Management Accounting

What is management accounting?

According to the Chartered Institute of management accountants (CIMA), Management Accounting is "the process of recognition, measurement, gathering, study, research, analysis and communication of information used by management to plan, assess and control within a body and to assure appropriate use of and accountability for its Resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholder's, creditor's, regulatory agencies and tax authorities" (CIMA Official Terminology) The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas:

\"what Is Management\"

- Strategic Management-advancing the role of the management accountant as a strategic partner in the organization.
- Performance Management-developing the practice of business decision-making and managing the performance of the organization.
- Risk Management-contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

The Role of Management Accounting

Management accountants have a double reporting relationship. As a strategic partner and provider of decision based financial and operational information, management accountants are responsible for managing the business team and at the same time having to report relationships and responsibilities to the corporation's finance organization.

Breaking down of cost or outflow into functions and processes to smooth the progress of cost control at each prepared level in the business environment, also to suggest alternatives to improve the productivity of the business to accumulate the maximum profit/success of the business.

The management accountants must develop a standard for all working areas and to evaluate the actual standards within the business sector, ensuring the best operation of available resources in the business sector and to Identify areas of wastages, leakages, inefficiencies and invisible losses that the business has dealt within the last view years.

The accountant must deploy informatic tools for a well-organized management information system to keep the business up to date with the latest whereabouts in the business sector, contributing to a Total Quality Management (TQM) assisting in decision-making process at all levels of management of the specific enterprise.

What management accountants Do?

Also known as corporate accountants, management accountants work within one specific company. They perform a series of tasks to ensure their company's financial security, handling essentially all financial matters and thus helping to drive the business's overall management and strategy skills to the best they can.

A management accountant's responsibilities can be a variety of things, depending on the company you work for, the management accountant's level of experience, the time of year and the type of industry the management accountant is at, you could find yourself doing anything from budgeting, handling taxes, managing assets to help determine compensation, the benefits packages and aiding in strategic planning.

The aims of management accounting

1. Formulating strategies to reach their goals as fast as possible but thorough.
2. Planning and constructing business activities to keep the business up and running for it to make a profit.
3. Helps in making the financial decisions of the firm, by using strategies to reach their aim.
4. Optimal use of Resources (making use of all resources that one can find like the internet, books and own knowledge)
5. Supporting financial reports. preparation (you can also give your meaning about the subject that is discussed by giving your view point).
6. Safeguarding asset.

Management Accounting

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