Accounting and Control for MBAs Shyam Sunder Yale

Transcript:Accounting and Control for MBAs Shyam Sunder Yale:
Accounting and Control for MBAs Shyam Sunder Yale School of Management AAA: APLG/FSA Annual Seminar San Antonio, Feb 9-11, 2014 2/9/2014 Sunder: Accounting and Control in MBA 1 Accounting and Control and MBA MBA education to manage three overlapping levels of society: organizations, markets, and economy Data, information, contracts, and measurement process common to all aspects of management Sound education in A&C to understand, operate these processes, efficiently use their output, and adapt to changes in environment Explores the interfaces between management for business and society and A&C to facilitate thinking about the latter’s role in the MBA curriculum. 2/9/2014 Sunder: Accounting and Control in MBA 2 A&C as Solving Problems of Managing Many think of A&C as a set of techniques or rules to generate the right answers A&C do use a collection of concepts, rules, and techniques; e.g., Assets, recognition, conservatism, and costing just as: NPV in finance, diversification is in investments, and throughput rate is in operations Too easy to lose sight of the problems of managing organizations, markets and economy that led to the development of these concepts and techniques over the millennia MBA education calls for understanding challenges of management, and ability to devise A&C systems to meet them Stereotypical perspective of accounting-as-a-mechanical-set-of-rules-of-bookkeeping fails to serve management education 2/9/2014 Sunder: Accounting and Control in MBA 3 Consequences of Failure This note identifies five basic functions of A&C in organizations, markets, and economy. Daily press reports of breakdowns of A&C, tragic and avoidable socio-economic consequences Inability or unwillingness of managers or policy makers to devise effective A&C Weak systems cynically manipulated for short term gains Such problems not just ethical, but are rooted in the failure to understand the function of A&C at various levels of society MBA education can be designed to emphasize the systemic role of, for example, budgeting, transparency, and public disclosure A&C calls for a careful balance between written rules and social norms, because no written rule can be evasion and manipulation proof. 2/9/2014 Sunder: Accounting and Control in MBA 4 Organization as a Set of Contracts among Participants Organizations—business as well as non-business—can be seen as sets of contracts among their participats Three broad classes of participats: from financial capital, labor (managerial as well as other), and product (input as well as output) markets All seek their own respective objectives through their participation in the organization; government and community constitute the