1. Review the rights and responsibilities of Certified Management Accountants. What are some of the ethical responsibilities and obligations that management accountants have within an organization? Provide some examples. Are these responsibilities different than the obligations for financial accountants?
a. There are four (4) primary ethical responsibilities of a CMA, confidentiality, avoid conflicts of interest(integrity), credibility(truthfulness), and to comply with the continuing education requirements of 30 hours per year. "The management accountant is a strategic partner utilizing financial information to improve the quality of business decisions."(Rights and Responsibilities of a Certified Management Accountant). Management accountant's responsibilities differ from a financial accountant's responsibilities in that a management accountant has the ability to influence a financial decision of the company. As we learned earlier, a financial accountant primarily prepares documents for review by outside persons and entities such as investors or the I.R.S. Therefore, a management accountant has more influence over management than a financial accountant, and therefore has a higher ethical standard, much like a lawyer has an ethical duty to his clients. An example of such a duty is to disclose any and all conflicts of interest. A management accountant may have a financial interest in a company(stocks). The company he/she works for may be interested in buying that company based on the accountant's analysis. Since the accountant may stand to gain financially from the transaction he/she has a duty to disclose the information. They also have a duty to tell the truth. That duty prevents a management accountant from lying to cover up a mistake he/she may have made or to ensure that management gets truthful and accurate information. Rights and Responsibilities of a Certified Management Accountant.
b. Management accountants are responsible for "contributing to strategic, tactical, and operating decisions and helps coordinate the efforts of the whole organization. As part of management, the CMA utilizes financial expertise and broad business competence to help assure the organization's successful operation in the long, intermediate, and short term." For example, a management accountant is responsible for planning the financial goals of a company. The responsibilities are different from financial accountants. Financial accountants are responsible for the financial records of the company.
2. List a few of the issues and considerations businesses should have when it comes to the selection of long-term investments and how those issues impact the various financial statements. Guided Response: Review your peer's posts. Respond to at least two of your peers describing how these issues can be overcome by the tools discussed in this chapter and why (i.e., looking at IRR, NPV, cash flow).
a. Prior to a business or organization making a long term investment then must take a few things into consideration. First they must determine whether or not they have the capital in order to make that investment. This is done by performing a capital budget. After this step it would be a good idea for them to estimate the cash flows and assess the riskiness of the cash flow. Also the organization would have to determine the potential asset's rate of return. Another consideration they must take is the accounting rate of return and the payback method. A main consideration is deciding how long does the organization wants to have the money tied up in the long term investment. Investments are considered assets but decreases the available cash capital the organization may have. The most important thing is whether or not it is profitable and if they can afford and if so how long they want to keep the investment.
b. A few issues that a business faces when it comes to making decisions about any long-term investment would be the inflow and outflow of cash. How much capital do they need to make this investment and how long before they see a profit on their investment. Each of these things have an impact on a business when trying to figure out if it is possible to make changes that can help a business grow and to have success. There are four different areas that we read about this week that can help with trying to figure this out. Net present value,Internal rate of return, Accounting rate of return, and the last one is Payback. A manager should not focus on one single method in making a decision they should look over every aspect and make a sound judgement about any investment that is made in a business.