mbl93fw module overview 2014

8/9/2019 MBL93FW Module Overview 2014

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2014_MBL93FW

Module overview

Advanced Financial Systems

MBL93FW

IMPORTANT INFORMATION:

This module overview contains important informationabout your module.


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CONTENTS

1

INTRODUCTION ...................................................................................................... 3

2

PURPOSE, BROAD AND SPECIFIC OUTCOMES FOR THE MODULE ................. 4

2.1 Purpose .................................................................................................................... 4

2.2 Broad and specific outcomes .................................................................................... 5

3

LECTURER(S) AND CONTACT DETAILS .............................................................. 8

3.1 Lecturer(s) ................................................................................................................ 8

3.2 Area ......................................................................................................................... 8

3.3 University ................................................................................................................. 8

4

MODULE-RELATED RESOURCES......................................................................... 9

4.1 Prescribed books ...................................................................................................... 9

4.2 Recommended books ............................................................................................... 9

4.3 Electronic Reserves (e-Reserves) ............................................................................ 9

5 TOPICS .................................................................................................................. 10

6 STUDY SCHOOL PLAN ........................................................................................ 11

7 MODULE SPECIFIC STUDY PLAN ....................................................................... 12

8

ASSESSMENT ....................................................................................................... 23

8.1 Assessment plan .................................................................................................... 23

8.2 General assignment numbers ................................................................................. 23

8.3 Due dates for assignments ..................................................................................... 23

8.4 Submission of assignments .................................................................................... 23

8.5 Assignments ........................................................................................................... 24

8.6

Marking guideline/matrix/rubric ............................................................................... 27

8.7

Self assessment questions ..................................................................................... 27

9 OTHER ASSESSMENT METHODS ....................................................................... 27

10 EXAMINATION ...................................................................................................... 27

11 FREQUENTLY ASKED QUESTIONS .................................................................... 27

12 SOURCES CONSULTED ....................................................................................... 27

13

CONCLUSION ....................................................................................................... 28

14

ADDENDUM .......................................................................................................... 29


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1 INTRODUCTION

Dear Student

Welcome to the elective module Advanced Financial Systems. I hope that you will

find it an interesting and rewarding experience. Please feel free to contact your

lecturer with regard to any part of the contents of the module which you do not

understand.

The aim of this overview is to give you a bird’s eye view of the subject matter you are

about to study. This material should be read in conjunction with any other material

received on this subject from the SBL. The idea of this overview is to provide you

with a step-by-step guide to all the material you need to cover in order to do well in

this course.

The kind of environment in which a firm operates can have a significant effect on the

type of control and communication system chosen and implemented. A successful

firm operating in a stable environment would tend to emphasise the maintenance of

the status quo, preservation of market share, stable growth and the continuation of

efficient production.

System dynamics is a method used to gain insight into situations of dynamic

complexity, and is used to design more successful policies in companies. The goal is

to find management policies and organisational structures that help resolve system

challenges.

Increasing compliance costs and the emergence of eco-efficiency have intensified

the interest in environmental costing. Eco-efficiency implies that cost reductions can

be achieved by increasing environmental performance, as environmental costs are a

significant percentage of total operating costs.

An information system (IS) depends on data from other functional areas. It includes

the people, procedures, software and computers that store, organise, analyse and

deliver information. More managers are now thinking in terms of business processes

rather than business functions. Remember that a business process is a collection of

activities that takes one or more kinds of input and creates an output that is of value

to the customer.


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2 PURPOSE, BROAD AND SPECIFIC OUTCOMES FOR THE MODULE

2.1 Purpose

The course requires a substantial amount of student-centred learning, so consider

where you may have clashes or other commitments and plan your timetable

accordingly. A subject like Advanced Financial Systems requires you to work every

day instead of trying to cram for the examination.

This course has been designed to reflect the cutting edge of current financial and

strategic cost management accounting thinking, but has been prepared in such a

way that it is accessible to those who do not have a basic understanding of finance.By the end of this course you should feel comfortable working with financial experts

in your business, no matter what area you are in.

Management control involves anticipating future conditions to ensure that a

company’s organisational objectives are achieved. If a manager identifies a better

approach which is likely to assist in achieving the organisation’s goals, the

management control system should not obstruct its implementation.


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2.2 Broad and specific outcomes

The following outcomes need to be achieved:

Specific outcome 1:

Understand and apply systems theory in the development of advanced financial

systems that will support the strategic planning process of any organisation.

Assessment criteria

- Evidence shows that learners understand that feedback is a method of

controlling a system and can explain the concept of useless systems.

- Evidence shows that learners understand that information from downstream in

the process is fed back upstream.

Specific outcome 2:

Understand strategic management accounting and its importance to strategic

formulation.

Assessment criteria

- Evidence shows that learners grasp that international issues affect the role of

the management account and executive management.

- Evidence shows that learners appreciate that a management information

system provides both financial and non-financial information.

Specific outcome 3:

Understand strategic information for ERP processes and procedures.

Assessment criteria

Evidence shows that learners understand that companies often use activity-based

costing for strategic purposes, while using traditional costing for everyday

accounting.


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Specific outcome 4:

Understand strategic management accounting and its importance to strategy

formulation.

Assessment criteria

- Evidence shows that learners grasp that external failure costs can be more

devastating to a firm than internal failure costs.

- Evidence shows that learners understand that the difference between quality

and productivity is essential.

Specific outcome 5:

Understand the principles and application of activity-based costing as a tool to aiddecision making on the cost of production and distribution for different managerial

applications.

Assessment criteria

Evidence shows that learners appreciate that the core of any business value strategy

is the customer-value proposition which describes the unique use of product, price,

service relationship and image that a company offers.


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Specific outcome 6:

Understand the concept of the triple bottom line to develop environmental

management accounting systems in support of environmental stakeholder

requirements.

Assessment criteria

- Evidence shows that learners understand that the expected benefits of

sustainability reporting will focus the global reporting initiative (GRI).

- Evidence shows that learners appreciate that stakeholder theory requires that

managers make decisions that take into account the interests of all the

stakeholders in the firm.

Specific outcome 7:

Distinguish between the main features of your company’s management systems to

ensure that there is an improved ability to implement the strategy effectively.

Assessment criteria

- Evidence shows that learners understand that the company’s current

compensation package motivates staff to achieve the organisational

objectives.

- Evidence shows that learners appreciate that the main features of companies’

management systems must ensure that there is an approved ability to

implement the strategy effectively.


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3 LECTURER(S) AND CONTACT DETAILS

3.1 Lecturer(s)

Advanced Financial Systems:

Mr Greg Dalton

Room 3-14

Email: [email protected]

Telephone: 011 652 0235

Cell phone: 082 334 8331

3.2 Area

Finance

3.3 University

University of South Africa Graduate School for Business Leadership

mailto:[email protected]:[email protected]:[email protected]:[email protected]


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4 MODULE-RELATED RESOURCES

4.1 Prescribed books

Monk, E. & Wagner, B. 2013. Concepts in enterprise resource planning 4th edition

Course Technology Cengage Learning.

Slides

Management control systems, corporate social responsibility and the balanced

scorecard (BSC).

4.2 Recommended books

None

4.2 Electronic Reserves (e-Reserves)

None


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5 TOPICS

The following topics are covered in this module

TopicNumber

Topic Description

1 Strategic planning; systems thinking and its application to thestrategic process.

2 Strategic management controls and processes for the 21st century.

3 Strategic management information for ERP processes andprocedures.

4 Continuous improvement through ERP accounting systems andimplementation.

5 Activity-based costing

6 Triple bottom line reporting and the implications for environmentalrisk management.

7 Strategic-based alignment of management controls.


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6 STUDY SCHOOL PLAN

Students should work through the suggested chapters as per the topic outline.

Additional pre-study school reading material or exercises might be loaded onto EDS

prior to the study school, so please keep an eye on any posts on the module

platform.

All study school presentations and material will be loaded onto EDS prior to the

study school.


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7 MODULE SPECIFIC STUDY PLAN

Activity Time period

Advanced Financial Systems

Strategic planning; systems theory and its application to thestrategic process

Firms operating in a rapidly changing environment where products

and processes are constantly being redesigned and improved are

forced to re-evaluate how they do things. Improving performance

translates into constantly searching for ways to eliminate waste.

Thus, the control system for firms operating in a stable environment

should be different from the control system for those firms operating

in a continuous improvement environment.

Self-assessment

An organisation is neither open nor closed. Discuss.

Can interventions in systems result in predictable behaviour?

Reflection

Systems theory suggests that you model natural and human-made

phenomena as a set of interrelated components that work together

to accomplish some kind of process.

Systems are used by humans in everyday life to describe the

operation of a number of diverse phenomena. Systems or models

are also generalisations about reality.

One common way to present how things work is with a graphical

model. Systems tend to have similarities in the way they work.

Before the firststudy school


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Conclusion

Adaptive organisations will soon motivate employees to adapt and

grow to share fairly the wealth that innovation creates.

Adaptive organisations eventually replace dynamic and static

organisations in economic competition, so that within a generation

most people will have learnt to expect continuous improvement in

their life experience.

The fact that their ancestors once worked at the same job in the

same way for an entire lifetime will seem almost as incredible as

the fact that people used to stay at jobs that they didn't thoroughly

enjoy.

The concern for excellence will be based upon getting things done

on time, staying close to the customer, using hands-on

management and doing what the company knows best.

Ultimately, we need to think of a business as a highly connected

system, where change in one area may have many effects

elsewhere.

This implies that information about value chain activities and

customer sacrifice (such as post-purchase costs) must be collected

and made available.

Before the first


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Strategic management controls and processes for the

21st century

Environmental costs are those costs incurred because poor

environmental quality exists or may exist. There are four categories

of environmental costs: prevention, detection, internal failure and

external failure.

The external failure category is divided into realised and unrealised

costs. Realised costs are those external costs the firm has to pay,and unrealised or societal costs are caused by the firm, but paid for

by society.

Self-assessment

How do Wal-Mart’s control systems execute the company’s strategy

and what is the basis on which Wal-Mart builds its competitive

advantage?

Reflection

"The most exciting and innovative work in management accounting

today is found in accounting theory, with new concepts, new

methodology – even what may be called new economic philosophy

- rapidly taking shape.

And while there is enormous controversy over specifics, the

lineaments of the new manufacturing accounting are becoming

clearer every day" (Drucker, P.E. 1990. The emerging theory of

manufacturing. Harvard Business Review , May-June:94).

Senior management requires the organisation to attain its goals, but

individual members of the organisation have personal goals as well,

and these are not in all respects consistent with the company’s

goals.

study school


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Conclusion

Included in this topic are strategic cost management and strategic

environmental management which, when harnessed together, allow

the adoption of appropriate strategies to maintain cost leadership

while keeping the organisation's impact on the environment within

the minimum standards.

Providing high-quality parts on a timely basis to managers of

production departments is just as vital for the purchasing

department as it is for the company as a whole. This cross-

functional perspective, and its management, is the realm of

strategic management accounting.

Management style also has a major influence on control. The

specific choice of organisational structure influences the design of

the management control system. This allows managers to decide

on the strategic positioning of the company, which will be costleadership or product differentiation, or both.

Remember that a business process is a collection of activities that

takes one or more kinds of input and creates an output that is of

value to the customer.

Task control relates to specific tasks, most of which require little or

no judgement to perform. Management control systems involve

information, and companies require an infrastructure to process that

information.

The management control process involves managers and their staff

at all levels in the company. Most of the information in an

organisation is task control information, namely the number of items

ordered by customers, the quantity of material and units of

components used in the manufacturing of products.


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Strategic management information for ERP processes andprocedures

The customer for a business process may be an external customer

or it may be an internal customer. For example, what is sold

through marketing and sales is linked to what is procured and

produced by supply chain management.

Self-assessment

Consider how an ERP system can help ease the transitions for

organisations.

Reflection

A successful customer interaction is one in which the customer is

not required to interact separately with each business function

involved in the process.

If companies are not coordinating their business functions, a

customer could receive conflicting information and is likely to

quickly become dissatisfied.

An information system (IS) depends on data from other functional

areas. It includes the people, procedures, software and computers

that store, organise, analyse and deliver information.

More managers are now thinking in terms of business processes

rather than business functions.

Conclusion

The customer for a business process may be an external customer

or it may be an internal customer. For example, what is sold

through marketing and sales is linked to what is procured and

Before thesecond

study school


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produced by supply chain management.

An important aspect of this integration is the need to share

information between functional areas, and with business partners.

Enterprise resource planning (ERP) software provides this

capability by means of a single common database.

Increasing customer value to create a sustainable competitive

advantage is achieved through a judicious selection of strategies.

The most important distinction between strategy formulation andmanagement control is that management control is the process of

implementing those strategies.

Continuous improvement through ERP accounting systems

and implementation

The tools for addressing strategic and management control

systems are quite different. Managers addressing strategic control

issues have a focus primarily external to the organisation.

Managers addressing management control systems, on the other

hand, have primarily an internal focus.

Reflection

In a continuous improvement environment, the financial perspectivetranslates into continuously enhancing revenues, reducing costs

and improving asset utilisation.

Creating this continuous growth and improvement requires an

organisation to improve constantly its capability to deliver value to

customers and shareholders.

Procurement, product development, manufacturing and customer

Before thesecond

studyschool


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service are examples of processes.

Conclusion

Uncertainty in the company environment will increase and rapid

changes will emerge all the time. Products and technologies will

rapidly go out of date.

Competition will increase continuously. Flexibility and rapidity will

become primary objects for accounting measurement.

Activity-based costing can be used to trace costs to specific

customers, and the cost of serving the customers can affect pricing

decisions. Activity-based supplier costing uses activity-based

costing to identify the true costs of suppliers.

Activity-based costing

It is clear that the control system selected is contingent on the

environment in which the firm operates. Management accounting

offers three types of responsibility accounting systems: functional-

based, activity-based and strategic-based systems.

Reflection

Functional-based responsibility accounting systems focus onorganisational units such as departments and plants, use financial

outcome measures and static standards and benchmarks to

evaluate performance, and emphasise the status quo and

organisational stability.

Activity-based responsibility accounting systems, in contrast, focus

on processes, use both operational and financial measures and

dynamic standards, and emphasise and support continuous


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improvement.

Activity-based responsibility accounting adds a process

perspective.

Conclusion

Strategic-based responsibility accounting expands the number of

responsibility dimensions from two to four. Customer, learning and

growth perspectives are added.

The management control process involves managers and their staff

at all levels in the company. Most of the information in an

organisation is task control information, namely the number of items

ordered by customers, the quantity of material and units of

components used in the manufacturing of products.

Also, the performance measures become an integrated set of

measures linked to an organisation’s mission and strategy.

Triple bottom line reporting and the implications for

environmental risk management

Reporting environmental costs by category reveals their importance

and shows the opportunity for reducing environmental costs by

improving environmental performance.

Reflection

This course will integrate the above so that by using systems theory

and dynamics, you will be able to design, review and recommend

strategic financial systems in the area of strategic management

accounting.

Reporting environmental costs by category reveals their importance

Before thesecond study

school


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and shows the opportunity for reducing environmental costs by

improving environmental performance.

The most important of these factors is an organisation’s culture.

Every management control system must recognise that an informal

organisation exists alongside the formal one and take this into

account in the system design.

Conclusion

This course will integrate the above so that by using systems theory

and dynamics, you will be able to design, review and recommendstrategic financial systems in the area of strategic management

accounting.

Businesses have had organisational structures that separated the

functional areas. Business schools have been similarly organised.

You might conclude that what happens in one functional area is not

closely related to what happens in others.

As you will learn in this course, functional areas are interdependent,

each requiring data from the others. The better a company can

integrate the activities of each functional area, the more successful

it will be in today’s highly competitive environment.

Task control relates to specific tasks, most of which require little or

no judgement to perform. Management control systems involve

information, and companies require an infrastructure to process that

information. The internet provides that infrastructure, making

processing the information easier and faster, with fewer errors.

Strategic-based alignment of management controls

Today, business managers try to think in terms of business

processes that integrate the functional areas, thus promoting


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efficiency and competitiveness.

Thus, management accounting must provide information that allows

managers to focus on customer value, total quality management

and time-based competition.

Self-assessment

What factors or systems enhance or impede a company’s ability to

enjoy economies of scale?

What circumstances lead to learning curve effects in business

operations?

What factors influence employees’ willingness to support efforts to

increase productivity?

Reflection

The most important distinction between strategy formulation and

management control is that management control is the process of

implementing those strategies.

Management control is concerned with the broadly defined activities

of managers deciding what is to be done within the general

constraints of strategy.

The internet facilitates coordination and control through the efficient

and effective processing of information, but cannot replace thefundamental processes that are involved in management control.

Conclusion

Management control is facilitated by a formal system that includes a

recurring cycle of activities.

Finally, the management control of projects is considered as the

Before thesecond study

school


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most important difference between management control of ongoing

operations and management control of projects: ongoing operations

continue indefinitely, whereas a project ends.


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8 ASSESSMENT

8.1 Assessment plan

Formative assessments will be in the form of group assignments based on the

learning material, as well as the student’s ability to monitor and assess his or her

own progress. Students will receive feedback from lecturers.

The student's final mark will comprise a year mark earned from the two group

assignments (40%) and a written examination (60%). First examiners set and

assess the assignments and the examination. External examiners (markers) may

assist with the marking of the assignments and/or examinations.

8.2 General assignment numbers

Individual assignment 1 – Activity-based costing

Individual assignment 2 – Enterprise resource planning (ERP)

8.3 Due dates for assignments

Group assignment 1 –

Group assignment 2 –

8.4 Submission of assignments

Through the EDS system.


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8.5 Assignments

INDIVIDUAL ASSIGNMENT 1 DUE DATE: 09/05/2014

Question 1 Cybercase - internet exercise (40 marks)

A consulting company that provides software and services relating to business

intelligence and analytics includes a library of customer success stories on its

website at http://www.sas.com/index.html.

Select the link, “more customer success” and then “customers by solution”. Then

click on the “financial intelligence/activity-based management” link. Choose two firms

and read about their experiences with activity-based costing (ABC) so that you can

then answer the following five questions.

1. What were the reasons offered for implementing ABC?

2. What implementation procedures were used?

3. How many activities were identified?

4. What types of benefits (results) were achieved?

5. What problems were mentioned, if any?

Your report must be a minimum of ten pages, excluding appendices, with 1.5

spacing and Arial font 12.

http://www.sas.com/index.htmlhttp://www.sas.com/index.htmlhttp://www.sas.com/index.htmlhttp://www.sas.com/index.html


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Question 2 Cell C’s challenge in the marketplace (30 marks)

While the South African cellular market has seen remarkable growth, the third

entrant into the market has had a tough job achieving the growth experienced by the

first two cellular network operators in the early establishing years.

1. Does Cell C have something significantly different to offer the market in order

to attract users?

2. What is the basis on which Cell C expects to build its competitive advantage?

3. How could Cell C’s systems help to execute its current strategy?

Question 3 Enterprise resource planning (30 marks)

Compare customer relationship management (CRM) and supply chain management

(SCM).

1. How are they similar or different?

2. What business technology is used in each?


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INDIVIDUAL ASSIGNMENT 2 Due Date: 08/08/2014

Question 1 Environmental signalling (60 marks)

Is environmental reporting a form of signalling? Does it follow that those firms that

voluntarily disclose environmental information are superior performers, whereas

those who don’t are not superior performers? This assignment r equires you to

compare the economic performance of firms with environmental disclosure with

those that have no disclosure.

You can refer to sources from South Africa as well as the European Union. Your

report must be a minimum of ten pages, excluding appendices, with 1.5 spacing and

Arial font 12.

Question 2 Enterprise resource planning (40 marks)

Refer to page 143 of Concepts in enterprise resource planning and answer the

following question:

Use the internet to research the latest news surrounding the Sarbanes-Oxley Act.

Make a list of companies that have been charged with fraudulent activities in the past

three years. Can you see any patterns of an increase or decrease in fraud over the

past few years?


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8.6 Marking guideline/matrix/rubric

Not applicable.

8.7 Self-assessment questions

Not applicable.

9 OTHER ASSESSMENT METHODS

Not applicable.

10 EXAMINATION

The examination may consist of multiple-choice questions, short questions,

case studies, calculations and scenarios. As a rule, multiple-choice questions

do not exceed 40% of the total number of marks. However, any combination of

the above may apply.

Examination details will be forwarded to students after the examination paper

has been prepared.

11 FREQUENTLY ASKED QUESTIONS

Not applicable.

12 SOURCES CONSULTED

Not applicable.


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13 CONCLUSION

The most important distinction between strategy formulation and management

control is that management control is the process of implementing those strategies.

The management control process involves managers and their staff at all levels in

the company. Most of the information in an organisation is task control information,

namely, the number of items ordered by customers, the quantity of material and units

of components used in the manufacturing of products.

Management control is concerned with the broadly defined activities of managers

deciding what is to be done within the general constraints of strategy. Task control

relates to specific tasks, most of which require little or no judgement to perform.

Management control systems involve information, and companies require an

infrastructure to process that information. The internet provides that infrastructure,

making processing the information easier and faster, with fewer errors.

Situations exist where not all employees, and not even all managers, should be

involved in planning and budgeting processes and, in particular, the setting of

performance targets.

These are those:

First, targets can effectively stem from a top-down process when top-management

has knowledge of the operating business and operational prospects that is either

sufficient for setting properly challenging performance targets or that essentially

subsumes the knowledge possessed by the subordinates.

A second situation that can lead to top-down target setting is where top-level

managers have the information available for evaluating performance on a relative

basis.

Allowing employees to participate in and influence the process of setting their

performance targets can have several benefits. One is commitment to achieve the

targets. Employees who are actively involved in setting their performance targets are

more likely to understand why the targets were set at the levels they were.

Please feel free to contact your lecturers via email with any content related queries.


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Not applicable.

mbl93fw module overview 2014

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