a new post or position as a change while higher management may feel it is unimportant.
"The process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources.
Therefore, this paper provides an insightful study of recent innovations in management accounting techniques and various controls employed on the part of the organisation to regulate managerial performance.
The main theme underlying the development of this paper encompasses the developments in management accounting systems and the effectiveness of corresponding measures in regulating managerial performance.
There are two popular methods of allocating costs that a service organisation in the United States and the United Kingdom use. The traditional costing method is uses only one or two cost drivers. On the other hand, the activity based costing allocates total costs using the different activities and processes in servicing a customer or groups of customers.
What ever is the cause or outcome change is inevitable in any field. But the techniques of management accounting even though traditional, is still in use.
After following the past of management accounting starting from1850 the accounting researcher Robert S.
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