Managerial Accounting Insurance Australia Group Limited

Question: Discuss about theManagerial Accountingfor Insurance Australia Group Limited. Answer: Introduction The report aims to present the organizational performance based on financial and non- financial measures including the analysis of accounting concepts for cost management. In order o present the report, a public listed company in Australia has been selected i.e. Insurance Australia Group Limited based on the insurance industry. To present the report, organizational cost roles and management costs have been evaluated for the current year information 2016. Analysis would be considered based on the management control theory along with the performance key measures. Background Material Major concept of the present report is analysis of cost roles and management accounting for the selected organization Insurance Australia Group Limited that assists the organization to achieve the desired goals. Accordingly, it is essential to include the appropriate performance management activities in the organization to monitor the business costs, functions and other non- financial measures. Accordingly, Insurance Australia Group Limited adopted management control theory to plan, organize and execute the business functions to maintain the business standards, manage business costs and maximize performance (Iag.com.au. 2017). The management accounting of Insurance Australia assist the organization for planning, organizing, controlling and making decisions for business activities. Academic Theory in Relation to Company Accounting Systems and Performance measurement Systems It has been analyzed that the primary aim of Insurance Australia Group Limited is a multinational insurance organization having its primary operations in the region of Australia and New Zealand. The organization has 70% of shareholding that issues insurance business under the same business name. Peter Harmer is the key person of the organization while the current revenue amounted to $9.78 billion and profit of the organization amounts to $1.23 billion (Iag.com.au. 2017). Companys performance depends on the performance and activities of the management and senior officials that is based on several factors. Performance of the senior managers and executives would be measured on the basis of performance allocations and percentage of target achieved (Henri, Boiral and Roy 2016). The management of the organization considered performance scorecards based on next- generation performance to comply the unique and relevant requirements of insurance business. Applying the method of performance wheel for measuring performance the management considered performance wheel to identify and monitor the business activities weakness in the internal control system. Accordingly, the measurement of the management performance has been based on the short- term as well as long- term business goals vesting the optimum business production policies. Individual Reports on Insurance Australia Group Limited In view of the organizational business plan in Insurance Australia Group Limited, it has been determined that the senior executives prepared and planned the financial budgets effectively resulting in generating highest revenue in Australia. Budget forecast in terms of trading and product costs including adoption of business activities for investing in the business of safety insurance, general insurance and property insurance has been done effectively (Bedford, Malmi and Sandelin 2016). Further, business principles and accountability of Insurance Australia has been analyzed and can be said that the organization complied the regulations of GAAP and IFRS to recognize the business transactions. It has been analyzed that the operating performance of the company reflected increased value since the growth in insurance margin during 2016 was 14.3% while the insurance margin in 2015 was 10.7%. Besides, underlying insurance margin increased to 14.0% in 2016 whereas 13.1% in 2015 (Iag.com.au. 2017). Other than that, organizational non- financial performance in terms of employment condition, process of trading and management of business costs have been performed by managing the fundamental principles. The management of the company implemented the management control theory by considering the theory of constraints, technology strategy as well as internal training to the employees for processing the insurance guidelines and regulations (Otley, 2016). Management of Insurance Australia also focused on maintaining the corporate governance requirements, communication process between the executive employees and their subordinates to improve the business performance. Management mainly focus es on the internal training program for the employees to explain the business strategies and procedures to perform the functions in an effective manner. Conclusion It can be concluded that the management of Insurance Australia Group Limited considers management accounting principles and theory to improve the performance with respect to appropriate planning, monitoring and controlling the accounting procedures. Further, the organizational management used constraint theory, technology strategy to improve the business performance that includes training program, communication sessions, compliance of governance and processes to improve business methodology. It has been noticed that the organization experienced higher growth in operating performance during the current year 2016 hence the organization is said to be efficient. Reference List and Bibliography Bedford, D.S., Malmi, T. and Sandelin, M., 2016. Management control effectiveness and strategy: An empirical analysis of packages and systems.Accounting, Organizations and Society,51, pp.12-28. Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices.Journal of Operations Management,32(7), pp.414-428. Henri, J.F., Boiral, O. and Roy, M.J., 2016. Strategic cost management and performance: The case of environmental costs.The British Accounting Review,48(2), pp.269-282. Hopper, T. and Bui, B., 2016. Has management accounting research been critical?.Management Accounting Research,31, pp.10-30. Iag.com.au. 2017. IAG Limited. [online] Available at: https://www.iag.com.au/ [Accessed 1 Jan. 2017]. Otley, D., 2016. The contingency theory of management accounting and control: 19802014.Management Accounting Research,31, pp.45-62.