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Management Accounting (ISMA) subsystem enables you to receive information about income, direct and indirect costs by responsibility center, business, territorially separate outlet of the bank for the prior period. For this, use is made of the method of the direct allocation of income and costs and the sequential step-by-step method of allocation of indirect costs.
The objects of the management accounting model are as follows:-
- Responsibility centers which are divided into profit-generating centers (these produce banking products, get income, bear expenses) and activity centers (these do not produce products, get no income, bear expenses, provide services to other responsibility centers);
- Banking products;
- The bank's units: these comprise the elements of the bank's territorial structure (infrastructure elements), territorially separate balance sheet-free outlets (TSBO);
- The bank's customers;
- Income (revenue) and expense accounts (Classes 6, 7) and documents which use these accounts;
- Intrabank resources which are sold/purchased in the bank's internal market such balances of accounts or amounts granted/raised under contracts with customers;
- Internal contracts, i.e., transactions of the purchase/sale of intrabank resources between profit-generating centers and Money Desk.
The tuned elements of the management accounting model are as follows:-
- The weighting factor: a numerical value determined and attached by the user to a management accounting object based on the actual characteristics of the object which represents a share of income/costs allocated to this object;
The account template: the list which represents the rule of the allocation of the amount of a posting to this account among the management accounting objects;
The transaction template: the setting which indicates to which management accounting objects postings created from the transaction will be allocated;
The non-trading transaction template: the list which represents the rule of the allocation of the amount of a posting which will be generated by the transaction template;
The allocation key: the weighting factor which is used by the allocation process to reallocate costs from some management accounting objects to others;
The rule of selecting an internal contract: the template according to which ABS B2 generates an internal contract. It connects the following substances: a management (subsidiary) account and a balance sheet account; an internal contract type (according to an account balance or data of an external contract with a customer); and currency.
Management Accounting Model Processes
- Direct allocation: The allocation of income/direct costs to management accounting objects based on account templates, transaction templates, and non-trading transaction templates;
- An automatic generation of internal contracts: The creation of internal contract transactions by ABS B2 based on the rules of selecting internal contracts;
- Allocation: The redistribution of indirect costs from one management accounting object to others based on the allocation keys.
- The management accounting model indicators are as follows:-
- Income related to the responsibility centers / units / products / customers. This is income distributed to a management accounting object based on template settings. Income does not take part in the allocation process;
- Direct cost related to the responsibility centers / units / products / customers. These are costs distributed to a management accounting object based on template settings. Further, they take part in the allocation process;
- Indirect cost related to the responsibility centers / units / products / customers. These are costs which are not distributed directly to a management accounting object and are allocated to this object from other management accounting objects using the step-by-step allocation method.
The subsystem carries out a real time distribution of direct income/costs according to account templates completed and internal contract generation. User's daily work is to enter manually interest rates (transfer prices) under internal contracts. Where analysis is required, the allocation procedure should be launched manually.
Result Analysis
At the first stage of system introduction, the bank may obtain information about income and direct costs by management accounting object:-
- TSBO;
- Responsibility centers;
- Banking products; and
- Customers.
At the second and third stages of introduction, the bank may obtain information about:-
- Indirect costs by above management accounting object; and
- Transfer ii/costs of the profit-generating centers.
To analyze income/costs of responsibility centers, units, products, customers, territorially separate outlets in detail, use is made of external reports (based on Microsoft Excel pivot tables).
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