Accounting for Decision Making
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Bigger better harder stronger  - Improving Annual Reports

Bigger better harder stronger  - Improving Annual Reports | Accounting for Decision Making | Scoop.it
Annual reports have undergone significant evolution, growing in size, but also complexity. Sandra Haurant looks at what’s driving the changes and what the next stage will bring
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This article focuses on the growing size and complexity of annual reports. With most company annual reports now 200+ pages there is a growing concern that the increasing regulation is resulting in too much information being published which is limiting its value to stakeholders
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The return of zero-base budgeting | McKinsey

The return of zero-base budgeting | McKinsey | Accounting for Decision Making | Scoop.it
The venerable technique has vaulted back into the consciousness of corporate leaders--for good reason. But getting it right is not easy and depends on five key elements.
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Nice overview article on the return of Zero Based Budgeting in recent years - it is now one of the favourite tools of private equity firms. A good discussion of the five factors of success for ZBB.
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Analysis: How much to scrap Irish Water?

Analysis: How much to scrap Irish Water? | Accounting for Decision Making | Scoop.it
As the future of water charges becomes a key battleground in forming a new government, some commentators have said that scrapping Irish Water could cost €7 billion.
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A short analysis of the different cost figures being thrown around in 2016 for the actual cost of abandoning Irish Water. This provides a good insight into the variety of different costs (some obvious, some not) that can be included (or excluded) when making or rationalising decisions depending on a person's agenda.
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A Quick Guide to Breakeven Analysis

A Quick Guide to Breakeven Analysis | Accounting for Decision Making | Scoop.it
In a world of Excel spreadsheets and online tools, we take a lot of calculations for granted. Take breakeven analysis. You’ve probably heard of it. Maybe even used the term before, or said: “At what point do we break even?” But because you may not entirely understand the math — and because understanding the formula can only deepen your understanding of the concept — here’s a closer look at how the concept works in reality.
John Nolan's insight:
This article provides a nice summary overview of break even analysis. It also includes an interactive break even calculator which allows you to change various assumptions (e.g. sales price, variable cost, fixed costs) and see the impact this will have on the break even level of sales.
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Target costing and lifecycle costing 

Target costing and lifecycle costing  | Accounting for Decision Making | Scoop.it
Target costing and lifecycle costing can be regarded as relatively modern advances in management accounting, so it is worth first looking at the approach taken by conventional costing.
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A good introductory article on the concepts of target costing and lifecycle costing which are two modern advancements in management accounting. Students should consider the differences between these two approaches and the typical way we have costed products in class to date.
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Irish Rail earmarks four routes for axe as it warns pay rise will push it 'towards insolvency' - Independent.ie

Irish Rail earmarks four routes for axe as it warns pay rise will push it 'towards insolvency' - Independent.ie | Accounting for Decision Making | Scoop.it
Irish Rail has earmarked four routes that may be axed if a serious shortfall in its funding is not met and warned that a pay rise sought for staff would push it to the brink of insolven
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A good example of the use of accounting information (quantifying the subsidy per passenger and the savings made if routes are closed) to help justify some difficult decisions re routes that could be controversial politically.
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Are Your People Financially Literate?

Are Your People Financially Literate? | Accounting for Decision Making | Scoop.it
Senior executives routinely share and discuss financial data with marketing directors, operations chiefs, and other direct reports. But how much do those managers really understand about finance? We recently investigated this question, and the news is not good. Asked to take a basic financial-literacy exam—a test that any CEO or junior finance person should easily […]
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This piece focuses on the importance of financial (or accounting) literacy for the broad management team in organisations - not just for the finance function. Accounting information transcends functional boundaries and regardless of your business unit it is a an important resource to understand and utilize effectively.

Key Quote:
"Financial illiteracy in the managerial ranks can be a crippling weakness for the organization"
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The dozy watchdogs - Accounting scandals

The dozy watchdogs - Accounting scandals | Accounting for Decision Making | Scoop.it
NO ENDORSEMENT carries more weight than an investment by Warren Buffett. He became the world’s second-richest man by buying safe, reliable businesses and holding them for ever.
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An interesting read on the role of auditors in business/capital markets and where things can go wrong. It also discusses the origins of the audit/auditor and how the role has evolved over the decades to where we are today.
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Conflicting Roles in Budgeting for Operations

Conflicting Roles in Budgeting for Operations | Accounting for Decision Making | Scoop.it
A senior design engineer for a large American automobile manufacturer recently complained to one of his colleagues. “Those marketing guys want everything. They’ve decided that what they need in the next design series is ‘The All-American Car.’ They say it’s got to be large enough for a family of five (plus dog), small enough to […]
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An old, but still very relevant read, about the different roles a budget can play in an organisation. This article also discusses the types of conflicting roles that can arise (e.g. motivation vs evaluation) and how these conflicts can be managed effectively.
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The Persuasive Power of Opportunity Costs

The Persuasive Power of Opportunity Costs | Accounting for Decision Making | Scoop.it
While shopping for my first stereo, I spent an hour debating between a $1,000 Pioneer and a $700 Sony. Perhaps fearing that my indecision would cost him a sale, the salesman intervened with the comment “Well, think of it this way—would you rather have the Pioneer, or the Sony and $300 worth of CDs?” Wow. […]
John Nolan's insight:
A nice short article on the role of opportunity costs in decision making. This article focuses predominantly on the marketing perspective of the use of opportunity costs but can also be extended to broader decision making contexts such as politics, corporate investment etc. This should be read in conjunction with the opportunity cost article on Loop.
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Activity-based management 

Activity-based management  | Accounting for Decision Making | Scoop.it
During the 1980s, many businesses started to introduce activity-based costing (ABC) systems. The aim of these was to achieve a more accurate calculation of product costs. However, it soon became apparent that the information that had been produced for activity based costing had much wider use than just calculating the cost per unit of a product or service.
John Nolan's insight:
This article provides a more detailed insight into ABM. It is not required reading but may be useful those who are interested in learning more about ABM and how it could be useful in organisations.
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Tapping the Full Potential of ABC

Tapping the Full Potential of ABC | Accounting for Decision Making | Scoop.it
Many companies have used activity-based costing (ABC) in onetime profitability studies to help them decide which products or customers to cut or keep. But ABC can be much more than a superior accounting technique that shows how much money individual products are really making or losing. 
John Nolan's insight:
A good insight into the role ABC can have in organisations. It can be seen as more than just an accounting technique and contribute to a more fundamental organisational change when integrated into key management systems. Activity based management is a key concept we will look at in Week 3 which is related to ABC.
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The Language of Business?

The Language of Business? | Accounting for Decision Making | Scoop.it

Some say it's English. Or Mandarin. Others contend it's the subtle, culture-spanning clues picked up by reading facial expressions and other physical movements. But most agree that the true language of business is accounting. The story of any company, no matter the size, the industry, or the country of origin, is told through its financial records and reports. Income, debt, revenue versus expenses, compensation, and cost of retaining customers can all be found on financial statements. 

John Nolan's insight:
A short intro article on why accounting information is important for managers. See below a key takeaway quote food for thought as you start your MBA journey;

“At some point you move up the hierarchy and you need this information. It’s not trendy. Accounting isn’t a hot topic. But it’s the language of business, and you have to learn it.”
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