Discussion and 2 replies
In this discussion, we will examine how firms use budget and other information to evaluate the performance of individuals and of the firm. Students should be able to exhibit a familiarity with these concepts and how they are used.
Explain the concepts of responsibility accounting and performance evaluation in your own words. How can these be used by a firm to improve their performance? Describe a balanced scorecard and explain how it differs from a traditional evaluation approach.
Post by classmate 1
Responsibility accounting has the capability of generating financial and related nonfinancial information that is gathered to display the actual and planned activities of companies certain responsibilities. The best way to describe performance evaluation is to say that it is the foundation of a management control system. By a firm using the tools of responsible accounting, they can receive information that will help guide their business decisions when it comes to moving forward. With performance evaluation employers can rate their employees and see where they specifically need more improvement in. A balanced scorecard is a method of strategic approach as it is a structured report that is given to the managers in order to keep an eye on their employees and the work they are conducting. The difference between a balanced scorecard and a traditional evaluation is that it incorporates information not only from the past and the present making it an internal business.
Post by classmate 2
Companies give authority for certain decisions to subunits within the company called responsibility centers. For companies to evaluate their responsibility centers they use a responsibility accounting system to evaluate the performance of each center and its manager. The four centers include a revenue center, profit center, cost center, and investment center. The goal of the performance evaluation systems is to promote coordination, communication of expectations, goals, motivation, feedback, and comparing achievements to other practices in their industry. The performance evaluations are used by the top management of a company for them to assess what is happening in the day to day operations. A balanced scorecard is a performance evaluation system that takes in operational performance measures to indicate future performance. It differs from traditional evaluations by not treating financial indicators as the only measurement of performance, therefore giving a balanced view of the company.