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Running head: FAITH INTEGRATION
PROJECT
Faith Integration Project
Liberty University
Jennifer Beck / ACCT
212 February 15, 2019
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FAITH INTEGRATION
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Managerial accounting is an area of accounting that focuses on serving the decision-
making needs of an organization. Many of the ideas that form the foundation of modern day
managerial accounting were actually used thousands of years ago in ancient civilizations. Some
of the main ideas of Managerial accounting can specifically be seen through out the Bible; these
include the three key tasks of managerial accounting and ethics.
The three key tasks of managerial accounting include determining the costs of an
organization’s products and services, planning future activities, and comparing actual results to
planned results (Wild & Shaw, 2018). The first key task has to do with gathering cost
information and then applying that knowledge in the decision-making process of product pricing,
profitability analysis, and purchases. Proverbs 27:23 says, “Be sure to know the condition of
your flocks, give careful attention to your herds” (NIV, 1984). It is important for organizations
to know the condition of their products or services and how they are performing. The next key
task has to do with planning, which is defined as “the process of setting goals and making plans
to achieve them” (Wild & Shaw, 2018, p. 4). The Bible specifically talks about the importance
of planning in Proverbs 15:22 which states, “Plans fail for lack of counsel, but with many
advisers they succeed” (NIV, 1984). When all levels of management come together to plan
goals, they are setting their organization up for success. The third key task of managerial
accounting, comparing actual results to planned results, deals a lot with control. Managerial
Accounting defines control as “the process of monitoring planning decisions and evaluating an
organization’s activities and employees” (Wild & Shaw, 2018, p. 4). This is one of the most
important aspects of managerial accounting because it is where managers take corrective actions
and revise plans. Managers can plan all year for the results they believe are probable, but actual
results can vary. This could mean that an organization revises which products or services are
added or removed. Ephesians
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5:15 says, “Be very careful, then, how you live—not as unwise but as wise, making the most of
every opportunity, because the days are evil” (NIV, 1984). It is important for management to
make wise decisions based off of the knowledge they receive from the three main tasks of
managerial accounting.
Having a firm understanding of the three key tasks of managerial accounting and an
understanding of how these fundamentals should and could be applied to a Christian based
organization, allows for faith-based organizations to be rooted in Biblical values while
maintaining realistic and achievable goals. The Wall Street Journal writes of GE, once a
booming company with a piece of everything now merely a shimmer of its former glory. The
first key task of managerial accounting surrounds cost analysis and knowledge application. GE
“helped invent the world as we know it: wired up, plugged in and switched on,” many marveled
at their successes due to the amount of staff they employed who knew how to analyze and make
appropriate decisions regarding the endeavors of the business[Gry18]. Their downfall came
amidst the second and third key tasks of managerial accounting. They became so big and
glorious that everyone thought they could not be stopped and would forever maintain a solid
grasp in whatever industry they pursued. The problem with this surrounded arrogance. Jack
Welch, the CEO, was so confident in the branding he created that he attempted to buy out rival
Honeywell but failed to do so dealing a damaging blow to the company. Days after Welch’s
retirement in 2001, the September 11th terrorist attacks began the massive decline and effectively
“hammered GE’s insurance businesses and grounded the airline industry”[Gry18]. This blow
and steady decline thereafter, “accounted for 38% of GE’s revenue in 2008”[Gry18]. Ultimately,
leaving the once marveled stock trading at over $150 per share in the early 2000’s to trading
below $7 a share in March of 2009. In Proverbs it is said that “pride goes before destruction, a
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haughty spirit before a fall” (16:18, NIV, 1984). As Christians, we understand that God giveth
and takes away. The decline of GE is a prime example of such a thing. For Christian businesses
it is important to remember and recall the blessings bestowed upon us when making decisions.
Managerial accounting does more than just measure data, but it also affects decisions that
are made in an organization. Ethics is defined as, “codes of conduct by which actions are judged
as right or wrong, fair or unfair, honest or dishonest” (Wild & Shaw, 2018, p. 7). Not only is
ethics important for running business operations, but also it is important for combating fraud.
Ethics plays a huge role in a company maintaining honest operations and reducing fraud. Fraud
is defined as “using one’s position for personal gain through the purposeful misuse of an
employer’s assets” (Wild & Shaw, 2018, p. 6). Mangerial Accounting describes the three factors
in the fraud triangle that must exist for a person to commit fraud as “opportunity, financial
pressure, and rationalization” (Wild & Shaw, 2018, p. 6). One of the main implications of fraud
on an organization is the loss of money and reliability of the organizations name. The Bible says
in Proverbs 22:1 “A good name is to be chosen rather than great riches, and favor is better than
silver or gold” (NIV, 1984). For this reason, having a reliable internal control system is
extremely important so that it ensures reliable accounting and upholds company policies while
protecting assets and promoting efficient operations. The need for an internal control system is
so that the temptation to commit fraud is reduced. The Bible speaks on this point in Micah 7:5
when it states, “Do not trust a neighbor; put no confidence in a friend” (NIV, 1984). Although,
an organization wants to be made up of highly trustworthy employees there still needs to be an
internal control systems in place to ensure reliability and ethics.
In conclusion, not only is it apparent that many of the managerial accounting concepts
used in modern day business operations were also used in ancient civilizations, but it is also
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apparent that the same reasoning was also present. The Bible is a great resource to look at when
considering the foundation of managerial accounting and the ethics involved, especially for
businesses wanting to prosper and have a biblically based foundation. Jeremiah 29:11 tells us,
“For I know the plans I have for you, declares the Lord, plans to prosper you and not to harm
you, plans to give you hope and a future” (NIV, 1984).
References
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Gryta, T., & Mann, T. (2018). GE Powered the American Century—Then It Burned Out. The
Wall Street Journal. Retrieved from https:// www.wsj.com/articles/ge-powered-the-
american-centurythen-it-burned-out-11544796010.
The Holy Bible, new international version. (1984). Grand Rapids: Zondervan Publishing House.
Wild, J. J., & Shaw, K. W. (2018). Managerial Accounting (6th ed.). New York, NY: McGraw-
Hill Education.
