CH 4

Sarbanes-Oxley Act of 2002 (SOX)

A congressional act that enhances internal control and financial reporting requirements and establishes new regulatory requirements for publicly traded companies and their independent auditors.

Extensible Business Reporting Language (XBRL)

A data tagging system that enables companies to release financial and business information in a format that can be quickly, efficiently, and cost-effectively accessed, sorted, and analyzed over the Internet.

Chartered Global Management Accountant (CGMA)

A designation available to qualifying American Institute of Certified Public Accountants (AICPA) members that is meant to recognize the unique business and accounting skill set possessed by those CPAs who work, or have worked, in business, industry or government.

Total Quality Management (TQM)

A management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function.

Lean Thinking

A philosophy and business strategy of operating without waste.

Integrated Reporting

A process resulting in a report that describes how a company is creating value over time using financial, manufactured, intellectual, human, social, and natural capital.

ISO 9001:2008

A quality-related certification issued by the International Organization for Standardization (ISO). Firms may become ISO 9001:2008 certified by complying with the quality management standards set forth by the ISO and undergoing extensive audits of their quality management processes.

Audit Committee

A subcommittee of the board of directors that is responsible for overseeing both the internal audit function and the annual financial statement audit by independent CPAs.

Chief Executive Officer (CEO)

The position hired by the board of directors to oversee the company on a daily basis.

Chief Financial Officer (CFO)

The position responsible for all of the company's financial concerns.

Controller

The position responsible for general financial accounting, managerial accounting, and tax reporting.

Chief Operating Officer (COO)

The position responsible for overseeing the company's operations.

Treasurer

The position responsible for raising the firm's capital and investing funds.

Institute of Management Accountants (IMA)

The professional organization that promotes the advancement of the management accounting profession.

Throughput time

The time between buying raw materials and selling finished products.

American Institute of Certified Public Accountants (AICPA)

The world's largest association representing the accounting profession; together with the Chartered Institute of Management Accountants (CIMA) offers the Chartered Global Management Accountant (CGMA) designation.

Cost-Benefit Analysis

Weighing costs against benefits to help make decisions.

Decision Making

Identifying possible courses of action and choosing among them.

Just-in-time (JIT)

An inventory philosophy first pioneered by Toyota in which a product is manufactured just in time to fill customer orders. Companies adopting JIT are able to substantially reduce the quantity of raw materials and finished products kept on hand.

Cross-Functional Teams

Corporate teams whose members represent various functions of the organization, such as R&D, design, production, marketing, distribution, and customer service.

Tripple Bottom Line

Evaluating a company's performance not only by its ability to generate economic profits, but also by its impact on people and on the planet. (result of sustainability)

Controlling

One of management's primary responsibilities; evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goals.

Directing

One of management's primary responsibilities; running the company on a day-to-day basis.

Planning

One of management's primary responsibilities; setting goals and objectives for the company and deciding how to achieve them.

Budget

Quantitative expression of a plan that helps managers coordinate and implement the plan. Certified Management Accountant (CMA). (p. 9) A professional certification issued by the IMA to designate expertise in the areas of managerial accounting, economics, and business finance.

Enterprise Resource Planning (ERP)

Software systems that can integrate all of a company's worldwide functions, departments, and data into a single system.

International Financial Reporting Standards (IFRS)

The SEC is considering whether to require all publicly traded companies to adopt IFRS. In many instances, IFRS vary from GAAP.

Sustainability

The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. GOLDEN RULE.

Board of Directors

The body elected by shareholders to oversee the company.

Internal Audit Function

The corporate function charged with assessing the effectiveness of the company's internal controls and risk management policies.