Audit and Accountancy
Audit and Accountancy
Audit management
Audit management is responsible for ensuring that board-approved audit directives are implemented.
Audit management oversees the internal/external audit staff, establishes audit programs, and hires and trains the appropriate audit personnel. The staff should have the necessary skills and expertise to identify inherent risks of the business and assess the overall effectiveness of controls in place relating to the companys internal controls.
Internal audit is a function setup the organisation to reduce the risk of fraud in the organisation and runs according to the management commands. This is the main difference between internal and external audit where external auditors and independent of management and hence external auditors give an opinion on the financial statements as presented by the management of the organisation.
Cost Centres
A cost centre (CC) is a unit, location or department where cost data is collected. The purpose of the cost centre is to collect, analyze and ascertain costs in its immediate context. Cost centres usually have cost units—units or equipment for which costs are determinable or attributable. Overheads and direct costs constitute the cost structure of a CC. Since many activities in an organisation involve costs, a cost centre is a fundamental aspect, especially as profit and investment centres can be cost centres.
According to the ACCA Study Text (Management accounting, c 1999), cost centres can manifest themselves as a project, a machine, department or overhead costs. One should note that a specific cost centre might not necessarily have other functions. CCs are not limited to production and manufacturing, since they can also be attributed to service centres, like commercial bank branches for example.
Revenue Centres
These centres deal exclusively with revenue. Even though costs may arise from these areas, the revenue centre is not accountable for costs. Its purpose is primarily to maximise sales and revenue.
Corporate Strategy
Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of “which businesses should we be in?” and “how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?” Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. It means the overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation, or focus to achieve a sustainable competitive advantage and long-term success. Alternatively, according to W. Chan Kim and RenĂ©e Mauborgne, an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost trade off by simultaneously pursuing both differentiation and low cost.
Organisational behavior
Organisational behavior is an emerging field of study, with sound prospects. Though the study of behaviour has interested psychologists for a number of years, its role in specific organizational situations has caught their attention only of late. The observation that work behavior is instrumental in determining organizational performance has forced organizations to focus greater attention on their employees behavior. The trend is noticed to be greater than ever before. The traditional view of considering the employee as just a spoke in the Organizational wheel has almost virtually disappeared. Organizations are constantly infusing the much needed humanistic approaches to keep their employees spirits high. Organizational behavior is significantly affected by several changes. Of prime importance, is the change in organizational structures. Bureaucratic models have given way to modern ones like the project and matrix designs. Analyzing the stages in the evolution of organizational structures and their specific implications to behavior in organizations are the focus of this unit. Every organization has certain objectives or goals which it strives to accomplish.
Different types of responsibility centers
A responsibility centre is an organisation unit that is headed by a manager who is responsible for its activities. In a sense, a company is a collection of responsibility centre, each of which is represented by a box on the organisation chart. The followings are the types of responsibility centre: