Role of Management Accountants
Management accounting, as distinct from financial accounting, focuses on the internal business building of the organization. Therefore, the management accountant has a vital role to play in the designing and evaluating business processes. In addition, the management accountants have an important part in the preparation of budgeting and forecasting. They also help the management in formulating the internal control systems and the implementation and monitoring of such control systems. The main objective of the management accountants is to ensure that the organizations enhance their economic values through the analysis and aggregation of vital information on the progress of the business of the organization. The role of the management accountant is different from that of a financial accountant as the management accountant functions at the beginning of the value chain. From this position, it is for the management accountant to feed necessary information to the management to assist in proper decision making and planning and control of the entire organization. The management accountants are in effect the business partners taking part in the achievement of the strategic goals of any organization. With the increased emphasis on the internal control the role of the management accountants, becomes an important one (Institute of Management Accountants, 1997).
Responsibilities of Management Accountants for Security and Financial Integrity
In order to ensure the security and financial integrity of the firms, management accountants undertake three important roles- problem solving, score keeping and attention directing. Under problem solving roles, the management accountants prepare comparative analysis for decision making by the managers. By presenting the cost-benefits of different alternative proposals, the management accountants enable the managers to arrive at decisions, which are profitable for the organization. Under score-keeping role the management accountant accumulates and reports on the reliable results to all levels of management. These functions ensure the security and financial integrity of the organization. Another important role played by the management accountants is the attention-directing role in which the management accountants help managers to focus their attention on the opportunities and problems. Management accountants serve each of these three roles from the perspectives of both planning decisions and control decisions. This way the management accountants are able to help the organizations to ensure security and financial integrity of the organizations (Horngren, Foster, & Datar, 2002).
Relationship between Management Accountants and Financial Accountants
Management accounting is a “process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information that is used by management to plan, evaluate, and control within an organization” (Allbusiness). In contrast to financial accounting, information the information provided by the management accountants are confidential in nature. The information is used by the managers at all levels within the organization, instead of the public, who uses the financial accounting information. Financial accountants have to comply with accounting standards and largely they rely on the information compiled by the management accountants. Though fundamentally there are differences in the uses to which the financial accounting reports and management accounting reports are prepared, both are complementary to each other. The financial accountants depend on the management accountants for the information on the cost and profitability of the products being manufactured by the organizations. Through the score-keeping role, the management accountants provide information on the revenues of the organization for specific periods to be presented to the stockholders for analysis and information. For instance, the reports by the management accountants greatly facilitate the quarterly reports to be prepared by the financial accountants for the information o the stockholders.
References
- Allbusiness. (n.d.). Business Definition for Management Accounting.
- Horngren, C. T., Foster, G., & Datar, S. M. (2002). Cost Accounting: A Managerial Emphasis. New Delhi: Prentice Hall of India Private Limited.
- InstituteofManagementAccountants. (1997). About Management Accounting.