BSC

Hellal A. Al-Hellal
phD pmp Msc

Accounting for Decision Makers

Fall 2015 - 2016

7 October 2015

Decision making mechanism

 Accounting information system 

   

Table of content

1. Abstract………………………..………….………03
2. Introduction.……………………………..………..03
3. Accounting information system…………………05

1. Identifying informations   ……………………….07
2. Public Authority for housing welfare ………….10
3. Process of Planning & General Government Over all Control………………………………….13 
4. Hierarchy………………………………………   14
5. Contractor’s BSC   ……………………………  18
6. What Figures Display…………………………  19 
7. Conclusion  ……………………………………  21
8. References  …………………………………… 22
9. Appendix   ………………………………………23

Abstract

The purpose of this summary is to understand how information derived from management accounting has an impact on development and foundation of new decisions and therefore to better understand the relationship between management accounting and information. Using as an example from the writer’s field and experience at the Public authority for housing welfare, will show the efficiency of information provided by management accounting in decision making and the operational control of the production process.

Introduction

Researchers (Hamilton, 2003; Albu, 2005; Briciu, 2010) consider that hyper competition and globalisation are two phenomenon that generate complexity in business environment. In this way, it not only creates a state of turmoil and turbulence in the competitive environment and generates changes in market conditions, but also requires changes and developments within the organisations. Organisations around the world are forced to adapt constantly products and services to market demands, to turn their attention to customer satisfaction, manufacturing required sophisticated processes and flexible internal processes that respond quickly to environmental changes.

Information to advance the process of developing, testing and refine new approaches to existing social needs with the adequate efficiency according to numbers and analysis in hand, visions designed by the strategy makers in the government approved by the parliament. Government ministries and agencies plus businesses related to the governmental sector, which all offer solution based on results figures and numbers, results a lead to the society need and solution to its matters. As well informed management decisions to drive continuous improvement and long-term social impact. Integrating performance measurement into day-to-day operations does not have to be complicated or prohibitively resource intensive—and the payoffs make it well worthwhile. Using measures tools to drive decision-making will help new methods to carry out their missions more effectively. It will also aid in building funder confidence and securing new and returning investments. In my experience with sixteen years of governmental work environment, the right approach to performance measurement enables leaders of organisations dedicated to social impact to answer such fundamental questions as these: How do we know how well our organisation is progressing against our mission and goals? What should we measure in order to have critical information without becoming overwhelmed with data?

 How should we report and discuss how each activity is to increase the efficiency of the basic system, which is why managers need concrete and timely information for decision-making within an entity. From here arises the need to improve management accounting. Accounting information for users fall into one of the categories: public information and / or confidential information.An internally driven performance measurement system will help to answer such and many more questions as it works to turn the organisation’s Accounting information system success (AIS) and programmatic efforts into meeting social demand.

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Accounting information system

A back ground

Some academics believe that there is Management accounting is defined in the literature as managerial accounting, analytical accounting (compatibility analytic) or internal accounting.

Management accounting is that accounting approach of an entity activity that allows separation and structure in subdivisions of property and financial results. In this way you can know how to generate profit or loss in the entity, and ways to influence its activity in order to increase profitability (S. Briciu, 2010).

 It is thought there is a two-way system whereby organisations shape they're accounting information systems but are also shaped by them. This report will look at the highlighted relationship and in the context of the information literacy and management skills that are needed by an accountancy graduate in the 21st Century. The summary will cover the importance of the factors i.e. political factor and economic context, that shape an accounting information system and what the needs are essential to have an effective and efficient system in this present day. The purpose of AIS is to support management and the controls of topics that have a connection with the economic financial area. With technology advancing every day, AIS, provide the firms with a strategic viewpoint. This allows for measures to be used regarding accounting information systems that will allow the organisation to become more competitive. Every firms accounting system may differ depending on the size of the firm, industry area and accounting procedures that may be in place. The accounting system will be chosen by management and whereby this would be an argument for an organisation shaping their systems. Accounting information systems must suit the needs of both management as well as the country’s laws such as the preparation of financial statements. Therefore, it is important that management choose the correct accounting information system that will meet all needs not only for the company’s benefits but also to remain compliant with the law. In this report I will look at how information flow from top of the state member to the labours, and how the understanding of accounting information systems help reaching the objectives. 

Role Of Information System In Business 

1. Information systems capture data from the organisation (internal data) and its environment (external data). 

2. Storing the informations in database, items over an extensive period of time. 

3. When specific information is needed, the appropriate data items are manipulated as necessary, and the user receives the resulting information. 

4. Depending on the type of information system, the information output may take the form a query response, decision outcome, expert-system advice, transaction document, or a report. 

Identifying informations

Informations! The Backbone of every Organisation

Information is an increment in knowledge: it contributes to the general framework of concepts and facts that we know. Data are only the raw facts (INPUTS), the material for obtaining information. Information systems tangible “financial’ and none financial “intangible” l use data stored in computer databases, to provide needed information. A database is an organised collection of interrelated data reflecting a major aspect of a firm's activities. 

An information system is a specific type of system in general. A system is a set of components (PROCESS) that operate together to achieve certain objectives (OUTPUTS). The objective of an information system is to provide the appropriate outputs via a certain process to the members of the organisation. 

Starting by   

  

INPUTS:

TYPES OF INFORMATION SYSTEM 

The basic types until this very day of the information systems are as follows : 

• Manual IS :-Paper‐and‐pencil information systems *refer to appendix 1
• Formal IS :-Written procedures information,periodically and monthly reports*refer to appendix 1&2
• Informal IS :-Word‐of‐mouth information within seniors, managers and sadly snitch  
• Computer Based IS :-Use hardware, software, the Internet, and other telecommunications networks 

Types of informations

• Demographic data, collecting (DEMAND) residential units needed.
• Human resources needed for the organisation in sites, head quarters and main offices.
• Facilities needed 
• Payroll 
• Public relations
• Reports
• Monthly payments
• Reporting expenses
• Over time
• Cost summery
• Cost performance
• Contractors listings and ratings based on yearly Balance scored card* refer to the balance score card page..18

To capture, transmit, store, retrieve, manipulate, or display information, thereby supporting people, organisations, or other software systems. Information system collects, processes, stores, analyses and disseminates information for a specific purpose. 

• Software to computer programs and manuals that support them. Computer software falls into two classes: 

Using Systems Software to Manage the resources of the computer system and simplifies programming. Application Software ready-to-use packages.Stored the database items over an extensive period of time. 

• Databases organising the collections of interrelated data used by applications software. Databases are managed by systems software known as database management systems (DBMS), Ex. IBM DB2 8.2 , Oracle Database.

PROCESS:

• Operating Support system
• Transaction Process
• Process control
• Management Support system
• managment information
• decision Support
• Executive Support

OUTCOME:

the outcome of successful grade of efficiency and productivity, and better information management are able to help on achieving operational excellence, help on improving problem solving capabilities and realising of customer needs. Helps companies, customers and suppliers intimacy, Encourage customers to give feedbacks and respond on activities/events held and their projects. Plus, managers no longer make important decisions by relying on guesses or luck since AIS and IT had developed. Real-time information provides those trustworthy data in order to organise, control and decide immediately. Companies are able to collect latest data more frequently and make decisions by setting up a network which links for example a central database to retail outlets. For competitive advantage, AIS and IT help companies to invent new solutions to fight with reaching efficiency, to discover useful information and they also provide reliable and security in order to ensure the stable of a business. Company could take action like creating a new product line that might able to gain back its trust among customers (citizens) by using those important data. At last, like any company, the public authority for housing welfare needs reliable, convenient and security systems to share files, store data or communicate with employees, contractors and it’s customers (citizens) in order to ensure the work is able to recover when problems occur and be stable. So the projects will be delivered in time with quality expected.

Public Authority for housing welfare

The application of housing policy in Kuwait

Since the middle of last century, and the belief of the state need to provide residential care for citizens, the Kuwaiti government has approved the provision of appropriate housing units for families of the Kuwaiti policy were embarked since the 1954 creation of the housing units of different alternatives, both governmental houses, vouchers, or apartments, and are distributed to citizens in accordance with the mechanisms and rules Organisation ensure fair foundations in providing such housing.

Stages of the development of residential care:

Residential Care in Kuwait began construction of Construction Council in 1954 and rolled departments and several ministries to assume this responsibility until the establishment of the General Housing Authority in 1974, which assumed responsibility for the establishment of housing projects, while the Ministry of Housing allocate and distribute housing units on the citizens, and is currently the General Organisation for care residential and since its inception in 1993, the allocation and distribution of housing units for citizens in addition to the implementation of integrated housing projects.

Tasks and activities of the Public Authority for Housing Welfare:

Planning, design, implementation of the suburbs and the cities housing integrated services. 

The Foundation creates residential units in addition to the following:

Infrastructure (road networks, rainwater drainage networks, sewage networks, water systems and brackish fresh. Civil works for telephone and electricity networks, medium and low-pressure cables and street lighting) and in coordination with the ministries and government agencies concerned.

Buildings of public utilities which police stations leadership and a subsidiary, health centres, clinics, local mosques and major mosques University nine 2000 worshipers, houses of Imams and muezzins, a major suburban centres and branch "centralised” markets, shops, multi-purpose halls, branches of gas and complexes government". Kindergartens, schools for boys and girls' elementary, intermediate, secondary "In addition to the branches of shops and buildings electrical transformer sub-stations. PAHW distributes residential subdivision on the beneficiaries of the citizens by historical priority to the provision of housing requests.

PAHW assume responsibility for the establishment of public joint stock companies to implement urban residential construction, operation and transfer to the state system (BOT), according to Law No. 50 for the year 2010.

Facts and Figures:

“Informations”

* Kuwaiti population: 1,118,911 inhabitants until 31/12/2009, according to the Public Authority for Civil Information guide.

* Average rate of the Kuwaiti family size: 8.7 persons / units.

* Number of Kuwaiti families: 230,295 Kuwaiti family until 31/12/2009, according to the Public Authority for Civil Information guide.

* State provided housing units for number 93,040 Kuwaiti families, representing about 40% of the current total number of Kuwaiti families.

* The cost of government house currently has about 60 thousand dinars (about 205 thousand US dollars).

* Gives the citizen who devoted his residential housing loan of KD 100,000.00 voucher (about 320 thousand US dollars).

• Foundation paid for eligible residential care instead of a monthly rent of 150  KD / month (US $ 500 approx.) While getting to residential care. 

  

  

  

  

Process of Planning & General  Government Over all Control.

How a Blacksmith’s hammer linked to the Parliament president’s Hammer ?

As will be well described below, how the inputs start to collected from deep down of the organisational hierarchy. How the construction site blacksmith hammer linked to the parliament president famous wood hammer?

Although it sounds childish, but with a deeper look at the inputs moving to the process and outputs.

Figure.1 clearly shows the PLAN phase where the Government start it’s planning blue prints with continuous meeting and decision mechanism side by side with parliament members whom been assigned by the voters.  Voters who are much more like the shareholders and board members.

Based on previous numbers, monetary figures, demographic numbers, and supply and demand ability. PLAN the guidelines/objectives so the minister and his undersecretaries shall follow. And here we get to the projection where the DO phase start. of managment control . DO. Where the minester and his/her cabinet works by using information, managers can controle entity’s activity on each field and can act on it in real time. In terms of modern activities, information becomes very important within the entities. ACT by implemented more widely in the analysis performed in order to sustain the relevant decision, within the main purpose and other purposes of the ministry which is the projects mostly and here we talk about "planning", so the strategy has two aspects:-a design strategy,  -follow-up strategy and implementation. Check  Back to the high regulators Government and parliament members. Checking on the progress of the strategy planned. 

Hierarchy

Clearer picture

Now as the picture main frame starts being clear after a vague  look. I recommend to follow the Public Authority for housing welfare’s hierarchy from top to the deep bottom, then will resume explaining the process back words from  Bottom-Up    

                                    

          

     

    

  

  

      

Contractor’s BSC

What Figures Display

Flow of informations

Figures “Bottom-Up”

1. Start with Daily report of site position (work, labour, machinery, quantities, work to be). Refer to Appendix.2
2. Clearly show from the first day of contract, beginning 
3. Receiving & registering material
4. Working with materials
5. Checking the work-> approved or disapproved—> documentation manually. Refer to Appendix.1
6. Register the work ( quantity & quality i.e. by meter squares, numbers, percentages )
7. Fill up the end day report.
8. Measure the contractors and its sub.Contractors work, ability, collaboration and quality to work.Figure.6

1. Collect infos in data number, qualities, index and payments in KD described in no. & graphs. Refer to Appendix.3
2. Send the monthly payments and report up to chairman of sites. Refer to Appendix.3&4
3. Chairman sites collects data of projects to be send to chairman of the HQ.
4. HQ chairmans collect monthly reports and report it in one single report about the position of projects working.
5. Send Report to the Assistant undersecretary for project implementations.
6. Monthly meeting with the minster, and  under secretary with his Assistance undersecretaries. Discussing how to collaborate and Measure the Ministry projects, employees, demand, supply, financials, public relations..etc and how to fill up each other.
7. Finally issue the monthly report on the 21st of the month to the minster.
8. Minster discuss the ministry reports with government cabinet.
9. Government presiding H.H show the parliament the stages on progress.  

Figure.5 

As described by the previous, starting for the strategy set by government  and approved by parliament, with guid lines from the minster cabinet. Start the process of gathering informations tangible and intangible informations. With the objective of MEAURE how work and track performance using indicators like EARNED VALUE MANAGEMENT  EV (COST PROFIT ANALYSIS).  

Which is a tool to measure..Following the progress relates cost, schedule and technical problems, then communicate with seniors and managers in formal standards by REPORTS as a concise summary. Extracting the knowledge from the data supplied and LEARN how to, support the decision to identify the opportunities a better improvements, allocating resources. Which will lead, to  IMPROVE an implement decisions that leads the activities and operation to efficient level. Closing the operating cycle with knowledge transfer within the entity i.e.Human Capital. Plus avoiding and learning from project to project what is best and better such thing, provide a better forecast for the predicted projects.

Conclusion

Accounting information system (AIS), can be used in many different organisations/entities, either public or private, with each fix and adjust such information flow to its policy, standards and situation, such system will guid to better decision making within the organisation, with any economic related organisation/entity, it should follow with a careful eye on the value of efficiency especially the economic efficiency, which lead to more competitive outcomes/products to the customers/citizens  in our case . 

(AIS). Is essential in business today, many sectors, survival and the ability to achieve strategic business goals is difficult without the extensive availability abd use of informations.

References

1. Atkinson, A. A. (2012). Management accounting : information for decision-making and strategy execution / Anthony A. Atkinson ... [et al.]. Harlow : Pearson, c2012.

1. Briciu S., 2006. Managerial accounting. Theoretical and practical aspects, Economica Publishing, Bucharest

1. Briciu S., 2008. Variable and fixed costs in company management: Annales Universitatis Apulensis Series Oeconomica, 10(1), pp.: 164 – 17

1. Briciu S., Căpuşneanu S., Rof L., Topor D., 2010. Accounting and management control. Tools for measuring the performance on an entity, Aeternitas Publishing, Alba Iulia.

1. Gardner, C. (2000). Accounting: An Introduction by Peter Atrill, Eddie McLaney, and David Harvey. Accounting And Finance -Sydney Then Oxford-, 40262-263.

1. Public Authority for housing welfare, Project no. 1225/2013-2014

1. Topor, D., Ioana, D., & Puţan, A. (2011). THE ROLE OF COST INFORMATION IN DECISION-MAKING.CASE STUDY. Annales Universitatis Apulensis - Series Oeconomica, 13(2), 315

1. www.housing.gov.kw

Appendix