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What Is Management Accounting?

Management accounting involves assisting management in strategic decision making by analyzing financial data and key performance indicators. Management accountants use their team's financial reports to forecast costs and guide financially sound decisions. They also monitor trends, recommend policy tweaks, and perform audits. Their role requires a future orientation to sustain the company's financial health.

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198 views3 pages

What Is Management Accounting?

Management accounting involves assisting management in strategic decision making by analyzing financial data and key performance indicators. Management accountants use their team's financial reports to forecast costs and guide financially sound decisions. They also monitor trends, recommend policy tweaks, and perform audits. Their role requires a future orientation to sustain the company's financial health.

Uploaded by

Mia Casas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is Management Accounting?

The Institute of Management Accountants (IMA) defines the job in the following terms:

"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.”

The typical role of a management accountant encompasses a number of tasks, all


of which are important in dictating future decision making within the company.
Management accountants often supervise a team of lower-level accountants who
compile data, create statements, and handle the basic accounting needs of any
business. They use the information gathered by their team to predict the
company’s fiscal forecast, and guide decision makers into making financially
sound decisions moving forward.
Management accountants may also be responsible for observing trends and
patterns in financial reports and suggesting ways to tweak spending and
transactional policies for the good of the business. They often act as risk
management specialists and can help executives and directors iron out any
potential kinks that could arise in the future.
They may handle most issues regarding their company’s financial systems and
may perform regular internal audits to make sure business keeps running
smoothly.

How Is Management Accounting Unique?


There are several ways in which management accounting differs from traditional accounting.

Most financial accountants spend their time analyzing trends and numbers from transactions that
have already occurred. In management accounting, the focus is more on looking ahead at the future
instead of studying the past. Management accounting largely has to do with using the information
gleaned from traditional accounting in ways that can sustain a company’s financial health moving
forward.

Management accountants have access to both the internal and external financial information
compiled by their employing business. This allows them to offer the best information for consulting
purposes, instead of being able to access only the general information available to shareholders and
the public. Management accountants are considered to be members of the company’s personnel,
whereas public accountants and consulting services are often external sources who receive the data
compiled by management accountants.

Traditional financial accounting looks at transactions on a case-by-case basis, and accumulate


information from each one. Management accounting looks at the larger picture, and takes into
account factors that could impact future operations. Accountants will make projections and advise
decisions based on the business as a whole, while making sure that management has all of the
information needed to make prudent financial choices.

Certifications for Management Accountants


Managerial accountants have two major options for professional certification.

CMA Certification
The Certified Management Accountant (CMA) certification is offered by the Institute of Management
Accountants. To qualify for eligibility, students must complete a minimum education of a bachelor’s
degree from an accredited university. Upon receiving their diploma, CMA candidates can sit for the
CMA exam.

The CMA exam is a two-part test that typically takes four hours to complete. The first exam tests
students’ knowledge of Financial Planning and Performance Analysis, and the other deals with
Control and Financial Decision Making

Chartered Global Management Designation


The Chartered Global Management Accountant designation is offered jointly by London’s Chartered
Institute of Management Accountants and the American Institute of Certified Public Accountants
(AICPA).

To qualify for the designation, candidates must complete a series of ten exams. This generally takes
place over several years, with many individuals opting to take a few tests each year. In addition to
passing the CGMA exam, candidates must complete three years of management accounting
experience before being eligible for certification.

WHY TAKE MANAGEMENT ACCOUNTING?


Many people who are interested in management accounting view it as a key step in a senior
management career path.

Management accounting experience is a natural fit for promotions into executive positions, such as
Chief Financial Officer (CFO) of a corporation. Many CFOs started out as a managerial accountant
and learned the tricks of the trade through the day to day handling of corporate finances and
operations. Owners and board members are more likely to promote a high-ranking staff member that
has already earned their trust, especially when the job involves overseeing their company’s finances.

According to the Bureau of Labor Statistics, management accounting jobs are projected to grow by a
whopping 19 percent by 2026. Specific growth projections, however, are expected to widely vary by
industry.

The job outlook is especially bright for management accountants who are especially skilled at risk
assessment and management. This is a rapidly growing concentration, due largely in part to recent
financial crises and economic instability on both a global and national level.

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