Faculty
-

Course Coordinator
Jytte Larsen

Knowledge of Financial Accounting

Management control systems are perceived as a mechanism to increase the likelihood of an organization to achieve its objectives, and use resources efficiently when implementing strategies.

Additionally, the management control system may be seen as an early warning system for feeding back information to the strategic planning and control system. During the course, alternatives to traditional management accounting will be introduced, but the main focus will be on financial result control systems going from planning and budgeting models to balanced scorecards.

The students will learn to integrate performance measurement, evaluation, and incentives as part of a management control system. They will also be able to influence an organization to actions and behavior, which might increase goal congruence and achievement of objectives. The course also deals with important management control roles and ethical issues faced by managers and employees.

The cases used will cover different national settings, different products and multinational corporations.

The course contains the following elements:

Management control alternatives (result controls, action controls, and people controls)

Design criteria for management control systems including analysis of control tightness and cost vs. benefit

Financial result control systems used in for-profit organizations, which include:

1. Decentralizing in financial responsibility centres

2. Allocating resources effectively with the use of transfer prices

3. Planning and budgeting processes

4. Determining financial performance targets

5. Designing performance dependent reward systems.

Performance measurement issues and their effects on financial results control systems, most notably the problems of Myopia and Uncontrollable Factors

Control remedies to performance measurement issues with particular focus on the Balanced Scorecard

Situational influences (e.g. corporate strategy national culture) on management control systems.

Management control considerations for not-for-profit organizations

The roles in corporate control and the organization of corporate governance.

Management control related ethical issues, e.g. earnings management; corporate fraud issues (e.g. Enron) and; the Sarbanes-Oxley legislations and its effect on management accounting and control systems

After having completed the course, students should be able to:

Describe the theories and models that are taught in the course (as described in the course content and its elements)

Apply the theories and models of the course in case study settings by:

1. Identifying and analyzing management accounting issues and management control issues

2. Evaluating management control systems and management accounting practices

3. Recommending courses of action for management with respect to their management accounting practices and control systems.

Individual oral 20 minutes examination based on a 72-hour mini group project of 10 pages (maximum four-six students), graded by internal examiners on the 7-point scale. The grade is based both on the written report and on the oral performance. Make-up and re-examination takes place according to the same rules as the regular examination.

Exam aids: None

The course is taught with the use of many case studies, and active class participation is required as well as effective communication skills, in order to train for effectively applying management accounting practices.

Kenneth A. Merchant & Wim A. Van der Stede: Management Control Systems: Performance Measurement, Evaluation and Incentives; Latest edition; Prentice Hall, Pearson Education.

Supplementary articles: announced at beginning of the course