Intermediate cost analysis and management 1 1 determine the difference between internal and ext

What Do Accountants Do?• Provide INFORMATION that is USEFUL to Decision Makers • Information must be RELIABLE • Free from Bias • Verifiable • Information must be RELEVANT • Will make a d

Course Introduction/

Determine the Difference Between Internal and External Reporting

Terminal Learning Objective

• Task: Determine the difference between internal

and external reporting

• Condition: You are training to become an ACE

with access to ICAM course handouts, readings, and spreadsheet tools and awareness of

Operational Environment (OE)/Contemporary

Operational Environment (COE) variables and

actors

• Standard: with at least 80% accuracy:

• Define the 4 characteristics of accounting information

• Identify key components of GFEBS output

• Classify GFEBS reports as internal or external

Cost Maturation Process

Single Use

Estimated Future Cost

Cost Benefit Analysis

Cost Informed Decisions

Persistent Use

Expected and Actual Cost

Continuous Improvement

Cost-Managed Organizations

Cost-Managed Enterprise

Cost War Cost War High Cost War Full Insurgency Intensity Conflict Spectrum Operations

Transforming the Army:

Four Requirements for Success

Need Status Action

Exploit existing strong leadership capabilities ACE Build strong staff, strong organization

Select, develop ACEs (Asst to Comdr – Enterprise) Design and deliver advanced training

Process Modify “winning the cost war” template

as needed Cost Info Use new tools as they come online

• Principles of Cost Analysis and Management

• Targeted at entry level CP11 Personnel, Sergeants,

Lieutenants, Junior Captains

• Course Length: Three Weeks

• Pre-requisites: On Line Math Refresher

• Intermediate Cost Analysis and Management

• Targeted at mid career CP11 Personnel, Staff Sergeants

and above, Senior Captains, Majors and above

• Course Length: Three Weeks

• Pre-requisites: On Line Math Refresher

ACE Development: PCAM & ICAM

All CEs will require basic, advanced, and master skills with

a concentration in:

 Readiness – Capacity management and force cost analysis

 Materiel – Logistics and working capital funds cost analysis

 Human Capital – Manpower cost analysis

 Services & Infrastructure – Services and capital asset costing

FAs and CPs that are common

to all CEs should train to become a master in any CE

Stackable Credentials

* NOTE: Stackable credentials are based on Financial Management (BC36/CP11) career field

demands for cost management, which is the Army maximum; other career fields will use a

subset of these requirements.

Based on the Financial Management Career Field

© Dale R Geiger 2011

7

ICAM

• Develop advanced cost management skills

• Next step for those already fulfilling the role of ACE or who wish to become and ACE

Purpose of Course

• Develop skills in Cost Management

• Includes conference, demonstration and practical

exercises, and case study

• Emphasizes critical thinking

• Introduces Excel templates to facilitate calculations

• Introduce and apply skills in Leadership Driven

Management

• Heavy emphasis on case studies requires students to analyze real-world scenarios.

Remember Valley Forge

• Refer to the article by Ms Matiella

• Why does the Army need to become more

Program of Instruction

Overview

Understanding Cost Learning the Process Applying the Process

Cost Benefit Analysis CBA Examples

Cost Management After Action Review Cost Management Cases

Cost Control Theory Org Based Control Role Based Control Output Based Control Change Management

What Do Accountants Do?

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

What Do Accountants Do?

• Provide INFORMATION that is USEFUL to

Decision Makers

• Information must be RELIABLE

• Free from Bias

• Verifiable

• Information must be RELEVANT

• Will make a difference in the decision

• Timely – frequency and lag time

• Relevance is in the eye of the User

Who are the Users?

• Users may be INTERNAL or EXTERNAL

• Internal users are:

• Managers and Leaders

• What types of Decisions might they make?

• What information might they need?

• External users are:

• Investors, Creditors, Regulators and Legislators

• What types of Decisions might they make?

• What information might they need?

Who are the Users?

• Users may be INTERNAL or EXTERNAL

• Internal users are:

• Managers and Leaders

• What types of Decisions might they make?

• What information might they need?

• External users are:

• Investors, Creditors, Regulators and Legislators

• What types of Decisions might they make?

• What information might they need?

Who are the Users?

• Users may be INTERNAL or EXTERNAL

• Internal users are:

• Managers and Leaders

• What types of Decisions might they make?

• What information might they need?

• External users are:

• Investors, Creditors, Regulators and Legislators

• What types of Decisions might they make?

• What information might they need?

Who are the Users?

• Users may be INTERNAL or EXTERNAL

• Internal users are:

• Managers and Leaders

• What types of Decisions might they make?

• What information might they need?

• External users are:

• Investors, Creditors, Regulators, Legislators and

Citizens

• What types of Decisions might they make?

External User Needs

• Examining an organization’s performance over time demands CONSISTENCY

• Assures users that the information is prepared in the same manner over multiple time periods

• Deciding whether to fund competing

organizations or programs demands

COMPARABILITY

• Assures that the information from all organizations

is prepared according to the same set of principles

External User Needs

• Examining an organization’s performance over time demands CONSISTENCY

• Assures users that the information is prepared in the same manner over multiple time periods

• Deciding whether to fund competing

organizations or programs demands

COMPARABILITY

• Assures that the information from all organizations

is prepared according to the same set of principles

External User Needs

• Examining an organization’s performance over time demands CONSISTENCY

• Assures users that the information is prepared in the same manner over multiple time periods

• Deciding whether to fund competing

organizations or programs demands

COMPARABILITY

• Assures that the information from all organizations

is prepared according to the same set of principles

External User Needs

• Examining an organization’s performance over time demands CONSISTENCY

• Assures users that the information is prepared in the same manner over multiple time periods

• Deciding whether to fund competing

organizations or programs demands

COMPARABILITY

• Assures that the information from all organizations

is prepared according to the same set of principles

External User Needs

• Examining an organization’s performance over time demands CONSISTENCY

• Assures users that the information is prepared in the same manner over multiple time periods

• Deciding whether to fund competing

organizations or programs demands

COMPARABILITY

• Assures that the information from all organizations

is prepared according to the same set of principles

Consistent Combat Ship

16" guns

landing gates periscope

Two Sides of the Same Coin

test dynamics user need

needed learning customized

use responsive continuous improvement external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Two Sides of the Same Coin

external reporting managerial costing

Research: System Uses at 59

OH allocation reqr costing

VMSS

WVA

FGIS

Research: System Uses at 59

OH allocation reqr costing

Research: System Uses at 59

OH allocation reqr costing

VMSS

WVA

FGIS

Research: System Uses at 59

OH allocation reqr costing

Research: System Uses at 59

OH allocation reqr costing

VMSS

WVA

FGIS

Research: System Uses at 59

OH allocation reqr costing

Research: System Uses at 59

OH allocation reqr costing

VMSS

WVA

FGIS

Learning Check

• What are the basic uses for Cost Accounting systems?

• Should all cost systems be the same?

• Why or why not?

What about GFEBS?

• General Fund Enterprise Business System

• Used Army-wide

• Permits real-time posting of financial

transactions

• Reports costs according to Budget-relevant

and non-Budget-relevant Cost Objects

• Are GFEBS reports internal or external?

Unit Cost Report

Unit Cost Report

This report shows the actual and

planned quantities and actual and

planned (average) unit cost for

various SKFs (Statistical Key Figures)

such as Headcount

Discussion Questions

• Who would use this report?

• How might they use it?

• If you were the Senior Leader of this organization, would you be surprised that your cost per

• Needs for internal cost information are as

varied as the organizations themselves

• External cost reports:

• Facilitate comparison of organizations by external users

• Are unlikely to meet internal management

information needs