How to Use the Firm's Internal Accounting System for Decision-Making and Control

THE UNIVERSITY OF CHICAGO

GRADUATE SCHOOL OF BUSINESS

Managerial Accounting Professor Andrew J. Leone

Office: (716) 275-4714

Fax: (716) 442-6323

email: leone@simon.rochester.edu

COURSE OVERVIEW

This course deals with managerial accounting; how to use the firm's internal accounting system for decision-making and control. This is a problem-solving course, and as such requires you to gain familiarity with the topics by working problems.

This course relies considerably on problems and cases to motivate class discussion. We will use a case study in most of the classes. Cases are a powerful vehicle for learning how accounting numbers are created and used. Your responsibilities are to prepare diligently and to help develop the intellectual content of the class discussions by contributing to them yourself and by expanding on your classmates' contributions.

The background for the course is provided in the textbook, Accounting for Decision Making and Control, 3rd edition, by Jerry Zimmerman. Readings and problems from this book are assigned for the class sessions. The primary goal of the readings is to illustrate how accounting systems can help you to make better decisions and to motivate people in your organization. As additional /optional reading I have included course notes by Keating in your packet.

COURSE REQUIREMENTS

The most important requirement for this course is a thorough preparation and analysis of the assigned cases and active participation in the classroom. The course is built around the case method.

The cases included in this course represent broad organizational situations. In some instances, the case may represent a good system and you are expected to learn what makes the system work well. Other cases may present a system which has failed and the objective should be to learn from the failures. Most cases seldom present examples of absolutely perfect or totally flawed systems. There are always some weaknesses in the best of management practices. However, the evaluation of these weaknesses is always relative to the resources required to correct the weaknesses. Thus, it may be costly to remove flaws. When analyzing cases, any recommendation for changes should carefully weigh the organizational costs involved.

IN THE CLASSROOM

My expectation is that you will come to the class having already thought through and analyzed the assigned problems and cases. This way, we can devote the bulk of the class time to thinking about and responding to each other's analyses of the problems and cases and only the necessary minimum to getting the facts out.

I encourage active student participation in class. I should point out that most students typically tend to under-estimate -- rather than over-estimate -- the worth of what they have to say. Thus, if you are ever in doubt, I would encourage you to speak up instead of staying quiet.

The vast majority of managers' interactions with others are oral. Managers generally spend very little time reading, and even less time writing reports. For this reason, the development of oral skills is given a high priority in this course. The classroom should be considered a laboratory in which you can test your ability to convince your peers of the validity of your approach. Some people learn more by listening to others than they do by engaging in discussions themselves. Thus, while it is essential for the success of this course that we have excellent class discussions, it is not necessary that everybody actively participate all the time.

I hope that you will be highly energized the night before class when you are preparing for the cases and lectures, and relaxed during class. In class discussions we will be hard on ideas, but soft on people. My past experience suggests that if you spend several hours preparing and the class environment is intellectually vibrant, but not intimidating, you will want to participate. Please note that there is no need to contribute in every class. Some of the best contributors have been those who participated in only a handful of sessions. Their contributions, however, were truly insightful and persuasive. The issue is one of quality not quantity or frequency.

Most class sessions with an assigned case will begin with one student being asked to take 5 minutes to provide an analysis of the case. An effective lead-off can do a great deal to enhance class discussion. It sets the tone and quality level and encourages the class to probe more deeply into the issues of the case. After the individual lead-off presentation, the discussion will be opened to the remainder of the group. Others may choose to build on the lead-off discussion, to present a significantly different alternative, or focus sharply on one or more issues which seem to have been developed inadequately or perhaps overlooked.

My role in the class is to help facilitate discussion. In part, I serve as a recording secretary, clarifier, and intensive questioner in order to help you present and develop your ideas. I manage the class process to ensure that the class achieves an understanding of the case situation. Clearly, there is no single correct solution to any of these problems. There are, however, a number of wrong solutions. There are also solutions which are inadequately supported with analysis, and there are solutions and analyses which are ineffective because they are not presented in an orderly and persuasive fashion. We should work together to see to it that each class session is a lively, stimulating, and intellectually rewarding venture in group learning. We are individually and collectively responsible for achieving that end.

Each case has its own integrity and, thus, it stands on its own. You may draw on personal experiences if you believe they are substantive, insightful, and generalizable. Generally, we are not concerned with what was the actual outcome of the case. Such an approach would imply that there was a "right answer." The outcome of a situation may or may not reflect a good solution. In those instances where there was a particularly interesting outcome, it will be shared with the class.

Many of the cases end with an obvious question or issue to be resolved. Others do not. At the end of this syllabus you