Managerial Accounting and

Corporate Responsibility

Ahmed El Zayaty, PhD

Scope of Managerial Accounting:

Traditionally managerial accounting books focus on budgeting, Cost-Volume-Profit analysis, decision-making, and performance evaluation.

The concept of “Balanced Scorecard” has been introduced recently as a powerful managerial tool. See hand-out.

• Balanced Scorecard and Social Responsibility: Management should integrate social responsibility into corporate strategy. Then expand the balanced scorecard to include social responsibility as one of the strategic objectives.

Stakeholders Theory for Corporate Social Responsibility:

Goodpaster (1991) indicated the insoluble conflict between the Fiduciary duty of management to shareholders and the moral obligation to run the companyethically. The former may lead to business without ethics, while the later may lead to ethics without business.

However, the literature on stakeholders theory has not contrasted it with the shareholders theory in that fashion. The literature suggests that stakeholders theory forces decision makers to reflect on the purpose of the company in a broader societal context. Management should consider that business and society as intertwined. Helping society helps business to grow and that helps sustainability of society.

Managerial Accounting and The Concept of Stakeholders:

Management are required to involve stakeholder’s claims into a business logic. For example:

- Employee loyalty can be considered as an intangible asset.

- Community support is invaluable success factor. and so on.

Incorporating Corporate Responsibility into Course content.

Cost-Volume-Profit Analysis:

Accounting vs. Economic:

The use of opportunity cost concept.

The use of Economic Value Added concept.

( See hand-out)

- Budgeting and social responsibility.

- Decision making and social responsibility.

- Total quality Management and Social responsibility.

- See Hand out.

Expansion of Course Learning Outcomes:

Course learning outcomes has been expanded to include management role in corporate social responsibility. Performance evaluation measurements have been extended to include measurements of corporate contribution toward sustainable business and society.

Teaching Methodology:

A Case study approach and simulation are used to highlight the role of corporate social responsibility and its implication for corporate financial performance.