Discussing Managerial Accounting
Stacy L. Free
BUS630: Managerial Accounting (NAH1448A)
Instructor: Brian Shaw
January 15, 2015
Discussing Managerial Accounting
The word accounting brings to mind money management and usually has a financial undertone. However, in the business world, accounting has two different aspects, financial accounting, and managerial accounting. Financial accounting is treating money as a means of measuring economic performance instead of as a factor of production. Managerial accounting, on the other hand, is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. The ...view middle of the document...
According to IMA:
“managerial accountants have moved from a transaction and compliance orientation to that of a strategic business partner—to be stewards of corporate performance management, planning, and budgeting; champions of the corporate governance process, providing risk management, internal control, and financial reporting at a time of great change; and experts in cost management methods that help the organization become more competitive and successful.”
Moreover, this prompted them to modify their official definition to incorporate these changes and the new definition reads:
Management accounting is a profession that involves collaborating in management decision-making, devising planning, and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy.
As stated previously, accounting information is broken down into two categories; information used by internal groups or information used by external groups. These groups are distinguish the two types of accounting, managerial accounting, which provides information to people inside the organization in order to make the best decisions, is different than the financial accounting, which deals with providing information to persons outside the organization who request it (Bufan, 2014).
The act of management accounting is to assist management to lead the organization through the functions of planning, controlling, organizing, communicating, and motivating efficiently. The actual professional title for a person who performs the series of tasks to ensure a company’s financial security, handling essentially all financial matters, and thus helping to drive the business’s overall management and strategy is a management accountant. When asked, actual management accountants describe their job in many different ways but break it down to eight categories; Management; Modeling; Business planning; Accounting systems and financial reporting; Internal consulting; Organizational education; Business support; and Financial and economic analysis (Siegel, 2000). As these answers show, a managerial accountant does not perform a single job function, but must be able to multitask and perform numerous responsibilities to ensure the best possible outcome for the organization.
As in most professions, managerial accountants are often must make difficult judgments relating to their employment. Management accountants are expected and, should always behave ethically, as they may find themselves in distinctive situations. Samanthi Senaratne a Professor in Accounting and Head of the Department of Accounting at the University of Sri Jayewardenepura states, “Ethics is about choices. It signifies how people act in order to make the ‘right’ choice and produce ‘good’ behavior. It encompasses the examination of principles, values, and norms, the consideration of available choices to make the...