Management And Accounting Web

Responsibility Accounting Discussion Questions

Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Responsibility Acc MC Questions | Responsibility Acc Main Page | Graduate MA Course

1. What do the terms centralized and decentralized mean in terms of organization structure? (See the Responsibility Account concept summary).

2. Define the term authority.

3. Define responsibility.

4. What does decentralization require in terms of authority?

5. What does the term delegation mean?

6. Can responsibility be delegated? Explain?

7. What is responsibility accounting? (See the Responsibility Accounting exhibits, the Responsibility Account concept and McNair & Carr summaries).

8. Does your answer to 7 contradict your answer to 6?

9. What are revenue centers and how are they evaluated in traditional responsibility accounting? (See the Responsibility Account concept summary and the Responsibility Accounting exhibits ).

10. What are cost centers and how are they evaluated in traditional responsibility accounting? (See the Responsibility Account concept summary and the Responsibility Accounting exhibits ).

11. What are profit centers and how are they evaluated in traditional responsibility accounting? (See the Responsibility Account concept summary and the Responsibility Accounting exhibits ).

12. How does an investment center differ from a profit center? (See the Responsibility Account concept summary and the Responsibility Accounting exhibits ).

13. How are investment centers evaluated in traditional responsibility accounting? (See the Responsibility Account concept summary and the Responsibility Accounting exhibits ).

14. What is goal congruence? (See the Responsibility Account concept summary).

15. McNair and Carr (1994) and McNair (1996) discuss three types of control tools. What are these tools? (See the Responsibility Accounting exhibits and the McNair & Carr summary). (See the Simons summary for some other control tools).

16. According to McNair (1996) there are two types of action tools. What are these and how do they relate to the responsibility accounting controversy? (See the Responsibility Accounting exhibits).

17. What are the key elements of the responsibility accounting controversy? Discuss each element. (See the Responsibility Accounting exhibits and McNair 1990 and Elliott 92 summaries).

18. McNair (1990) mentions something she refers to as "goal displacement" associated with traditional responsibility accounting. What is goal displacement? (See the McNair 1990 summary).

19. According to McNair (1990), the traditional control concept is ambiguous in a team based system? Why? (See the McNair 1990 summary).

20. McNair (1990) indicates that the new activity-based responsibility accounting differs from the traditional concept of responsibility accounting by shifting from: (See the McNair 1990 summary).

Independence to ________________

Individuals to ___________________

Cost control to ___________________

Cost to ____________________

Outcomes to _________________

Accountability to ________________

21. What type of individual reward system does McNair recommend? (See the McNair 1990 summary). (See Shields & Young for more on compensation).

22. What are the main arguments to support traditional responsibility accounting? (See the Responsibility Accounting exhibits and the Responsibility Account concept summary).

23. What are the main arguments against traditional responsibility accounting? (See the Responsibility Accounting exhibits and the Responsibility Account concept, Elliott 92 and Shields & Young summaries. Also see Russell Ackoff, Systems Based Improvement Video - Part 1).

24. What is the controllability concept related to responsibility accounting? (See the Responsibility Account concept summary).

25. How does the controllability concept differ from the SPC concept of control? (See Chapter 3).

26. What was Howard Greer's main point in the Chop Suey Caper, and how is this related to responsibility accounting? (See the Greer summary).

27. What does the term "stovepipe organization" mean? (See the Responsibility Account concept, Dolk & Euske and Elliott 92 summaries).

28. How can the problems related to traditional responsibility accounting be resolved? (See the Responsibility Accounting exhibits, the Dolk & Euske, Shields & Young and Elliott 92, Cooper & Slagmulder and Schonberger summaries). (For more see MAAW's Whole Systems concept, and advocates of whole systems thinking such as Deming, Deming & Goldratt, Johnson, Senge and Castellano, Young & Roehm).

29. Dolk & Euske (1994) discuss the need for model integration. (See the Dolk & Euske summary). Do current enterprise resource planning (ERP) and enterprise performance measurement (EPM) systems provide this needed model integration? (See the Davenport summary and MAAW's ERP/EPM topic for more information on ERP/EPM).

30. Is the main problem with the functional, (stovepipe or subsystem) focus, technical or behavioral (e.g., organization culture)? Discuss.

31. An issue closely related to responsibility accounting is the controversy over budgeting and how budgets are used. For example, Jensen describes a problem with typical executive compensation plans where bonuses are based on budget targets. He argues that corporate budgeting is a joke because it encourages managers to lie, cheat, lowball targets and inflate results. Explain Jensen's argument and proposed solution. (See the Jensen summary).

32. Hope and Frazer go even further than Jensen and argue that budgeting and the command and control culture used by most corporations should be abolished. What is their proposed alternative? (See the Hope & Frazer summary).