Master's Thesis
Trend: Financial Management
Abstract:
In the special concept of a growing economy, emphasis on cost reduction is important. Cost management is one of the most strategic areas to achieve financial success and organizational performance in the competitive market. Through cost management, it is possible to choose the best revenue-generating path and strategy for the company. In cost management, it is necessary to measure the cost of resources that are used to perform the main activities, to identify and eliminate items from the cost that do not create added value, to determine the efficiency and effectiveness of the main activities carried out in the economic units, to identify and evaluate new activities that can improve the future performance of the organization, in order to improve performance. are considered.
This thesis examines the impact of cost management on the financial performance of the company in the Accounting and Auditing Institute of Codetco.
The research method is based on the descriptive objective and is also based on the method and nature of correlational research. Hypotheses were developed in this case, and then the data was analyzed using correlation analysis, and regression method was used to check the correlation between variables. And the hypotheses of the research were analyzed using the Kalmogrof-Smirnov test and the Durbin-Watson test.
The results obtained from the research indicate that all the hypotheses are accepted, that is, there is a significant relationship between eliminating value-added items, optimizing fixed costs in line with revenues and reducing non-fixed costs with the institution's financial performance and between strengthening the efficiency and effectiveness of the main activities in economic units with the institution's financial performance.
Introduction Research:
The activity of any institution includes doing a set of things, each of which has its own costs. Every company can choose a cost reduction method according to its situation and conditions, and by implementing it, it can control and reduce its costs. Paying attention to the many costs of organizations or in other words cost management is a matter that is of great concern to managers of organizations and in this way even competitors analyze each other's costs. (Engineer Seyed Musa Mir Ghorbaniganji)
In the special concept of the growing economy, emphasis is placed on cost reduction in the administrative, agricultural, and industrial sectors. It is important. Cost reduction alone cannot be the main goal. Rather, it is an issue that is related to everyone and it should be placed at the top of the agenda in all institutions. Cost awareness should be done through management and staff contact in all organizations, repeated and constant efforts in workshops, offices, and all affairs to reduce waste and minimize delays. (Amin Ramesh and Ahmad Sheikhzadeh)
In the course of the history of human civilization, globalization in the post-industrial society [1] advances despite the resistance of nations and promises the ideas of global production and entry into new fields with much lower costs and excellent quality.
The intensification of the global competition scene in an environment that is constantly changing has doubled the need for appropriate reactions of organizations and manufacturing-industrial companies, on their flexibility with the environment Uncertainty of the foreigner insists on the fact that technological advances and the benefit of information technology, the multiplicity of international markets, the emergence of new economic powers, extensive and transnational integration, more attention to the environment, the strengthening of international free zones have caused regional and international organizations and companies to take an unwanted course of regression[2] because they have lost many of their competitive advantages and have not been able to achieve a complete and comprehensive understanding of their surrounding environment.
Here it should be asked how organizations and companies should understand environmental changes and adapt themselves to the conditions of the global environment with appropriate flexibility and make global markets the target of their potential capabilities. According to other words, what competitive strategies do organizations and companies adopt to enter international markets?
Statement of the basic problem of the research:
Momentary awareness of activities in monetary and audit and financial institutions such as audit and financial institutions and companies is among the unique features and characteristics that have been able to bring them high profits and risks in the form of management programs and organizations. (Molinero, Cinca, 2005).
Auditing and financial institutions and companies, including institutions sensitive to micro and macro policies at the internal level, such as cost efficiency management, control assets and commitment management, quality management of accounting and auditing services, customer satisfaction management, etc. At the external level, it has been affected by market developments and uncontrollable risks, and due diligence in terms of these matters, taking into account the balance of income and expenses, accounting and auditing has been able to create high success in terms of profitability and productivity. (Murray, 2010)
Cost management in the form of cost and income management, accounting and auditing is considered to be one of the most ambiguous foundations of companies' activities and the most important aspect of profitability of auditing and financial institutions and companies, and due to this importance, examining the components of costs and revenues and examining the impact of each of them in the process of accounting and auditing activities has always been considered by managers and researchers. (Coffman, 2009)
In auditing and financial institutions and companies, the cost for reporting in a long-term period is grouped into 2 main categories:
A- Fixed costs: These costs include human resources and salaries, corporate debts and installments, office costs, monthly fixed costs such as rent, charges, audits and taxes. It is in a long-term period.
B- Non-fixed costs: which are also called other costs, these costs include unforeseen costs, costs of accidents, development costs of cross-sectional activities, deposits, guarantees, prepayments of letters of credit, prepayments for transactions, miscellaneous debts, and audits of sold surplus funds. (Chen & Strange, 2010)
Cost management today is one of the most strategic areas to achieve financial success and organizational performance of companies in the competitive market. Because through cost management, not only can you scientifically allocate costs to productive activities, but also through cost management, you can choose the best route and revenue-generating strategy for the company. In cost management, measuring the cost of resources that are used to perform the main activities, identifying and removing items from the cost that do not create added value, determining the efficiency and effectiveness of the main activities carried out in economic units, identifying and evaluating new activities that can improve the future performance of the organization are considered in order to improve performance. (mark, 2012)
Investigating the effect of each of these components on the performance of auditing and financial institutions and companies is of interest in terms of profitability. (Levin 2011) [3] has shown that the imbalance in the compliance of expenses with respect to revenues has been able to cause irreparable losses to auditing and financial institutions and companies in the long and medium term and remove them from the competition. In the revenue sector, financial institutions and companies have faced stagnation and the inability to pay interest on facilities and cannot achieve development plans. Also, due to the high expenditure of companies in the revenue sector, the amount of accounting and auditing obligations has increased and they are no longer able to respond to new customers or profitable projects, and factors such as high risk of facilities, failure to receive claims on time, decrease in the time value of money, etc. It can be a problem for financial institutions and companies. (Esther, 2006)
The model (Fero 2003) [4] regarding the impact of cost management on the financial performance of the organization.
Efficiency and effectiveness of the main activities carried out in economic units
Optimization of non-fixed costs
Optimization of fixed costs in line with Revenues
Cost items with no added value
Organization's auditing and financial performance
With regard to the topic of accounting and auditing costs and revenues and examining its components, this research has tried to examine the impact of the components of costs and revenues of private auditing and financial institutions and companies on their performance, a case study of Kodekco Company. The question that can be considered at the beginning of this research is how big is the gap between the costs and revenues of Editco and what effect can each of the components of the costs or revenues have on the performance of this accounting institution.