personal finance These are obvious, all too obvious, facts, but they are often ignored. Through an intelligent approach to management accounting the interpretation in terms of money of the history of the recent past and the plans of an industrial or commercial unit for t]ie coming year or years and to check whether these plans are bearing fruit in the way planned accountants can make an immense contribution to easing management's burden. Whether accountants make good top executives is another and far wider question and an answer will be attempted in a later chapter; but it is interesting that a financial and not a technical man has recently been appointed to one of the top jobs in Britain chairmanship of I.G.I. It is not in the scope of this book to discuss the origin of finance and how it is raised. This needs a book to itself. The assumption must be that the accountant, the financial controller, the cashier, the secretary (titles are unimportant) have been given the responsibility for ensuring that a business operation pays its way and that its results bear a reasonable relatic between net profit earned and capital employed. A further assumption must also be that a board is aware of its responsibility to ensure that the shareholders' net assets earn a fair return and that they are maintained in a profitearning condition. A company may pay its way for an unconscionable time without its management being aware of or reacting to the fact that profitability is diminishing. In fact profits may show an upward trend but the return on capital employed may be decreasing, and all too often part of this capital is undistributed profits which could have been more profitably employed by the shareholders themselves. The accountant or financial controller is the connecting link between production and board policy: he must interpret the former to the latter and convert policy into production planning. The essence of the task is acceptance of the idea of planning in advance the revenue and expenditure and use of finance. There is nothing new in this idea of budgetary control. Samuel Pepys used it when he was assigned the job of rebuilding Charles IPs navy; he catalogued the Fleet, dockyard facilities, stores, and manpower requirements; he then calculated with characteristically Pepysian conscientiousness the cost of building the additional Ships of the Line needed by the Fleet. The approach that is new is that the budgets resulting from the agreed operational plan are made and accepted by the whole management team and become serious targets. These are yardsticks by which management's efficiency can be judged. The detailed standards used for controlling manufactured costs are based on the material, labour, and overheads needed to make the product if the available plant and manufacturing process are used in the most effective way. In the case of a purely service undertaking for example a bank or an insurance company the emphasis is on such factors as salaries, wages, and rents. interior Planning