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People theory Organisation and management structures

Managers are people who steer an organisation towards meeting its' objectives. Management has been described as: 'the process of planning, organising, leading and controlling the efforts of organisation members and of using all organisational resource to achieve stated organisational goals.' A manager's job is to maintain control over the way an organisation does things, and at the same time to lead, inspire and direct the people under them. In a company the shareholders will elect a board of directors to represent their interests. A Managing Director will be appointed who has overall responsibility for running the company. The managing director with help from other directors will appoint senior managers to run the company. The type of managers appointed will depend on the structure of the company. Possible structures will include:

regional managers when an organisation operates on a regional basis

functional managers when an organisation is split up into various functions e.g. human resources, finance, sales etc departmental managers when an organisation is split up into departments e.g. a school, or a retailing outlet general managers - for example, an office or factory may have a general manager who functional managers report to.

Each manager in an organisation is given an area of responsibility. Typically they will have targets and objectives to meet which fit into the organisations overall targets and objectives. Managers are typically responsible for:

establishing, prioritising, and making sure that objectives are met establishing a framework for communications, and patterns of work within their area of responsibility e.g. department communicating targets, goals and results to people that work for them motivating employees setting out the administrative arrangements for their area of responsibility creating, monitoring, and making sure that budgets are achieved.

A key managerial responsibility is for the management of resources. The sorts of resources that a manager will be responsible for will include:

people - directing the activities and looking after people financial - using financial resources in the best possible way for the organisation in line with profit and sales targets. materials - making sure that materials are used in the most productive way with the minimum waste machinery and equipment - using the most appropriate machinery and equipment, and making sure that it is maintained, replaced and updated where necessary time - ensuring efficient use of time buildings - making sure that premises are safe and are being used in the best possible way information - making sure that the organisation uses the most effective information processing technologies.

Shareholders are the owners of a company. They hold shares entitling them to a share in the profits and the right to be represented by directors at board meetings. Directors are the elected representatives of shareholders. Executive directors are responsible for ongoing decision making in the business. Nonexecutive directors provide regular advice to the company but are not directly involved in the day-to-day supervision of the company. BIC is a very large manufacturer of razors, lighter, and pens. Recently it has

simplified its operations to run from large superfactories that serve large geographical markets. Product distribution is then organised by continent, with country managers reporting to their continental manager. The organisation thus has a matrix structure based on two main lines of communication - 1) by product category, 2) by geographical region. The matrix structure allows combining the benefits of a strong product expertise, together with strong operational structures per geographic area.

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This case study shows how the important roles played by people who work for the Commission are structured. It outlines how this structure helps the Forestry Commission in its vital role in protecting Britain's forests.

Meeting business needs through workforce planning

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This case study looks at why the FCO needs people with transferable skills who can adapt easily and undertake many different roles and responsibilities within the organisation.

Managing workforce requirements

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This case study shows how a dynamic and growing company needs to recruit new people with new skills to meet the energy challenges of the 21st century.

Workforce planning at British Gas

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This case study explores how British Gas manages the recruitment and selection of new employees.

Developing a Human Resource strategy

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This case study focuses on Human Resource Management within Tarmac. It looks at how workforce planning and other HR strategies enable Tarmac to meet its mission.

Management styles in the oil and gas industry

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This case study examines how different management styles may be necessary to support the variety of job roles within the oil and gas industry.

Developing an effective organisational structure

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The case study shows how Syngenta operates though a matrix structure. This involves staff from different departments working together in teams on specific projects and tasks.

Flexible working patterns

Edition 13

This case study shows how the Audit Commission has implemented flexible working practices to improve its services and meet the changing needs of its staff.

Using a range of management styles to lead a business

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This case study focuses on leadership within Enterprise. It shows how its managers use a range of management and leadership styles to support Enterprise's focus on customers.

Building Human Resources to provide a foundation for growth

Edition 10

As a result of carefully reading the Case Study, students should be able to: appreciate the importance of customer service as part of the overall product offered by organisations, understand how customer service

helps to give an organisation a competitive advantage, illustrate how customer service enables an organisation to build a strong business capable of growing faster than its competitors.

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This case study shows how Taylor Woodrow, is creating a benchmark for human resource development by matching its objectives with the needs of its employees. This places human resource development at the centre of the companys culture.

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This edition 4 case study is from Capita/DfES.

Glossary

Related Theory

Human resources planning Contemporary work patterns Methods of management Delegation and decentralisation Management structure and organisation Working arrangements

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Managing people
The world of work is changing. Outsourcing. International mobility. Talent shortages. New labour laws. Globalisation. Shifting demographics. An ageing workforce. Where, how, and for whom, people work is, in turn, transforming company structures and cultures. Over the next decade, the convergence of dominant business, demographic, and social trends will only accelerate the changes sweeping through todays workplace. The human resource (HR) function is also changingand HR leaders are under more pressure than ever to demonstrate results from their workforce practices and policies. Business leaders recognise the link between business performance and the people within their organisation. And they understand that people-related issues need to be at the heart of the boardroom agenda. As a consequence, HR managers are being encouraged to implement people strategies that support the organisations business objectives and increase accountability and transparency around people management and reporting. The bottom line: HR is increasingly seen as a strategic linchpinone that needs to work closely with operations, finance, and other corporate departments to help drive business strategy and success. PwC research into the future of the workplace has helped shape innovative people strategies within many of the world's major organisations. Our HR services focus on three core issues: international mobility, reward, and HR management. These services are delivered by our global network of 6,000 dedicated HR professionals whose members have with deep functional skills in tax, benefits, retirement, compensation, financial planning, international assignment, equity, and compliance matters. Every day, we work with organisations of every size and in many different industries to meet a wide range of HR challenges, including:

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Management and Organizations

Functions of Managers Dispelling Common Management Myths The Evolution of Management Thought Managerial Environments Decision Making and Problem Solving Organizational Planning Creating Organizational Structure Organizational Design and Structure Managing Change Staffing and Human Resource Management Understanding Teams Motivating and Rewarding Employees Leadership and Management Communication and Interpersonal Skills Control: The Linking Function Productivity and Total Quality Management Management in a Global Environment

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Management and Organizations

In today's tough and uncertain economy, a company needs strong managers to lead its staff toward accomplishing business goals. But managers are more than just leaders they're problem solvers, cheerleaders, and planners as well. And managers don't come in one-size-fits-all shapes or forms. Managers fulfill many roles and have many different responsibilities at each level of management within an organization.

Organizations abound in today's society. Groups of individuals constantly join forces to accomplish common goals. Sometimes the goals of these organizations are for profit, such as franchise restaurant chains or clothing retailers. Other times, the goals are more altruistic, such as nonprofit churches or public schools. But no matter what their aims, all these organizations share two things in common: They're made up of people, and certain individuals are in charge of these people. Enter managers. Managers appear in every organization at least in organizations that want to succeed. These individuals have the sometimesunenviable task of making decisions, solving difficult problems, setting goals, planning strategies, and rallying individuals. And those are just a few of their responsibilities! To be exact, managers administer and coordinate resources effectively and efficiently to achieve the goals of an organization. In essence, managers get the job done through other people.

The intricacies of management

No matter what type of organization they work in, managers are generally responsible for a group of individuals' performance. As leaders, managers must encourage this group to reach common business goals, such as bringing a new product to market in a timely fashion. To accomplish these goals, managers not only use their human resources, but they also take advantage of various material resources as well, such as technology. Think of a team, for example. A manager may be in charge of a certain department whose task it is to develop a new product. The manager needs to coordinate the efforts of his department's team members, as well as give them the material tools they need to accomplish the job well. If the team fails, ultimately it is the manager who shoulders the responsibility.

Levels of management
Two leaders may serve as managers within the same company but have very different titles and purposes. Large organizations, in particular, may break down management into different levels because so many more people need to be managed. Typical management levels fall into the following categories:
Top level: Managers at this level ensure that major performance

objectives are established and accomplished. Common job titles for top managers include chief executive officer (CEO), chief operating officer (COO), president, and vice president. These senior managers are considered executives, responsible for the performance of an organization as a whole or for one of its significant parts. When you

think of a top-level manager, think of someone like Dave Thomas of the fast-food franchise Wendy's. Although John T. Schuessler was elected CEO in 2000, Dave Thomas was the founder and served as the chairman of the board. He was the well-known spokesperson for the chain, until his death in 2002. Middle level: Middle managers report to top managers and are in charge of relatively large departments or divisions consisting of several smaller units. Examples of middle managers include clinic directors in hospitals; deans in universities; and division managers, plant managers, and branch sales managers in businesses. Middle managers develop and implement action plans consistent with company objectives, such as increasing market presence. Low level: The initial management job that most people attain is typically afirst-line management position, such as a team leader or supervisor a person in charge of smaller work units composed of hands-on workers. Job titles for these first-line managers vary greatly, but include such designations as department head, group leader, and unit leader. First-line managers ensure that their work teams or units meet performance objectives, such as producing a set number of items at a given quality, that are consistent with the plans of middle and top management.

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Income statement
From Wikipedia, the free encyclopedia

Accountancy

Key concepts

Accountant Accounting period Bookkeeping Cash and accrual basis Cash flow forecasting Chart of accounts Journal Special journals Constant item purchasing power accounting Cost of goods sold Credit terms Debits and credits Double-entry system Mark-tomarket accounting FIFO and LIFO GAAP / IFRS General ledger Goodwill Historical cost Matching principle Revenue recognition Trial balance

Fields of accounting

Cost Financial Forensic Fund Management Tax (U.S.)

Financial statements

Balance sheet Cash flow statement Statement of retained earnings Income statement Notes Management discussion and analysis XBRL

Auditing

Auditor's report Financial audit GAAS / ISA Internal audit Sarbanes Oxley Act

Accounting qualifications

CA CPA CCA CGA CMA CAT CFA CIIA IIA CTP ACCA ICWAI

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Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statementor statement of operations)[1] is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including writeoffs (e.g., depreciation and amortization of various assets) and taxes.[1] The purpose of the income statement is to show managersand investors whether the company made or lost money during the period being reported. The important thing to remember about an income statement is that it represents a period of time. This contrasts with the balance sheet, which represents a single moment in time. Charitable organizations that are required to publish financial statements do not produce an income statement. Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments. This statement is commonly referred to as the statement of activities. Revenues and expenses are further categorized in the statement of activities by the donor restrictions on the funds received and expended.

The income statement can be prepared in one of two methods.[2] The Single Step income statement takes a simpler approach, totaling revenues and subtracting expenses to find the bottom line. The more complex Multi-Step income statement (as the name implies) takes several steps to find the bottom line, starting with the gross profit. It then calculates operating expenses and, when deducted from the gross profit, yields income from operations. Adding to income from operations is the difference of other revenues and other expenses. When combined with income from operations, this yields income before taxes. The final step is to deduct taxes, which finally produces the net income for the period measured.
Contents

1 Usefulness and limitations of income statement

o o o o o

1.1 Operating section 1.2 Non-operating section 1.3 Irregular items 1.4 Disclosures 1.5 Earnings per share

2 Sample income statement 3 Bottom line 4 Requirements of IFRS

4.1 Items and disclosures

5 See also 6 References 7 External links

[edit]Usefulness

and limitations of income statement

Income statements should help investors and creditors determine the past financial performance of the enterprise, predict future performance, and assess the capability of generating future cash flows through report of the income and expenses. However, information of an income statement has several limitations:

Items that might be relevant but cannot be reliably measured are not reported (e.g. brand recognition and loyalty).

Some numbers depend on accounting methods used (e.g. using FIFO or LIFO accounting to measure inventory level).

Some numbers depend on judgments and estimates (e.g. depreciation expense depends on estimated useful life and salvage value).

- INCOME STATEMENT GREENHARBOR LLC For the year ended DECEMBER 31 2010 Debit Revenues GROSS REVENUES (including INTEREST income) Expenses: ADVERTISING BANK & CREDIT CARD FEES BOOKKEEPING SUBCONTRACTORS ENTERTAINMENT INSURANCE LEGAL & PROFESSIONAL SERVICES LICENSES PRINTING, POSTAGE & STATIONERY RENT MATERIALS TELEPHONE UTILITIES TOTAL EXPENSES NET INCOME 6,300 144 2,350 88,000 5,550 750 1,575 632 320 13,000 74,400 1,000 1,491 -------(195,512) -------100,885 296,397 ------- Credit

Guidelines for statements of comprehensive income and income statements of business entities are formulated by the International Accounting Standards Board and numerous country-specific organizations, for example the FASB in the U.S.. Names and usage of different accounts in the income statement depend on the type of organization, industry practices and the requirements of different jurisdictions. If applicable to the business, summary values for the following items should be included in the income statement:[3]

[edit]Operating

section

Revenue - Cash inflows or other enhancements of assets of an entity during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major operations. It is usually presented as sales minus sales discounts, returns, and allowances.Every time a business sells a product or performs a service, it obtains revenue. This often is referred to as gross revenue or sales revenue. [4]

Expenses - Cash outflows or other using-up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Cost of Goods Sold (COGS) / Cost of Sales - represents the direct costs attributable to goods produced and sold by a business (manufacturing or merchandizing). It includes material costs,direct labour, and overhead costs (as in absorption costing), and excludes operating costs (period costs) such as selling, administrative, advertising or R&D, etc.

Selling, General and Administrative expenses (SG&A or SGA) - consist of the combined payroll costs. SGA is usually understood as a major portion of non-production related costs, in contrast to production costs such as direct labour.

Selling expenses - represent expenses needed to sell products (e.g. salaries of sales people, commissions and travel expenses, advertising, freight, shipping, depreciation of sales store buildings and equipment, etc.).

General and Administrative (G&A) expenses - represent expenses to manage the business (salaries of officers / executives, legal and professional fees, utilities, insurance, depreciation of office building and equipment, office rents, office supplies, etc.).

Depreciation / Amortization - the charge with respect to fixed assets / intangible assets that have been capitalised on the balance sheet for a specific (accounting) period. It is a systematic and rational allocation of cost rather than the recognition of market value decrement.

Research & Development (R&D) expenses - represent expenses included in research and development.

Expenses recognised in the income statement should be analysed either by nature (raw materials, transport costs, staffing costs, depreciation, employee benefit etc.) or by function (cost of sales, selling, administrative, etc.). (IAS 1.99) If an entity categorises by function, then additional information on the nature of expenses, at least, depreciation, amortisation and employee benefits expense must be disclosed. (IAS 1.104) The major exclusive of costs of goods sold, are classified as operating expenses. These represent the resources expended, except for inventory purchases, in generating the revenue for the period. Expenses often are divided into two broad sub classicifications selling expenses and administrative expenses. [5]

[edit]Non-operating

section

Other revenues or gains - revenues and gains from other than primary business activities (e.g. rent, income from patents). It also includes unusual gains that are either unusual or infrequent, but not both (e.g. gain from sale of securities or gain from disposal of fixed assets)

Other expenses or losses - expenses or losses not related to primary business operations, (e.g. foreign exchange loss).

Finance costs - costs of borrowing from various creditors (e.g. interest expenses, bank charges).

Income tax expense - sum of the amount of tax payable to tax authorities in the current reporting period (current tax liabilities/ tax payable) and the amount of deferred tax liabilities (or assets).

[edit]Irregular

items

They are reported separately because this way users can better predict future cash flows - irregular items most likely will not recur. These are reported net of taxes.

Discontinued operations is the most common type of irregular items. Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations. Discontinued operations must be shown separately.

Cumulative effect of changes in accounting policies (principles) is the difference between the book value of the affected assets (or liabilities) under the old policy (principle) and what the book value would have been if the new principle had been applied in the prior periods. For example, valuation of inventories using LIFO instead of weighted average method. The changes should be appliedretrospectively and shown as adjustments to the beginning balance of affected components in Equity. All comparative financial statements should be restated. (IAS 8) However, changes in estimates (e.g. estimated useful life of a fixed asset) only requires prospective changes. (IAS 8) No items may be presented in the income statement as extraordinary items. (IAS 1.87) Extraordinary items are both unusual (abnormal) and infrequent, for example, unexpected natural disaster, expropriation, prohibitions under new regulations. [Note: natural disaster might not qualify depending on location (e.g. frost damage would not qualify in Canada but would in the tropics).] Additional items may be needed to fairly present the entity's results of operations. (IAS 1.85)

[edit]Disclosures
Certain items must be disclosed separately in the notes (or the statement of comprehensive income), if material, including:[3] (IAS 1.98)

Write-downs of inventories to net realisable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs

Restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring

Disposals of items of property, plant and equipment Disposals of investments Discontinued operations Litigation settlements Other reversals of provisions

[edit]Earnings

per share

Because of its importance, earnings per share (EPS) are required to be disclosed on the face of the income statement. A company which reports any of the irregular items must also report EPS for these items either in the statement or in the notes.

There are two forms of EPS reported:

Basic: in this case "weighted average of shares outstanding" includes only actual stocks outstanding.

Diluted: in this case "weighted average of shares outstanding" is calculated as if all stock options, warrants, convertible bonds, and other securities that could be transformed into shares aretransformed. This increases the number of shares and so EPS decreases. Diluted EPS is considered to be a more reliable way to measure EPS.

[edit]Sample

income statement

The following income statement is a very brief example prepared in accordance with IFRS. It does not show all possible kinds of items appeared a firm, but it shows the most usual ones. Please note the difference between IFRS and US GAAP when interpreting the following sample income statements.

Fitness Equipment Limited INCOME STATEMENTS (in millions) Year Ended March 31, 2007 --------------------------------------------------------------------------------Revenue $ 8,290.3 Cost of sales (4,524.2) (6,740.2) (5,650.1) $ 14,580.2 $ 11,900.4 2009 2008

-----------------------Gross profit 3,766.1 -----------------------SGA expenses (3,034.0) -----------------------Operating profit $ 732.1 -----------------------Gains from disposal of fixed assets Interest expense (142.8) -----------------------Profit before tax 589.3 -----------------------Income tax expense (235.7) -----------------------Profit (or loss) for the year $ 353.6 $ 2,485.2 (1,656.8) 4,142.0 (119.7) 46.3 $ 4,215.4 (3,624.6) 7,840.0

-----------6,250.3 -----------(3,296.3) -----------$ 2,954.0

-----------(124.1) -----------2,829.9 -----------(1,132.0) -----------$ 1,697.9

DEXTERITY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions) Year Ended December 31, 2008 2007 2009

--------------------------------------------------------------------------------------------Revenue 29,827.6 (15,858.8) ----------$ 21,186.8 (18,545.8) ---------------------(11,745.5) Cost of sales $ 36,525.9 $

Gross profit 13,968.8 ----------9,441.3

17,980.1 ---------------------(4,142.1) (602.4) (209.9) (17,997.1) -----------

Operating expenses: Selling, general and administrative expenses (3,732.3) (584.5) (141.9) ----------(4,458.7) ----------9,510.1 $ (3,498.6) (562.3) (111.8) -----------(22,951.5) ---------------------$ (4,971.4) $ 5,268.6 --------------------11.7 (742.9) ---------------------25.3 (718.9) ---------------------Profit (or loss) from continuing operations before tax, share of profit (or loss) from associates and non-controlling interest $ 8,778.9 $ 4,481.5 --------------------(3,510.5) 0.1 -----------(1,678.6) (20.8) (1,789.9) (37.3) (5.1) (3.3) Income tax expense Profit (or loss) from associates, net of tax Profit (or loss) from non-controlling interest, net of tax (4.7) $ (5,665.0) 12.0 (799.1) Interest income Interest expense Operating profit (or loss) (4,172.7) Depreciation Amortization Impairment loss

Total operating expenses

--------------------5,263.8 $ -----------$ (7,348.7) $ 2,651.0 --------------------net of tax (802.4) ----------4,461.4 $ 164.6 ---------------------$ (8,439.0] $ 2,815.6 Profit (or loss) for the year -----------(1,090.3) Profit (or loss) from discontinued operations, Profit (or loss) from continuing operations

[edit]Bottom

line

"Bottom line" is the net income that is calculated after subtracting the expenses from revenue. Since this forms the last line of the income statement, it is informally called "bottom line." It is important to investors as it represents the profit for the year attributable to the shareholders. After revision to IAS 1 in 2003, the Standard is now using profit or loss rather than net profit or loss or net income as the descriptive term for the bottom line of the income statement.

[edit]Requirements

of IFRS

On 6 September 2007, the International Accounting Standards Board issued a revised IAS 1: Presentation of Financial Statements, which is effective for annual periods beginning on or after 1 January 2009. A business entity adopting IFRS must include:

a Statement of Comprehensive Income or two separate statements comprising: 1. 2. an Income Statement displaying components of profit or loss and a Statement of Comprehensive Income that begins with profit or loss (bottom line of the income statement) and displays the items of other comprehensive income for the reporting period. (IAS1.81) All non-owner changes in equity (i.e. comprehensive income ) shall be presented in either in the statement of comprehensive income (or in a separate income statement and a statement of comprehensive income). Components of comprehensive income may not be presented in the statement of changes in equity.

Comprehensive income for a period includes profit or loss (net income) for that period and other comprehensive income recognised in that period. All items of income and expense recognised in a period must be included in profit or loss unless a Standard or an Interpretation requires otherwise. (IAS 1.88) Some IFRSs require or permit that some components to be excluded from profit or loss and instead to be included in other comprehensive income. (IAS 1.89)

[edit]Items

and disclosures

The statement of comprehensive income should include:[3] (IAS 1.82) 1. 2. 3. Revenue Finance costs (including interest expenses) Share of the profit or loss of associates and joint ventures accounted for using the equity method 4. 5. Tax expense A single amount comprising the total of (1) the post-tax profit or loss of discontinued operations and (2) the post-tax gain or loss recognised on the disposal of the assets or disposal group(s) constituting the discontinued operation 6. 7. 8. Profit or loss Each component of other comprehensive income classified by nature Share of the other comprehensive income of associates and joint ventures accounted for using the equity method 9. Total comprehensive income

The following items must also be disclosed in the statement of comprehensive income as allocations for the period: (IAS 1.83)

Profit or loss for the period attributable to non-controlling interests and owners of the parent

Total comprehensive income attributable to non-controlling interests and owners of the parent

No items may be presented in the statement of comprehensive income (or in the income statement, if separately presented) or in the notes as extraordinary items.

[edit]See

also
Statement of retained earnings (statement of changes in equity) Model audit International Financial Reporting Standards (and its requirements)

Comprehensive income Cash flow Cash flow statement

Balance sheet

PnL Explained - Profit and loss explained report

[edit]References
a b

1.

Helfert, Erich A. (2001). "The Nature of Financial Statements: The Income

Statement". Financial Analysis - Tools and Techniques - A Guide for Managers. McGrawHill. p. 40. doi:10.1036/0071395415. 2. ^ Warren, Carl (2008). Survey of Accounting. Cincinnati: South-Western College Pub. pp. 128132. ISBN 9780324658262. 3. ^
a b c

"Presentation of Financial Statements" International Accounting Standards Board.

Accessed 17 July 2010. 4. 5. ^ http://www.economywatch.info/2011/06/income-statement.html ^ http://www.economywatch.info/2011/06/income-statement.html

Harry I. Wolk, James L. Dodd, Michael G. Tearney. Accounting Theory: Conceptual Issues in a Political and Economic Environment (2004). ISBN 0324186231.

Angelico A. Groppelli, Ehsan Nikbakht. Finance (2000). ISBN 0764112759. Barry J. Epstein, Eva K. Jermakowicz. Interpretation and Application of International Financial Reporting Standards (2007). ISBN 9780471798231.

Jan R. Williams, Susan F. Haka, Mark S. Bettner, Joseph V. Carcello. Financial & Managerial Accounting (2008). ISBN 9780072996500.

[edit]External

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Understanding The Income Statement Article from Investopedia

Categories: Financial statements Generally Accepted Accounting Principles

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