23-1- Operating Cost Categories

23-2- Labor

23-3- Logistics and Transportation

23-3-1- Marine Vessels

23-3-2- Helicopters

23-4- Materials and Supplies

23-4-1- Chemicals for Water Treatment

23-4-2- Chemicals for Corrosion

23-4-3- Chemicals for Flow Assurance

23-4-4- Fuel, Water and Utilities

23-5- Repairs and Maintenance—Wells and Flowline

23-5-1- Maintenance

23-5-2- Stimulation

23-5-3- Well Failure

23-5-4- Flowline and Export Repairs

23-6- Repairs and Maintenance—Equipment and Structure

23-6-1- Regulatory Requirements

23-6-2- Inspection Schedules

23-6-3- Three Zones

23-6-4- Painting

23-6-5- Underwater Maintenance

References

ABSTRACT

Activity-based cost models apply work decomposition methods and knowledge of engineering and market conditions to estimate cost. The tasks required to be performed are identified, and the time and duration to perform each task are estimated. Activity-based costing is the most detailed and transparent method that can be applied in operating cost estimation and require a higher level of expertise to successfully apply. In this final chapter, work decompositionmethods are described to illustrate how the operating cost components of labor, logistics and transportation, materials and supplies, and repairs and maintenance are estimated. Examples are provided to develop analytic skills and intuition regarding the relative importance of cost components. Regional diving, helicopter, and marine vessel contracts and service markets are reviewed as part of this discussion.

23-1- OPERATING COST CATEGORIES

The primary cost categories for offshore oil and gas operations include the following:
• Salaries of operating personnel
• Transportation of products and people
• Materials and supply services
• Repair and maintenance of wells and flow lines
• Repair, maintenance, and inspection of equipment and structure
Cost may be incurred hourly, daily, monthly, or annually; be volume- or capacity-based; or be per person (Table 23.1). In activity-based costing, the tasks required to be performed are identified, and the time and duration to perform each task are estimated. If only a small number of facilities are evaluated, a detailed approach is feasible, but for more than a few structures, the resources required to complete an activity-based cost study are significant (Kaiser, 2019).

This paper demonstrates an approach to address the unique control and security concerns in database environments by using audit modules embedded into application programs. Embedded audit modules (EAM) are sections of code built into application programs that capture information of audit significance on a continuous basis. The implementation of EAMs is presented using INGRESS a relational database management system. An interface which enables the auditor to access audit-related information stored in the database is also presented. The use of EAMs as an audit tool for compliance and substantive testing is discussed. Advantages and disadvantages of employing EAMs in database environments and future directions in this line of research are discussed.

ADVANCES in computer technology over the past several years have made computer-based accounting systems increasingly complex. With the virtual elimination of the traditional audit trail in computerized systems [Weber, 1982), internal control and system security are critical concerns. With recent improvements in computer technology and reductions in hardware costs, database management systems [DBMS] have become commonly used for business data processing. While there are unique control and security concerns relative to DBMS applications [Fernandez et al., 1981, p. 151), there is some evidence that auditors do not sufficiently adjust their audit procedures in the environment of DBMS [Roberts, 1980]. A variety of computer audit techniques have been discussed in the literature [Cash et al., 1977]. Though auditors have developed generalized audit software [GAS] to obtain audit evidence in advanced computer systems, such software packages are generally incompatible with the complex file structures of database systems [Cash et al., 1977, p. 824; Fernandez et al., 1981, p. 164]. Access to client database systems using GAS is most often done through intermediate sequential files extracted from the database. Embedded audit modules [EAM] are an example of concurrent auditing techniques [CAT] which continuously monitor transaction processing. Weber [1982, p. 475] highlights the increased need for CATs in the environment of database systems due to the integration of sub-systems and the sharing of data. Further, EAMs are perceived by auditors to be very efficient methods of auditing advanced computer-based systems [Tobison & Davis, 1981; Garsombke & Tabor, 1986]. The purpose of this paper is to describe an approach to the continuous auditing of database-driven accounting applications using EAMs. The objectives of this paper are to discuss (1) a selected number of unique control and security issues related to DBMS-driven accounting systems, (2) the use of a relational DBMS to construct and implement EAMs in a sales application, and (3) the utilization of EAMs as an audit tool. The significance of this paper lies in the demonstration of how audit modules embedded in a DBMS-driven application can address the unique control and security aspects of database environments. In addition, we demonstrate how the DBMS might enable the auditor to access audit-related information collected by the EAMs. In this manner, the illustration presented in this paper would assist auditors contemplating the use of EAMs in DBMS environments.

Using experimental scenarios, the current study suggest that the management accountants’ professional attributes social obligation, professional autonomy, professional affiliation, and professional dedication are associated with three ethical rationales that have been identified as playing important roles in ethical judgment, the perception of the ethicality of an action; moral equity, contractualism, and relativism. Understanding these issues will assist in determining the management accounting professional attributes that should be fostered in encouraging the ethical judgments of management accountants since research indicates that the moral equity and contractualism rationales are consistent with individuals at the postconventional stage of ethical development and more ethical judgments while the relativism rationale is consistent with the conventional stage of moral development and less ethical judgments.

Introduction

The current study examined the association between attributes of the management accounting profession, their ethical rationales, and ethical judgment, the perception of the ethicality of an action. Professionalism involves the perceived responsibility to avoid self-interest in the performance of duties (Kerr, Von Glinow, & Schriesheim, 1977), demanding a higher standard of behavior than required by law (Goode, 1957). Professionals have many opportunities to act in their own self-interest, forsaking their responsibilities to society. This behavior cannot be solely enforced by ethical codes, external rewards or sanctions, but must instead be internalized (Noreen, 1988). This requires a better understanding of the multidimensional factors involved in influencing ethical judgment. These shared values are inculcated through an adult socialization process (Goode, 1957) and guidance with ethical dilemmas provided through professional standards. Research indicates, for example, that ethical behavior is strongly influenced by individual’s professional environment, even when the behavior is inconsistent with the individual’s ethical standards (Shaub, Finn & Munter, 1993). Professionalism has also been described as motivating a self-concept of a high performing, competent individual (Kalbers & Fogarty, 1995). This self-concept is expected to extend to shared ethical values. Individuals’ levels of professionalism are therefore expected to be related to their ethical decision making. The current study explored this relationship. Although 80% of accounting students have management accounting careers and most accountants work in corporate accounting (Isaacs, 2016) very few studies have examined management accounting professionalism and only one of those has used a multidimensional concept of professionalism (Shafer, Park, & Liao, 2002). This study investigates a potential benefit of professionalism for constituents of management accounting. Understanding these issues will assist in determining what attributes the management accounting profession should foster in encouraging the ethical judgment of management accountants and as well highlight a benefit of specific management accounting professional attributes. Five professional attributes, beliefs in social obligation, professional autonomy, professional affiliation, professional dedication and self-regulation are promoted by the professions through continuing professional education and the socialization process (Hall, 1968). Understanding the link between these attributes and the ethical decision-making process, will enhance ethical judgments.

Purpose – This article examines management accounting practice in relation to the two aspects of Enterprise Risk Management (ERM): risk management and internal controls. Methodology/Approach – We conducted a survey of experienced management accountants to find out about the risk management and internal control aspects of their current ERM practices, and their perceived effectiveness in performing various ERM roles, within the context of the ERM culture and the level of information systems support for ERM in their organizations. Findings – In terms of the risk management aspects of ERM, the management accountants in the survey contribute highly to managing risks of a financial or compliance/legal nature and tend to focus mostly on risks with potentially higher impact and higher likelihood of occurring. In terms of the internal control aspects of ERM, they play a highly important role in ERM activities related to prevention and internal risk treatment. Their organizations have an ERM culture that is perceived as open to challenging discussions about risk and have implemented IS support for management accounting in areas such as information security and standardized information architecture. Overall, the effectiveness of their contributions to ERM is perceived to be high in the areas of compliance and finance-related risk. Originality/Value – We develop a framework and offer empirical evidence about the ERM contributions of management accountants. We propose and use two original scales: one to classify ERM activities, and the other to assess ERM culture.

INTRODUCTION

Over the past decade, there has been increasing pressure for organizations to design and implement Enterprise Risk Management (ERM) systems. Largescale accounting frauds such as Enron and WorldCom have prompted new legislation such as the Sarbanes–Oxley (SOX) Act of 2002. This has resulted in the revamping of internal controls in a wide range of companies to comply with SOX section 404 requirements. The private sector has also responded, issuing a comprehensive Internal Control Integrated Framework (first issued in 2004, then revised in 2013) through the Committee of Sponsoring Organizations of the Treadway Commission (COSO), explicitly identifying risk assessment as a key component for effective corporate governance. COSO’s Enterprise Risk Management Framework, published in 2004, further expanded the Internal Control framework to develop detailed guidelines for objective setting, event identification, risk assessment and response, among other elements. Since COSO’s original ERM framework, other proposals for improved risk management (RM) have been published, such as the International Organization for Standardization (ISO)’s standard 31000. In the fall of 2016, COSO’s board received public comments about a proposed update of its ERM framework. The revised framework, which addresses the increasing complexity of risk management, is scheduled for release in 2017. Since the financial crisis of 2008, close scrutiny of ERM practices for the purposes of ratings by agencies such as Standard & Poor, additional Securities Exchange Commission (SEC) proxy statement requirements of risk oversight disclosures, and public awareness of the consequences of neglecting risk management have led to mounting pressure on boards of directors and senior executives to take ERM seriously (see review in Merchant & Spaulding, 2012). This pressure for technical improvements in ERM practices should help organizations develop their capacity for identifying and treating risk more systematically. In this context, management accountants can make a valuable contribution. With their experience in designing and implementing internal controls and providing relevant information for decision-making, management accountants “can champion the importance of good risk management, including internal control…they can set the tone for good RM/IC [risk management/internal control] throughout the organization … [and] ensure RM/ IC is part of every decision-making process and subsequent planning and execution” (McNally & Tophoff, 2014, pp. 35–36).

Purpose – This study investigates the interplay between strategic performance measurement and management accounting to gain a deeper understanding of how strategic measures of performance evolve with the managerial accounting practices. Design/Methodology/Approach – The study explored the performance measures used at a bank focused on the development and sustainability initiatives in Africa. Thirty-two semistructured interviews were conducted with directors, managers, and analysts from nine different categories of job families. Findings – Analysis shows that managers assimilate a comprehensive, multifaceted measurement system to understand the creation and delivery of sustainable value. The results show that the managerial accounting practices adapt to incorporate an integrated set of performance measures that afford sustainable value to the stakeholders. The findings provide rich insights into how the managers adapt their information assimilation practices to the changing demands of the different stakeholders and adopt practices which innovate measures of performance that are aligned to the strategic goals. Finally, the findings illustrate that the interplay between strategic performance and managerial accounting practices has the potential to improve or inhibit sustainable development. Originality/Value – Little is known about how performance measures evolve, and how they interplay with the managerial accounting practices within organizations. This study reveals that the interplay of strategic performance measurement and managerial accounting can only be understood in the confluence of organizational change and sustainability. While acknowledging the need to embrace change and sustainability simultaneously, the study offers insights into the dynamics of change – the duality of emergent managerial accounting practices and the evolution of strategic performance measurement systems.

INTRODUCTION

The role of managerial accountants as organizational actors in the creation and dissemination of information for the long-term, strategic planning is widely acknowledged in research and practice. While information generated from the recording of financial transactions are primarily used for reporting financial information to the stakeholders and regulators, data gathered from an organization’s operations, processes, and activities are compiled in the creation of analytical information for operational and process effectiveness. Growing use of such analytical information for planning and control in organizations led to the adoption of strategic cost management information for strategic performance management (Brands & Holtzblatt, 2015; Shank & Govindarajan, 1993). Despite the growing popularity of analytical data for strategic performance management in organizations, widespread adoption of a comprehensive performance management framework remains tentative. The interplay between strategic performance measurement and managerial accounting has been evolving not only with the managerial accounting practices but also with the dynamic organizational contexts within which these practices are situated (Greenley, 1994). Researchers have long argued that the use of managerial accounting information for the strategic management of performance is influenced by a combination of organizational, contextual, political, and environmental variables (Dent, 1991; Ezzamel, Lilley, & Willmott, 1997; Zenita, Sari, Anugerah, & Said, 2015). Some studies (e.g., Aranda & Arellano, 2010) claim that financial systems impede strategic performance that they do not provide information to improve competitiveness of firms in a globally connected world. However, Johnson (1989) argued that in order for a firm to understand profitability, it must understand the sources of its sustainable competitive advantage, such as quality, reliability, and flexibility. In essence, researchers conclude that more the alignment between management accounting practices adopted by an organization and its strategic objectives, the greater the organization’s business performance (e.g., Abdel Al & McLellan, 2013). As most measures of strategic performance are traditionally outside the domain of accounting practice, Shank (2006) argued that strategic management accounting (SMA) practices had to evolve in conjunction with the strategic priorities of an organization for sustainable competitive advantage. To further understand how the management accounting practices adapt in this strategic context, this study explores how strategic measures of performance evolve with the practices of managerial accounting within organizations.