♣29♣Management Accounting
29.1 Introduction
The owner(s) of a company should make sure that the interest of the management is aligned with theirs.1 In the company form where the owners aremost remote from themanagement (the share company), the owners will have at least once a year an Ordinary General Shareholders Meeting. It is in that meeting that the supervisory board is chosen by a majority of votes – that are allocated in function of the number of shares owned.
In that step, the owners will choose supervisory board members that they can trust to align the executing management's priorities with those of the owners. This supervisory board will typically set goals for the executive management in the form of KPIs (Key Performance Indicators), and the variable pay of the executive manager depends on the results of these KPIs.
For example, the executive management might be pushed to increase share value, market share, and profit. The executive management in it is turn will then be able to set more concrete goals for team leaders who in their turn will put goals for the executing workers. This cascade of goals and their management is “management accounting.”
29.1.1 Definition of Management Accounting (MA)
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