The Organization Chart
An organization chart shows an entity's principal management positions, helps to define authority, responsibility, and accountability, and is essential in developing a cost accounting system capable of reporting the responsibilities of individuals. The coordinated development of a company's organization with the cost and budgetary system leads to an approach to accounting and reporting called responsibility accounting. Most organization charts are based on the line-staff concept. The assumption of this concept is that all positions or functional units can be categorized into two groups: the line, which makes decisions, and the staff, which gives advice and performs technical functions. A line-staff organization chart is illustrated Figure 1-2. Another type of organization chart is based on the functional-teamwork concept of management, which emphasizes the most important function of an enterprise: resources, processes, and human interrelations. The resources function involves the acquisition, disposal, and prudent management of a wide variety of resources- tangible and intangible, human and physical. The processes function deals with activities such as product design, research and development, purchasing, manufacturing, advertising, marketing, and billing. The human interrelations function directs the company's efforts concerning the behavior of people inside and outside the company. A functional-teamwork organization chart is illustrated in Figure 1-3