accy 304 final - short answer

What are the two fundamental problems firms face?

• important information is held by many different individuals, information is expensive to acquire, store, process, and transfer

• even when decision makers have the “right” information, they still may not have appropriate incentives to make the “right” decision

what is the primary goal of any economic organization?

produce the output customers want at the lowest cost

do good internal controls effectively solve these fundamental problems faced by firms?

• no, internal controls provide only minimum level of operational effectiveness

• they do not necessarily ensure that sound decisions are made to maximize firm value

speed of industry and decentralized vs. centralized

• fast growing industry → decentralized

• stable industry → centralized

What are the three primary determinants of a business strategy?

• business environment

  • technology

    • computers, telecommunications, production methods

  • markets

    • competitors, customers, suppliers

  • regulation

    • taxes, antitrust, international laws

• strategy

  • choice of industries

  • basis for competition (price, quality, service)

• organizational architecture

  • 1. decision-right assignment

  • 2. reward system

  • 3. performance-evaluation system

What are the three elements of organizational architecture and how are they related? (3 points, extra info is based on ATH case)

• decision-right assignment

  • highly decentralized

  • ATH case study: doctors and imaging experts, with local knowledge, are inside ATH. Scepter is a pharma company; it should delegate

• reward system

  • intense pay-for-performance via the earn-out

  • also aligned with decentralization

• performance-evaluation system (management control system)

  • ATH case: absent

  • levers of controls:

    • belief: communicate what he company actually cares about beyond the payout

    • boundary: guardrails on decisions and behavior, since decision rights are so decentralized: which markets, how many new products, what you may not compromise

    • diagnostic: costs are exploding; a DCS could monitor spending, earnings quality, and even leverage

• All three legs must balance. The performance measurement system (accounting control system) must measure the agent's performance in areas over which he/she has been assigned decision rights, the reward system must be matched to those areas, and a person should not be assigned decision rights if the exercise of those rights cannot be measured and rewarded

business environment - lever of control

• interactive

  • watching external environment (technology, markets, regulation)

For the “three-legged stool” of organizational architecture to remain level, we (repeatedly) noted that all three legs must balance:

• The performance measurement system (accounting control system) must measure the agent’s performance in areas over which he/she has been assigned decision rights.

• The reward system must be matched to those areas over which performance is being measured.

• A person should not be assigned decision rights if the exercise of these rights cannot be measured and rewarded

organizational architecture - decentralization - benefits

• effective use of local knowledge

• conserves management time

• TMT can focus on strategy

• training and motivation for local managers

organizational architecture - decentralization - costs

• potential agency problems

• coordination costs and failures

• less effective use of central information

• forgone economies of scale * wording matter for exam

What are the factors that influence decision rights assignment?

The business environment (such as dynamic vs. stable environments and technology) and strategy

decision rights - centralization - benefits

• standardized experience for customer

• reduced coordination costs

• reduced ability for biases / personal incentives of frontline employees to affect decisions

• not all employees understand customer profitability metrics

decision rights - centralization - costs

• restricts employee focus on what the computer says, not the customer

• ignores local information

• limits organizational learning

• poor computer models / assumptions lead to poor decisions

• hard to build long-term relationships

• demotivating for employees

decision rights - centralization vs. decentralization

• key decision is whether to retain the right to make a particular decision or delegate the right to someone else (i.e., centrally managed vs. decentralized is an issue of decision right assignment)

• not a dichotomous choice

• performance evaluation systems (control systems) and reward systems must be carefully designed to mitigate the costs of decentralized decision making

How does decision-rights assignment affect performance evaluation and reward systems?

• Performance evaluation and reward systems must be carefully designed to match the decentralized decision rights and mitigate coordination costs or agency problems, ensuring the "three-legged stool" remains balanced

• controllability principle

• the tradeoffs (benefits and costs) of centralizing or decentralizing decision rights must be carefully considered

  • given this tradeoff, what determinants lead to increased…

    • decentralization? dynamic environments

    • centralization? technology

what is organizational culture?

• Shared organizational purpose and values that guide employee decisions in areas where explicit rules/policies are difficult to define

  • purpose:

    • concrete goal or objective for the firm that reaches beyond profit

  • values:

    • shared beliefs among employees regarding “the right way” to conduct oneself

advantages of a strong culture

• when employees share their organization’s purpose and values, they can be intrinsically motivated by a sense of pride and achievement, and satisfaction of doing something worthy and meaningful

  • customer loyalty

• these feelings often inspire significant effort and collaboration in pursuit of organizational (rather than individual) goals

• when orgs. have a recognized, strong culture, it can attract candidates who fit the culture which further enhances its benefits

What does North STAR stand for, and how does each piece engrain culture?

• Selection — hire/promote people who already fit the firm's purpose and values.

• Training — actively teach and coach employees into the desired culture (onboarding, ongoing coaching).

• Assessment — formally evaluate employees on adherence to values, not just results (e.g., 360° leadership surveys, goal check-ins).

• Reinforcement — symbols, rituals, recognition, and stories that continuously remind and reward people for living the culture (e.g., branded merch, "give-back days," HQ visits, leadership retreats)

• By embedding company beliefs into employee behaviors through its four components: Selection, Training, Assessment, and Reinforcement

How can the North STAR system help prompt cultural change of a long-established organization with an entrenched culture?

• It systematically aligns new hires and current employees with the firm's purpose and values by hiring for cultural fit, providing thorough coaching and training, assessing performance based on both results and adherence to values, and reinforcing the culture via symbols, traditions, and recognition.

• dutch bros case:

  • Dutch Bros' shift from the "Legacy" franchise model to the "NewCo" model is the case example — they deliberately redesigned each North STAR lever: Selection shifted to only tenured, values-endorsed internal employees (instead of outside investors chasing profit); Training added structured coaching ("DB Biz Coaches," 45–100 hrs of required training + an exam); Assessment added 360° surveys and personal goal reviews; Reinforcement added t-shirts, give-back days, and company-wide gatherings. By deliberately re-engineering all four levers together, a company can shift an entrenched culture instead of hoping it changes on its own.

belief systems/north star - decentralization - benefits

• flexibility to respond to local customer needs

• better local market knowledge → improved decisions and innovations

• faster decision-making

• greater operator empowerment and motivation

belief systems/north star - decentralization - costs

• harder to coordinate and maintain consistent brand identity

• potential incentive conflicts between operators and founders

• local information remains within the franchise / operator

belief systems/north star - subjective method

• benefit:

  • soft skills such as culture fit and judgement are difficult to assess objectively. subjective systems allows the company to take these aspects of a person into account

• potential cost:

  • subjective systems can be influenced by judgement biases

  • for example, a candidate’s ability to interview well is seemingly playing a huge factor in the selection process - even though this skill might not translate into franchise success

belief systems/north star - objective system

• benefit:

  • could be perceived as more transparent and fair

• potential cost:

  • the system is based on the quantity of experience rather than a quality of experience

  • the objective measures would not capture all aspects of performance and could be subject to manipulation and gaming

What is a budget?

• “BOTTOM UP” by having regional managers prepare an initial draft budget

• DEBATED and ADJUSTED by the leadership team to arrive at a final budget

• financial plan that projects financial statement accounts, operating performance, and cash flows for one or more periods. A

• sophisticated budget is essentially a full projected set of financial statements built from a set of underlying operating decisions/assumptions

What role/functions does the budget fulfill in organizations?

• Directing — forces managers to spell out strategic/financial plans and their implications.

• Coordinating — helps the firm plan resource use, set expectations, and balance one unit's output with another unit's (internal customer's) needs.

• Decision Influencing — provides a benchmark for feedback and performance evaluation.

responsibility centers

• an organizational unit headed by a manager who has been charged with achieving some agreed-upon result

• focus on the distinction between the revenues and costs that are controllable vs. ones that are not

• differ fundamentally on one important dimension: decision rights

• bc they have different decision rights, they require different financial performance measures for performance evaluation

  • the principal criterion is the kinds of resources controlled by the responsibility center manager (i.e., the controllability principle)

variance analysis

• a tool that helps an org. determine who “owns” each line item and should be held responsible for knowing its status

• we observed that variance analysis - a form of diagnostic control - if designed effectively, can potentially reap the benefits and mitigate the costs of expanding decision-making authority

How does the budgeting process fit within the Levers of Control framework, particularly an interactive control system?

• It can serve as an interactive control system where top management and division heads engage in ongoing dialogues, reviews, and debates to communicate and coordinate objectives, share information, and monitor strategic uncertainties

What impact does tying rewards to budget achievement have?

• decreases informativeness

• Tying rewards directly to meeting and beating budget targets gives managers an incentive to lie or build slack into the budget. Instead, tying compensation to broader company profit or using budgets primarily for information sharing helps promote accurate information

What are the common responsibility centers, each one’s objectives, typical decision rights, typical performance measures, etc.?

• cost center

  • objective:

    • minimize cost for a fixed output

  • typical decision rights:

    • OP costs

  • ex:

    • manufacturing dept.

  • performance measures:

    • cost variance analysis

    • quality measures

    • continuous import

• expense center

  • objective:

    • maximize output for a fixed budget

  • typical decision rights:

    • -

  • ex:

    • accounting dept.

    • HR dept.

    • R + D

  • performance measures:

    • benchmarking

    • quality measures

• revenue center

  • objective:

    • maximize revenue with a fixed budget

  • typical decision rights:

    • revenue

  • ex:

    • sales dept.

  • performance measures:

    • sales variance analysis

• profit center

  • objective:

    • maximize profit with a fixed budget

  • typical decision rights:

    • revenue

    • OP costs

    • OP income

  • ex:

    • cdf region - assuming no control over equipment decisions

  • performance measures:

    • profit variance

• investment center

  • objective:

    • maximize profit subject to investment made

  • typical decision rights:

    • revenue

    • OP costs

    • depreciation

    • OP income

  • ex:

    • cdf region with control over investment (i.e., equipment decisions)

  • performance measures:

    • ROI

    • ROA

    • residual income

What does variance analysis do for organizations?

It compares actual results against planned or budgeted standards to help management identify deviations, investigate operational inefficiencies, and evaluate performance

What are the revenue-side variances?

• Sales Volume Variance (SVV) = Master Budget vs. Flex Budget = (AQ – BQ) × BP → isolates the effect of selling more/fewer units than planned.

• Sales Price Variance (PV) = Flex Budget vs. Actual = AQ × (AP – BP) → isolates the effect of selling at a different price than planned

What are the input/COGS-side variances?

• Sales Volume Variance (Master vs. Flex) — reflects using more/less input because of unit volume changes.

• Efficiency Variance (EV) = Flex Budget vs. As-If = compares BIQ vs. AIQ → used more/less input per unit than planned.

• Input Price Variance (PV) = As-If vs. Actual = compares BIP vs. AIP → paid a different price per unit of input than planned.

variance analysis symbols

• BQ=Budget Qty

• BP=Budget Price

• AQ=Actual Qty

• AP=Actual Price

• BIQ=Budget Input Qty

• BIP=Budget Input Price

• AIQ=Actual Input Qty

• AIP=Actual Input Price

How do you tell if a variance is Favorable (F) or Unfavorable (U)?

• Sales Volume Variance: AQ > BQ → F; AQ < BQ → U

• Sales Price Variance: AP > BP → F; AP < BP → U

• Efficiency Variance: AIQ < BIQ (used less input than planned) → F; AIQ > BIQ → U

• Input Price Variance: AIP < BIP (paid less than planned) → F; AIP > BIP → U

transfer pricing

• refers to the price that one unit (dept. or division) charges for a product/service supplied to another unit in the same org.

• creates revenues for the selling (producing) unit, creates costs for the buying unit, and hence, affects the profits of both entities

• assuming units make all desirable internal transfers, the transfer price only affect the units profits - not firm profit

• Transfer pricing facilitates accurate performance evaluation, goal congruence, and preserves divisional autonomy.

What is the purpose of transfer pricing?

• provide info for accurate performance evaluation

• provide proper economic signals for good decision making (i.e., goal congruence(

• preserve divisional autonomy

• purposely move profits between entities/locations

What are the various types/methods of determining transfer prices?

• correct is opportunity cost, but that is expense to determine and constantly evolving - we adopt less expensive approximations

• market-based:

  • when a competitive external market exists

• marginal cost:

  • when synergies from production arise

• marginal cost plus markup:

  • includes a charge for tying up fixed capacity

• full cost:

  • since marginal cost is rarely known and disputes arise

  • most common, simplest, low implementation cost

• negotiated:

  • manufacturing and distribution determine how profits are divided; usually approximates opp. cost

When is it appropriate to use variable costs, fixed costs, or market price for a transfer?

• Recall that the minimum transfer price leaves the selling division no worse off if an internal transfer of goods takes place as compared to if no transfer took place. The maximum transfer price leaves the buying division no worse off if an internal transfer of goods takes place as compared to if no transfer took place.

• An appropriate transfer price considers whether the transaction is one- time/short-term vs. long-term as well as the availability of idle/excess capacity to determine the opportunity cost involved.

• Variable cost — short-term/one-time exchanges when the selling division has excess capacity (no added fixed cost is incurred, so including it would mislead); transfers only operational efficiencies. EXCESS CAPACITY, SHORT-TERM

• Full cost — recurring, long-term exchanges that utilize the seller's capacity — add the cost of that capacity (via ABC, etc.) so both operational and capacity-related (in)efficiencies transfer. EXCESS CAPACITY, LONG-TERM

• Market price — when the selling division lacks excess capacity (the good could've been sold externally) — anything below market harms the seller because the internal sale displaces an external one. LACKS EXCESS CAPACITY

transfer cost formula

• Transfer Price = Variable Cost + Opportunity Cost

• With excess capacity, opportunity cost = 0, so Transfer Price ≈ Variable Cost. Without excess capacity, opportunity cost = contribution margin forgone on the lost external sale, so Transfer Price ≈ Market Price

What are the minimum and maximum transfer prices?

• Minimum = the price that leaves the selling division no worse off than if no transfer occurred (variable cost + opportunity cost of any lost external sale).

• Maximum = the price that leaves the buying division no worse off than if it had bought externally (no higher than the buyer's outside market price).

financial performance metrics - benefits **

• fairly easy to measure correctly

• easy to set performance targets

• easy to communicate and explain to employees

• data already collected

• perceived as objective

• ultimate goal of owners

financial performance metrics - costs **

• backward-looking measures

• may encourage myopic (i.e., shortsighted) decisions

• Sometimes "too informative" (e.g., links easy to validate

What is a balanced scorecard (BSC) and why should organizations have one?

A strategic planning/management system that aligns activities to the organization's vision and strategy, improves communication of strategy, and monitors performance against strategic goals. Needed because no single measure can drive/motivate all value-creating actions, financial results alone are inadequate predictors of future performance, and firms must balance short-term results with long-term growth

What are the four perspectives of a BSC?

• financial

  • To succeed financially, how should we look to shareholders?

• customer

  • To achieve our vision, how should we look to customers?

• internal business process

  • To satisfy shareholders and customers, which processes must we excel at?

• learning and growth

  • How do we sustain our ability to change and improve?

What are the four required parts of each perspective of a BSC?

• objectives

  • the dimension of performance you want to improve

  • e.g., "achieve higher customer satisfaction”

• measures

  • the data used to assess performance on the objective

  • e.g., responses to customer survey, defect rate

• targets

  • level of measure to which performance is compared

  • the level you're aiming for

  • e.g., 90% "very satisfied"; defective rates < 1%

• initiatives

  • strategy intended to help achieve target

  • e.g., training program for sales staff, incentives to detect problems

rule of thumb for BSC

• every objective starts with a verb

• a good measurement should be SMART (specific, measurable, actionable, realistic, time-related

What are nonfinancial performance measures?

• Metrics that track operational, customer, or employee factors (such as customer satisfaction ratings, cycle times, or training hours) rather than financial accounting outputs

• nonfinancial performance measures should therefore supplement, not replace financial performance measures

nonfinancial performance metrics - benefits

• data often already collected

• leading/intermediate info; thus, good diagnostic tool

• effective at curtailing gaming and short-termism

• focused more easily on components of operations that managers can control

• provides greatest encouragement for risk-taking and innovation

• employees receive better information on specific actions that achieve strategic objectives

nonfinancial performance metrics - costs

• not always easy to reliably measure (i.e., lower measurement precision)

• difficult to confirm their association with value creation

• interpretation is tricky and often depends on context

• takes away some decision rights from employees

What is a construct vs. a proxy measure?

• construct

  • abstract concept; not observable and needs tools to observe (proxy)

  • the underlying thing you actually care about but often can't observe directly (e.g., financial performance, strategy implementation, customer satisfaction, happiness)

• proxy

  • specific metric used to capture or assess the construct

  • the observable stand-in used to approximate it (e.g., audit scores as a proxy for strategy implementation; comment cards as a proxy for customer satisfaction; smile frequency as a proxy for happiness)

predictive validity framework

• organizations can examine critical performance measures relative to targets to test whether they are effectively implementing strategy

• orgs. can examine the link between these critical performance measures and future financial performance to examine whether they have developed an effective strategy

What is measurement error? How do noise and bias differ? Why are they a problem?

• Construct = Proxy + Measurement Error

• Measurement error

  • the discrepancy between the true value of a construct and what is actually measured

  • proxy measures are often not perfect representations of their underlying constructs; instead, they contain error

• noise

  • random, unpredictable differences between construct and proxy

• bias

  • a predictable, systematic difference between construct and proxy

• Both weaken the proxy's ability to represent the real construct; bias is especially dangerous because it can be deliberately and predictably exploited

What is the Predictive Validity Framework, and what two questions does it answer?

• A framework testing whether your measures actually validate your strategy, structured as Cause (Construct → Proxy) and Effect (Construct → Proxy), linked by a Causal Relation on the cause side and a Statistical Association (regression) on the effect side, with Omitted Factors also influencing the outcome proxy

• 1. "Is the strategy being implemented effectively?"

  • tests the causal relation between the strategy-implementation construct (e.g., Internal Business Process) and its proxy (e.g., Announced Visits/Audits). Poor measurement here is why surprise/unannounced visits would be a better proxy than announced ones

• 2. "Is the strategy an effective strategy?"

  • tests the statistical association (regression) between the customer/process proxy (e.g., Comment Cards) and Future Controllable Contribution (financial outcome). A weak, zero, or negative relation is bad news for the strategy itself

What is a moderating vs. mediating variable? What is an example of each? What impact do they have?

• mediators

  • explains the how or why of an (observed) relationship between an independent variable and its dependent variable

  • M exists when the effect of X on Y “flows through” M

  • Impact:

    • missing a moderator makes you think a relationship is constant when it's actually context-dependent; missing a mediator means you miss the actual mechanism linking a leading indicator to an outcome

• moderators

  • changes the strength or direction of an effect between 2 variables x (independent or predictor variable) and y (dependent or criterion variable)

  • increases or reduces the effect of another casual variable

  • it doesn't sit in the causal chain

  • Example: pants color (moderator) changes how strongly shirt-color brightness (X) relates to outfit attractiveness (Y)

what is performance measure management?

• measurement management arises when employees improve their performance on a measure by taking actions inconsistent with the underlying construct that the measure represents

• the more incentive intensity tied to a performance measure, the more those whose performance is being evaluated will distort the measure from the underlying construct

• When employees improve their score on a performance measure by taking actions inconsistent with the underlying construct the measure is meant to represent — i.e., gaming the measure instead of genuinely improving performance.

does performance measure management induce noise or bias?

• bias

• pushes the measure in one predictable direction

What are the characteristics of a good performance measure?

• precise/low-noise

• unbiased

• timely

• understandable and actionable to employees

• tied to an achievable initiative

• hard to game (closely captures its underlying construct)

What is the balanced scorecard methodology? How can organizations use it?

• Definition: A balanced scorecard (BSC) is a strategic planning and management system that aligns business activities to an organization's vision and strategy.

• Purpose: Organizations use it to improve strategy communication, monitor performance against strategic goals, and overcome the limitation that single financial measures cannot guide future performance.

• Four Perspectives: It evaluates performance across four core areas:

  1. Financial

  2. Customer

  3. Internal Business Process

  4. Learning and Growth

• Implementation Components: For each perspective, organizations define four required parts: objectives, measures, targets, and initiatives

How do you interpret the results of regression analysis? Understand what the coefficients are telling you and what the p-value means:

• The sign of each coefficient indicates the direction of the relationship between a predictor variable and the response variable: A positive sign indicates that as the predictor variable increases, the response variable also increases. In contrast, a negative sign indicates that as the predictor variable increases, the response variable decreases.

• All hypothesis tests rely on a p-value to weigh the strength of the evidence (what the data are telling you about the population). The p-value is a number between 0 and 1 and interpreted in the following way: A small p-value (typically ≤ 0.05) indicates strong evidence against the null hypothesis, so you reject the null hypothesis. In contrast, a large p-value (> 0.05) indicates weak evidence against the null hypothesis, so you fail to reject the null hypothesis. (Note: p-values very close to the cutoff (0.05) are considered to be marginal; they could go either way)

• Coefficient sign:

  • positive = as X increases, Y increases

  • negative = as X increases, Y decreases

What are the three requirements/conditions that make performance measure management more likely?

1. the performance measure is an imperfect proxy for the construct it represents (almost always the case)

2. people are aware of the measure used for their evaluation and care about their evaluation (the more they care, the more incentive that they have to management the measure)

3. people have the ability/discretion to distort this measure through either action that effect the raw data or the (mis)reporting of that data

How can we reduce performance measure management?

• reduce measurement error

  • the more closely the measure captures the construct, the more difficult the measure is to manage

• conceal measurement from employees

  • those who don’t know that they are being measured or how they are being measured cannot easily manage the measure

• monitor and limit discretion

  • leverage controls

  • leverage internal controls to restrict employees’ ability to distort data or reporting

performance measure management - COSO’s internal control framework

• control environment

  • tone at the top

• risk assessment

  • objective + risks

• control activities

  • i.e., seg. of duties, security of assets, etc.

• info and communications

• monitoring

What impact does tying rewards to the achievement of diagnostic measures have?

• tying rewards to diagnostic measures often decreases their informativeness - especially when employees have the flexibility to take actions to improve the measure that are not consistent with the measure’s underlying construct

• when using incentives, orgs. must have strong internal controls and design LOC to discourage employees from attaining rewards / avoiding punishment through improper actions

What role does an enterprise risk management function fill?

ERM provides a proactive, planned approach to anticipating and managing risk — rather than reacting only after a risk event occurs — because reacting after the fact costs more than planning ahead. (Case tie-in: Healthy Babies, Healthy Moms had declining finances for years, got hurt further by COVID, and has new leadership — they'd already paid the price of reacting after problems hit, which is exactly what ERM aims to prevent going forward.)

What are the three types of risk organizations must consider?

• strategic risks

  • risks that orgs. intentionally accept in pursuit of superior performance, growth, or competitive advantage

  • manage it / embrace it

• preventable risks

  • internal risks, typically compliance or operational, that arise within the org. and provide no strategic benefit

  • remove it

• external risks

  • originate outside the org. and are largely beyond management’s control

• risk is not uniformly negative; it also creates potential upside opportunities

purpose of ERM

• to have a PROACTIVE, planned approach to ANTICIPATING and managing risk

• because reacting after a risk event COSTS MORE than planning for it

What steps should be taken to effectively manage risk?

1. ENGAGE SENIOR MANAGEMENT and the BOARD for their views of risks to strategy, and how to manage risks (interviews + assessments of risks)

2. PRIORITIZE risks, often by significance / severity and likelihood (heatmap + risk assessment)

3. IDENTIFY RISK RESPONSES for higher priority risks, and take action (risk event card)

ERM plan - what info should be reviewed?

• strategy

• objective

• known concerns

• metrics

ERM plan - who should be interviewed?

• senior executives

• managers

• regular employees

What behavioral threats derail ERM?

• overconfidence

• normalization of deviance

• groupthink

potential benefits of an ERM program

• increases awareness of key risks to organizational objectives

• focuses attention on the highest-priority risks

• improves strategic and operating decision-making

• clarifies accountability for risk ownership and mitigation

• improves resource allocation across competing risks

• strengthens resilience and recovery after adverse events

What are the challenges in fulfilling an ERM program?

• Busy employees may not devote time to thinking about risk

• employees may overlook risks embedded in their own designs/products/ideas

• employees may recognize risks but fail to speak up

• risk information is dispersed across the organization, limiting an enterprise-wide view

How does ERM connect to the four Levers of Control?

• Interactive Control Systems — needed to encourage employees to think about risk and circulate risk information/mitigation plans throughout the company.

• Belief System — needs to create a culture where it's safe to openly discuss what could go wrong.

• Boundary Systems/Internal Controls — for compliance-related risks, set guardrails so employees take actions that trigger warnings before bad outcomes occur.

• Diagnostic Control Systems — track and monitor risk mitigation plans and initiatives over time.

ERM - four Levers of Control - pros and cons

• pro:

  • an academic framework will prepare you to better understand and appreciate the many different management accounting practices utilized across your future employers

    • it describes fundamental tensions present in most orgs.

    • it describes general characteristics of accounting control tools

• con:

  • most practitioners will not know about the levers of control

COSO’s ERM framework

• governance & culture

• strategy & objective-setting

• performance

• review & revision

• information, communication, & reporting