Management accounting
In management accounting or managerial accounting, managers
use the provisions of accounting information in order to better inform
themselves before they decide matters within their organizations, which aids
their management and performance of control functions.
Definition
One simple definition of management accounting is the
provision of financial and non-financial decision-making information to
managers.[2]
According to the Institute of Management Accountants (IMA):
"Management accounting is a profession that involves partnering 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".[3]
Management accountants (also called managerial accountants)
look at the events that happen in and around a business while considering the
needs of the business. From this, data and estimates emerge. Cost accounting is
the process of translating these estimates and data into knowledge that will
ultimately be used to guide decision-making.[
Scope, practice, and application[edit]
The American Institute of Certified Public Accountants
(AICPA) states that management accounting as practice extends to the following
three areas:
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 Institute of Certified Management Accountants (CMA)
states, "A management accountant applies his or her professional knowledge
and skill in the preparation and presentation of financial and other decision
oriented information in such a way as to assist management in the formulation
of policies and in the planning and control of the operation of the
undertaking".
Management accountants are seen as the
"value-creators" amongst the accountants. They are more concerned
with forward looking and taking decisions that will affect the future of the
organization, than in the historical recording and compliance (score keeping)
aspects of the profession. Management accounting knowledge and experience can
be obtained from varied fields and functions within an organization, such as
information management, treasury, efficiency auditing, marketing, valuation,
pricing and logistics. In 2014 CIMA created the Global Management Accounting
Principles (GMAPs).[5] The result of research from across 20 countries in five
continents, the principles aim to guide best practice in the discipline
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