Explain the use of planning tools used in management accounting.

                There exist many various planning tools which are used by management accounting which assist in identification of financial problems. The information that is gathered using the planning tools will assist in making strategic and financial decisions which will lead to financial success for the company. Planning tools will help to implement control so that all investment verdicts can be taken properly. The interpretation and analysis of the financial data will help in reporting that is external which will lead to sustainable growth of organization. (Loe, 2015) The organization will have significant influence on the sustainability issues if planning tools are executed accordingly.

Cash Flow Budgeting:

            It is actually a practice of estimating all cash expenditures and receipts which are likely to take place during a specific duration of time. Forecasts and estimations can be made quarterly, bimonthly, and monthly while including nonfarm expenditures and incomes. An important advantage of using this practice helps in determining whether cash balances are enough for fulfilling normal obligations and if cash and liquidity requirements of balance stipulated by an internal company or bank regulations are properly maintained. The prominent disadvantage of this practice is that distortions might be caused by cash budgets since profit is not equated by cash inflows.

Capital Budgeting:

             It is the practice of evaluating and determining large investments or expenses. This process helps a lot in understanding the effects of risks, decision making, choosing investments, and maintaining control over expenditures. Some disadvantages include uncertainty leading to poor applicability, ineffective decisions affecting durability, and assumptions of techniques.

Zero-Based Budgeting:

        ZBB or zero-based budgeting is a practice of budgeting in which an expense has to be justified for every new duration or period. It starts from a base of zero and every operation in a company is analyzed for its costs and needs. Its advantages include managers being attentive to every spent dollar and tracking the legacy expenses. An important drawback includes rewarding the short-term thinking other than being resource intensive.

Rolling budget:

             The process of rolling budget is all about updating the budget with a new period as the recent duration of budget is completed. It means that the rolling budget includes incremental extensions of the present model of budget. An important advantage of this practice is that it reflects the dynamic environment of business. Meanwhile, the prime drawback is its consumption of time.

Operational budget:

             It is actually a strategy for the expenditures which are required for maintaining the operations of a public organization or business venture. Operational budgets helps a lot in taking measures for long-range needs of planning. It also makes it easier to create a flexible budget. Its disadvantages include complications of federal tax and variation in information.

2. Analyze the way in which management accountants use different planning tools such as cost accounting, budget control, pricing strategies, and financial statement to prepare budgets and gain competitive advantage.

            Identifying money related issues: key execution (non-monetary and money), using budgetary targets related and benchmarks to differentiate changes and issues in command to address those avoiding postponements. Money related management: the organization should characterize budgetary management and check how it tends to be linked to avoid or anticipate monetary issues. The company can use budgetary management for observing the procedure. Managerial bookkeeping varieties of abilities: an association should be aware of the high spots of a productive and compelling managerial bookkeeper. Additionally, they should check how the abilities can be linked to managing or keeping the problem, an example can be, embezzlement of assets proposed to develop the business Effective frameworks and methodologies: the improvement of techniques and frameworks that need appropriate and powerful detailing, complete morality fiscal precise and are mindfully possessed represented by the company. (Shah, 2016)

There are a few ways by the management accountants that move the firm towards achieving sustainability.

Identify how the environmental and social trends which will influence the capability of the organization to create value across the time period.

Linking reasonable difficulties that are corporate to the technique of the company, standpoint execution, plan of the action and license to work

Define the influence of the problems of sustainability in firm business terms covering of when and how and they will disturb the firm.

Create KPIs that will support strategic and sustainable plans, aims and the goals.

Create techniques and tools of management accounting such as usual supply obtainability situation planning, lifecycle costing and carbon foot-printing to contribute in issues of incorporate sustainability into the decision making process.

Produce reports which comprise of information of the sustainability effects to update budget decisions, pricing and strategic development or investment appraisals.

Create the strategy of reporting which includes matter on the sustainability to guaranteeing that relevant financial and non-financial data is revealed. An example is the International Incorporated Reporting Framework recognized by the council of International Integrated Reporting. (Bhattacharyya, 2014)

Cost accounting:

             It is actually the practice of allocating, summarizing, analyzing, classifying, and recording costs which are related to process before creating the steps that should be taken to control every cost.

Budget Control:

            It is the process in which a manager focuses on setting performance and financial goals with various budgets, adjusting performance, and comparing the actual outcomes as they are required.

Pricing Strategies:

        Various strategies of pricing are used by a company when it comes to selling a service or product. Such strategies help in defending against competitors and increasing the share of market.

Financial Statement Analysis:

It is the process of analyzing and reviewing the financial statements of a company for making efficient decisions in terms of the economy.

3. Explain how management accountants will use KPI’s in a company’s internal processes. Evaluate the advantages and disadvantages that the use of KPI’s can bring to the business.

        Key Performance Indicators are an organizations measurable goals that is basically tied to an organization’s strategy. KPI is a performance management tool that helps the organization evaluate the performance of the work. Through KPI many goals are attained but not with the help of only single worker but multiple workers working together. Experts of performance management agree on that fact that other multiple owners are working on a common goal which creates shared accountability which is significant for the firm to be successful. For this the business uses Key Performance Indicators to track and analyze the performances and resource and staffing decisions. (SAP, 2018)

Implementing the key performance basically includes four ways:

The organization decodes its shared vision into assessable operational goals which are conveyed to the employees.

These goals are then connected to each individual workers performance goals that are evaluated on a recognized periodic basis.

Internal methods are developed to encounter and surpass the expectations of the customers and the strategic goals and customer expectations.

Lastly, Key Performance Indicators (KPI) are examined to assess and create recommendations for improvement in the company’s future company.

Advantages:

        The identification of important indicators for the success of company helps in establishing precise targets. Setting key indicators helps in identifying the areas where the organization is weak and can potentially improve by focusing on them. Just depending on the figures that seem to represent total profits, revenues, or sales, it might become impossible to know where it is necessary perform effectively.

Disadvantages:

         An organization can suffer by setting performance indicators if they are not being followed up in terms of the progress. It is critical assess whether the indicators are even being met by the workers or not. Therefore, it becomes necessary to review goals for determining whether they should be adjusted on the basis of factors like new releases of products or economy.

4. With reference to the Tesco scandal explain and analyze the role the management accounting profession should have played in identifying and preventing the financial irregularities that were seen.

            For years, Tesco has been the 2^nd largest retailer in the whole world right after Walmart. Recently, it faced a tough competition in Europe and Britain along with the declining profits. It can be said that the most impactful and latest announcement of Tesco was on September 22. It was a huge blow to the reputation and value of Tesco. It has been stated by the Tesco that the overstatement of profit was caused by the accounting errors, including the delayed cost recognition and early revenue booking. The organization has started an investigation into the accounting and finance irregularities. Over the globe, the subsequent investigations, decrement in share value, misreporting, and accounting error have been reported.

            This situation might have been prevented if finance managers had been attentive and not too easy with the statements. If the revenue had not been booked earlier and cost recognition had not been delayed, the overstatement of profits had not taken place. It is more than just a little important for accountants and finance managers to keep the track of ever financial operation of the organization. With precise practices, this situation of scandal would have been prevented.

References  of management accounting

Bhattacharyya, D. (2014). Budget and Budgetary Control. Management Accounting By Debarshi .

Hill, B. (2017). Advantages & Disadvantages of a Rolling Budget. Retrieved from Small Business: https://smallbusiness.chron.com/advantages-disadvantages-rolling-budget-62686.html

Loe, W. (2015). ESSENTIAL TOOLS FOR MANAGEMENT ACCOUNTANTS. CGMA.

SAP. (2018). Using Key Performance Indicators to Increase Productivity and Profitability. Retrieved from Success Factors : https://www.successfactors.com/content/ssf-site/en/resources/knowledge-hub/educational-articles/key-performance-indicators.html

Shah, P. (2016). Management Accounting . Oxford University Press .

Shpak, S. (2019, January 28). Five Types of Budgets in Managerial Accounting. Retrieved from Small Business: https://smallbusiness.chron.com/five-types-budgets-managerial-accounting-50928.html