Managerial Accounting For Dummies

Chapter 16

Responsibility Accounting

In This Chapter

Organizing to implement strategy

Handing over authority and establishing accountability

Evaluating the performance of responsibility centers

Ah, teenage driving, one of the great rites of passage. The teen reaches driving age, passes the road test, and then asks for the keys. Along with the keys comes authority — not only the authority to drive a car but also the authority to go more places and to take family and friends there, too.

With this new authority comes responsibility (to drive carefully, to follow the law, and to obey any other rules parents try to enforce) and limits (driving the old pickup is okay, but keep away from the sports car). When the young driver oversteps these limits, it becomes time for accountability.

Just as a parent can’t hand over the keys to the car without setting some degree of accountability, a manager can’t delegate authority over a division of the company without also establishing accountability. Responsibility accounting is the primary tool to establish accountability throughout an organization; it involves ensuring that subordinates receive the authority to perform tasks and are held accountable ...