Management Accounting Best Practices: A Guide for the Professional Accountant

Chapter 9

Performance Responsibility Accounting Decisions

A subtle issue that is completely overlooked by many accountants is the proper structuring of the reports that they issue to various company employees. In addition to the creation of a single, companywide set of financial statements, a considerable amount of attention should be paid to the creation of an underlying set of reports that target specific areas of responsibility, which may be at the levels of an entire division, a department, or perhaps a single machine cell. When creating such reports, the accountant may inquire about the nature of responsibility accounting, the types of responsibility centers for which reports are created, and what types of costs should be included or excluded from them. Ancillary issues involve whether a balanced scorecard or a benchmarking system should be used; in both cases, the information selected for inclusion in reports can have a significant impact on the resulting performance of a company.

This chapter discusses the answers to all of these questions. The following table itemizes the section number in which the answers to each question posed in this chapter can be found:

Section	Decision
9-1	What is responsibility accounting?
9-2	What are the types of responsibility centers?
9-3	Should allocated costs be included in responsibility reports?
9-4	What is balanced scorecard reporting?
9-5	How does benchmarking work?

9-1 WHAT IS RESPONSIBILITY ACCOUNTING?

A key task of ...