The role of management accountant The eurotunnel, the company that has been experiencing financial problems was recently suspended from the London stock exchange after failing to meet the deadline for filing the account. They have been experiencing financial problems and it almost a year ago when they wrote off three billion sterling pounds. This company was involved in the construction of underground tunnels connecting United Kingdom and France. The British railway which has been facing numerous problems from misappropriation of funds to poor performance got a live line with the entry of the eurotunnel. The problem with the eurotunnel although how expensive has been said was rising of risks and there were more risks over generalisation and performance. Since the construction of the euro underground tunnel there has been poor performance and poor productivity on part of the company. There has been lack of efficiency, innovation and cost cutting strategies which will lead the company to great heights. The management accountant played an important role in the success of the construction of the tunnel. The roles he played include; 1. Product pricing and costing When setting the prices for the products to be sold, the unit per cost is considered. Depending on the market the unit selling price will be set above the unit cost. However, if faced with stiff competition, the unit price can be set at the break even point or slightly higher the break even point. At that production, the company will not be making any profit or losses. (Ask, U, Ax, C. and Johnson’s, 1996). In the case of Eurotunnel he participated in estimating the costs to be incurred and the breakeven point for the project. He also together with finance manager estimated the future benefits that will accrue from the project. 1. Maintaining day to day operational control The management accountant assisted in ensuring that wastages and losses were avoided, this is because of need for the company to have operational control. That wastage which cannot be attributed to any unit of production were amalgamated and recalculated for the value of one unit was done by management accountant. iii. Planning and decision making. The company had good planning and decision making process. They have budgets which are annual plans. They have capital investment plans and other strategic plans. Before taking any decision, the company took into account budget plans or five year plans. The budget for the company involved the day to day operations of the company in terms of finances and forecast. The budget is short term but will have long term effects on the long term sustainability of the company. All this was the work of the management accountant IV Monitoring performance. For any company to succeed in production especially a company faced with a competition from giants will need to strategically control and monitor the performance of each unit or cost centres. This company left the activity to the management accountant. He monitored operations through the use of cost centres which they maintained. They have monitored cost elements such as direct materials, variable overheads, fixed overheads, direct wages and other costs. In accumulating form for a particular period which is normally per day, and by the end of the day the management accountant produces reports showing the cost incurred in production and how much is attributable to each unit (Ask, U, Ax, C. and Johnson’s 1996); The impact of the eurotunnel budget on employee behaviour. The budgetary control of eurotunnel transformed the behaviour of employees and their service delivery. With the method of cost cutting, the employees felt that the method of cost cutting was meant to reduce some of them from their jobs. Some employees resisted, others decided to go work slow. Employees’ behaviour in any organisation is paramount to the success of the organisation. With the recent huge debts and a talk of cost reduction, the employees have felt demotivated as some of them think they will be retrenched. The preparation of the budget by the management accountant showing cost cuts that were needed led to people having defensive behaviours. Others felt frustrated, some of the employees became aggressive, others became rational while others withdrew as a sign of giving up. This shows that the budget prepared by eurotunnel management accountant was not acceptable by the employees as it was seen as a way to kick them out of their jobs. Behaviour determines the motivation the employees have and motivation is measured by rewards offered by the company. Performance Measurement in Eurotunnel Performance measurement is vital in all organizations because the organizations need to verify the validity of the selection methods; they also need to do performance measurement in order to improve productivity of the organization. In the case of eurotunnel, performance measurement is vital so as to see the profitability and to determine whether it is viable to continue financing the company. It also measured the effectiveness of the management of eurotunnel including the management accountant. As much as this may seem an important and key aspect of management, still it has a lot more difficulties associated with it. Some of the main factors that may make performance measurement to be more challenging are the measurement problems that make it impossible the supervisors (those in charge of the performance measurement) to tell the juniors or subordinates that they are below the average standards. In order for eurotunnel to do performance measurement well, then they should carefully study the job, systematically and scientifically, in order to determine the nature and characteristics of the job, knowledge, skills and experience required for the successful performance of the job. They should collect all the vital information related to the job. They should then look at the specific individual tasks that comprise the job and qualifications necessary to do the job. This is called job analysis that involves determining the content of the job in terms of what the worker is expected to do, methods and techniques used, and lastly, the conditions and skills required for the job. Eurotunnel does performance measurement in order to determine whether a particular job is done according to the required standards. It also helps the organization to improve efficiency due to better placement and frequently suggested methods of improvement. It also assists management in proper allocation of authority and responsibility by describing duties of each job and the interrelationships among jobs. This facilitates matching employer skills to the job requirements. All this will facilitate job evaluation and performance appraisal which are necessary for wage evaluation, checking on the working conditions and also it is used as a basis for promotions and transfers. In formation about the job is gathered through interviews, observations, sampling and questionnaires. Rewards of employees In order for a reward system to be effective in eurotunnel, employees should be recognized. Therefore, eurotunnel should adapt the following essentials for employee reward and recognition. 1. Set clear standards which the management uses to remind employees in their important value to the organisation. The standards set should have a common goals, values and principles to all employees. The management of eurotunnel should take time to clarify these values, principles to the employees and ensure there is feedback from the employees in relation to their performance. In such a situation, any reward to employees will have a meaning. 2. The system set on the management accountant on the mode of reward should pay attention to the employees needs and have personalised recognition for the purposes of success. It should also match the reward with the people. Therefore, the employees of eurotunnel should expect a reward for better performance in order to have positive result and this reward system that is expected for eurotunnel is the reward of congratulations and morale building since the company dose not have enough resources to match rewards.
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