Accountancy, Cost Accounting, creative accounting, Edrington Group, ethics, Financial Accounting, Financial and Management Accounting, Management Accounting, MBA blog, Professor Barry Koch, Professor Margaret Stewart, Strathclyde Business School, strathclyde mba, Student Blog, University of Strathclyde
To allay the fears of those who have had practically no knowledge or experience in accounting, and yet feel quite excited about Accountancy, watching the introductory video of Professor Barry Koch on myplace would indeed be quite rewarding. Professor Koch reassures students that the main objective of this module is not to turn them into expert accountants. And that agreed he and Professor Margaret Stewart covers in this module a remarkably wide range of issues and topics in Financial, Cost and Management Accounting.
To begin with, one looks at the role of an accountant in an organisation and slowly moves on to interpreting basic accounting statements using ratio analysis in conjunction with the basic accounting concepts. Profitability, liquidity, efficiency and financial structure ratios offer an amazing insight into the functioning of a company both in the short as well as the long term, apart from helping various stakeholders who are interested in the company’s performance. At this stage, I must mention that we touch upon ‘creative accounting’ where a few companies unethically collude with their auditors and engage in ‘window dressing’ their accounts by exploiting the loopholes in the taxation-law regimes of the land.
The module further swiftly moves on to Cost Accounting where one engages with classification, nature and the ‘behaviour’ of costs. One major difficulty accountants often face, I guess, is the allocation of overhead costs which often prove to be very subjective. For example, an accountant may face real difficulty in apportioning distributive overheads such as rent, electricity, and insurance to various departments which utilize all these services differently.
The Management Accounting section of the course deals with taking short term decisions (withdrawing or introducing a new product, make or buy decisions or limiting factor) by using important concepts such as the contribution approach, “what if” decisions, and breakeven point. We end the module by briefly touching upon concepts like budgets, their importance for organisations and for determining performance measurement.
To put such things into an enabling perspective, we had Mr. Richard Hunter, Group Finance Director of The Edrington Group Ltd. He was gracious enough to share with us his knowledge and experience in managing the finance and accounts of a global firm. His recollection of acquiring the Highland Distillers and a majority shareholding in Brugal & Co, the leading producer of golden rum in the Dominican Republic, was quite instructive. All in all, the Financial and Management Accounting module proved to be very engaging and demanding to all of us who fancy negotiating such arduous and challenging financial tasks at nearly every crucial turn in our prospective careers.