Management decisions and accounting functions



Reckitt Benckiser founded in 1823, they have experience over 189 years. The headquarters is located in London the Company has over 32,000 employees across the world and rank No. 341 on Forbes Global 2000. There are over 200 countries worldwide sold their products. They have over 40 manufacturing sites globally In addition, through the Carbon20 Project, they are also recognised as a leader in sustainability.


RB vision s is to see people being healthy and live better in the world. The purpose is to give people innovative solution to make differences, so that they can have healthier lives and happier homes.


Reckitt Benckiser is an organization with flat hierarchy which employees are involved in the decision making process. This eliminates bureaucracy in an organization and empowers people.

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The top management is closer to the middle management and it make easier for the lower level management to communicate with upper management. Flat hierarchy organizations like Reckitt Benckiser in comparison to tall structures are more effective in terms of innovation and empowerment.

Their view is in their country and global level. Their regional HR director, SVP Global Corporate Communication & Affairs and their Regional Director had training session to teach them to think global and act local; In RB global, the top management shares their view to others. They concern about the future plans, share their best practise and have business updates with other regions to get the best results in future.

2.0 Managerial Decisions

2.1 Market Risks (pg.13)

“The Group has developed a new and patented sublingual film delivery method for this product which partially mitigates the risk exposure from the expected generic variant entry against tablets.”

2.2 Capital Management (pg14)

“The Group’s objectives for managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide returns for Shareholders and benefits for other stakeholders, and to maintain an efficient capital structure to optimise the cost of capital.”

2.3 Performance Evaluation (pg25)

“The Board maintains an ongoing review of its procedures and its effectiveness and those of its Committees throughout the year. It carries out a formal and rigorous internal evaluation of its performance, that of its Committees and those of individual Directors to assess such performance with a view to improving the effectiveness of the Board and its Committees and Reckitt Benckiser’s overall performance.”

2.4 Financial and Business Reporting (pg25)

“To assist with financial reporting and the preparation of consolidated financial statements, the finance function has in place a series of accounting and treasury policies, practices and controls which are designed to ensure the identification and communication of changes in accounting standards, and reconciliation of core financial systems. The function consists of consolidation and financial accounting teams and technical support which comprises senior finance managers who review external technical developments and accounting policy issues. In addition, the finance function maintains an up-to-date Group Finance Policy Manual and sets formal requirements with business unit finance functions which specify the standard reports and approvals required by Reckitt Benckiser.”

2.5 Risk Management and Internal Control (pg25)

“The Board has established a risk and control structure designed to manage the achievement of business objectives.”

2.6 Exceptional Items (pg42)

“The Group also presents an alternative adjusted earnings per share calculation to exclude the impact of the exceptional items. Management believes that the use of adjusted measures such as adjusted operating profit, adjusted net income and adjusted earnings per share provide additional useful information on underlying trends to Shareholders.”

2.7 Pension Commitments (pg43)

“The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the plan assets.”

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2.8 Financial risk management (pg59)

“The Group has in place a risk management programme that uses foreign currency financial instruments, including debt, and other instruments, to limit the impact of these risks on the financial performance of the Group.

The Group’s financing and financial risk management activities are centralised into Group Treasury (GT) to achieve benefits of scale and control.”

Question 3

Management accounting involves decision making, planning and performance which provides financial reporting and control which helps to assist the organisation strategy. However the information are used to in order to give the best course of action. It needs analysing and measuring information to achieve goals for the company.



Solving problem

Solving problem is like financial problems and non-financial problems. But logical reasoning is the important thing .According to 2.1, the Group managed to solve this problem by developed a new and patented sublingual film delivery method for the expiry of the Group’s exclusive licence that likely to expose the business to competition from genetic variants.


Keeping the score

Keeping the score aim to solve the quantitative problem which need the allocation be fair, which emphasis on cost, sharing and allocating. According to 2.2, in 2011 the Company has provided returns to Shareholders in the form of to optimise the cost of capital in maintaining an appropriate capital structure and providing returns for Shareholders


Performance Evaluation

Performance evaluation requires the management accountant to carry out the following process: decide on what to measure, plan how to report and consider the behavioural aspects. Relating back to 3.3, they encourage debate and open questions to provide prior to the meeting together so that Non-Executive Directors could evaluate to executive management. Comments also were submitted ahead of the meeting for improving future performance.


Analysis and interpretation of data

It helps them understand and it useful to the management in the process of company decision making, planning and controlling. It can present the results with useful comments to the management as it is such effective information. Relating back to 3.4, the Board is responsible for the Company’s financial statements and recognises its responsibility .Because it presenting a balanced and understandable assessment of Reckitt Benckiser’s prospects and positions.



It is a process of organizing of the different elements of activities of a company. It divides the whole organization into suitable profit or cost centres. Based on 3.5 which the system of internal control complies with the Turnbull guidance on Internal Control and Risk Management. It provides reasonable for the effectiveness of the system. Reckitt Benckiser’s Code of Conduct is controlling the environment on which employees will get training annually and a range of policies on corporate responsibility.


Managing by exception

Management by exception is the practice of examining the financial and operational results of a business. Only the results of its budgeted or expected amount are shown substantial differences, then it will bringing issues to management. Based on 3.6 where material, non-recurring expenses or income are incurred during a period, so the acquisition-related costs are disclosed as exceptional item.



Planning covers shorter-term operational planning and longer-term strategic planning that requires managers to look ahead. It also requires managers to establish objectives that are often diverse like maximizing market share and short-term profits, and contributing to social programs. Relating back to 3.7, the contribution to the company will charge to the income statement for those who retire and contribution schemes will be defined by company as the cost of providing pensions to employees and the company members as well.

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As to protect the firm and the financial industry from systemic, through the risk management controls, that will get protect for their firm against legal risks, liquidity, credit, market and operational. Relating back to 3.8, the Group’s multi-national operations expose it to a variety of financial risks that include the effects of changes in foreign currency exchange rates, market prices, interest rates, credit risks and liquidity.


So in conclusion, the development of management accounting has a long way to go and innovation will be more difficult. However, through the support and efforts of all parties, the management accounting will be able to develop into a system, completely instructive and become practical science so that management accounting will be able to play an important role in the world economy, national economy and company economic management.