Reference No: KLL-FO-ACAD-000 | Effectivity Date: August 3, 2020 | Revisions No.

: 00

VISION MISSION
A center of human development committed to the pursuit of wisdom, truth, Establish and maintain an academic environment promoting the pursuit of
justice, pride, dignity, and local/global competitiveness via a quality but excellence and the total development of its students as human beings,
affordable education for all qualified clients. with fear of God and love of country and fellowmen.

GOALS
Kolehiyo ng Lungsod ng Lipa aims to:
foster the spiritual, intellectual, social, moral, and creative life of its client via affordable but quality tertiary education;
provide the clients with reach and substantial, relevant, wide range of academic disciplines, expose them to varied curricular and co-
curricular experiences which nurture and enhance their personal dedications and commitments to social, moral, cultural, and economic
transformations.
work with the government and the community and the pursuit of achieving national developmental goals; and
develop deserving and qualified clients with different skills of life existence and prepare them for local and global competitiveness

MODULE
SECOND Semester AY 2020-2021

I. COURSE CODE/TITLE : ACCTG 2 MANAGERIAL ACCOUNTING

II. SUBJECT MATTER

SUBJECT MATTER Time-Frame
1.1 Managerial Accounting Overview September 6-10, 2021

1.2 Management Accountant and their Responsibilities September 13-17, 2021

1.3 Difference between Managerial and Financial Accounting September 13-17, 2021
 

III. COURSE OUTCOME

1. Managerial Accounting Overview

a) Develop a basic understanding of managerial accounting concepts
b) Understand the functions of Managerial Accounting in a business organization

2. Management Accountant and their Responsibilities

a) Recognize the roles of Managerial Accountant
3. Difference between Managerial and Financial Accounting
a) Understand the role and scope of financial and managerial accounting and the use of accounting
information in the decision making process of managers.
b) Distinguish the difference among the Six types of Escape from Taxation

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MANAGERIAL ACCOUNTING OVERVIEW

Management accounting can be viewed as Management-oriented Accounting. It is the study of managerial aspect of
financial accounting," accounting in relation to management function". It shows how the accounting function can be re-
oriented to fit it within the framework of management activity. The primary task of management accounting is,
therefore, to redesign the entire accounting system so that it may serve the operational needs of the firm. If furnishes
definite accounting information, past, present or future, which may be used as a basis for management action. The
financial data are so devised and systematically development that they become a unique tool for management
decision.

DEFINITION OF MANAGERIAL ACCOUNTING

⮚ Managerial accounting often referred to as management accounting. The Institute of Management

Accountants describes management accounting as “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.” • In short, managerial accounting supports the decision making process through
planning and controlling operations. Planning primarily occurs in the budgeting process. Controlling occurs
when managers compare actual performance with budgeted amounts to identify differences and then act upon
any differences that appear to be significant.

⮚ Management accounting refers to accounting information developed for managers within an organization. In
other words, management accounting is the process of identifying, measuring, accumulating, analyzing,
preparing, interpreting, and communicating information that helps managers fulfill organizational objectives.
This is the phase of accounting concerned with providing information to managers for use in planning and
controlling operations and in decision-making.

⮚ Managerial accounting is concerned with providing information to managers- People inside an organization
who direct and control its operations. In contrast, financial accounting is concerned with providing information
to stockholders, creditors, and others who are outside an organization. Managerial accounting provides the
essential data with which organizations actually run. Financial accounting provides the scorecard by which a
company’s past performance is judged. Because it is manager oriented, some understanding of what
managers do, the information managers need, and the general business environment, must precede any
study of managerial accounting.

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⮚ The term “Management Accounting”, covers all those services by which the accounting department can assist
the top management and other departments in the formation of policy, control of execution and appreciation of
effectiveness. This definition points out that management is entrusted with the primary task of planning,
execution and control of the operating activities of an enterprise. It constantly needs accounting information on
which to base its decision. A decision based on data is usually correct and the risk of erring is minimized. The
position of the management in respect of its functions can be compared to that of an army general who wants
to wage a successful battle. A general can hardly fight successfully unless he gets full information about the
surrounding situation and the extent of effectiveness of each of his battalions and, to the extent possible, even
the enemy's intentions. Like a general, a successful management too strives to outstrip other competitors in
the field by streamlining its operating efficiency. It needs a thorough knowledge of the situation and the
circumstances in which the firm operates. Such knowledge gained through the processed financial data
rendered by the accounting department based on which it can take policy decision regarding execution,
control, etc. It is here that the role of management accounting comes in It supplies all sorts of accounting
information in the form of such statements as may be needed by the management.

⮚ "Management accounting is the presentation of accounting information in such a way as to assist the
management in creation of policy and the day to day operation of an undertaking”. Anglo-American Council of
Productivity (1950. The reasoning added to this statement was, "the technique of accounting is of extreme
importance because it works in the most nearly universal medium available for the expression of facts, so that
facts of great diversity can be represented in the same picture. Management needs information for better
decision-making and effectiveness. The collection and presentation of such information come within the area
of management accounting. The accounting data so supplied thus provide the informational basis of action.
The quality of information so supplied depends upon its usefulness to management in decision-making. The
usual approach is that, first, a thorough analysis of the whole managerial process is made, then the
information required for each area is explored, and finally, all the information, after analysis in terms of
alternatives, is taken into consideration before arriving at a management decision. It is to be understood here
that the accounting information has no end in itself; it is a means to an end. As its basic idea is to serve the
management, its form and frequency are all decided by managerial needs. Therefore, accounting aids the
management by providing quantitative information on the economic well-being of the enterprise. It would be
appropriate if we called management accounting an Enterprise Economics. Its scope extends to the use of
certain modern sophisticated managerial techniques in analyzing and interpreting operative data and to the
establishment of a communication network for financial reporting at all managerial levels of an organization.

NATURE OF MANAGEMENT ACCOUNTING

The term management accounting is composed of 'management' and 'accounting'.

⮚ The word 'management' - does not signify only the top management but the entire personnel charged with the
authority and responsibility of operating an enterprise. The task of management accounting involves furnishing
accounting information to the management, which may base its decisions on it. It is through management
accounting that the management gets the tools for an analysis of its administrative action and can lay suitable

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 stress on the possible alternatives in terms of costs, prices and profits, etc. but it should be understood that
the accounting information supplied to management is not the sole basis for managerial decisions. Along with
the accounting information, management takes into consideration or weighs other factors concerning actual
execution. For reaching a final decision, management has to apply its common sense, foresight, knowledge
and experience of operating an enterprise.

⮚ Management accounting is managerially oriented; its data is selective in nature. It focuses on potential
opportunities rather than opportunities lost. The data is operative in nature catering to the operational needs of
a firm. It details events, monetary and non-monetary. The nature of data, the form of presentation and its
duration are mainly determined by managerial needs. It is meant for internal uses and managerial control. An
accountant should look at his enterprise from the management's point of view. Whenever he fails to do that, he
ceases to be a management accountant. Management accounting is highly sensitive to management needs.
However, it assists the management and does not replace it. It represents a service phase of management
rather than a service to management from management accountant. It is rather highly personalized service.
Management accounting serves as a management information system and so enables the management to
manage better.

FUNCTIONS OF MANAGEMENT ACCOUNTING

The basic function of management accounting is to assist the management in performing its functions
effectively. The functions of the management are planning, organizing, directing and controlling. Management
accounting helps in the performance of each of these functions in the following ways:

⮚ Provides data: Management accounting serves as a vital source of data for management planning. The
accounts and documents are a source of a vast quantity of data about the past progress of the enterprise,
which are necessary for making forecasts for the future.

⮚ Modifies data: The accounting data required for managerial decisions is properly compiled and classified. For
example, purchase figures for different months may be classified to know total purchases made during each
period product-wise, supplier-wise and territory-wise.

⮚ Analyses and interprets data: The accounting data is analyzed meaningfully for effective planning and
decision-making. For this purpose, the data is presented in a comparative form. Ratios are calculated and
likely trends are projected.
Serves as a means of communicating: Management accounting provides a means of communicating
management plans upward, downward and outward through the organization. Initially, it means identifying the
feasibility and consistency of the various segments of the plan. At later stages, it keeps all parties informed
about the plans that have been agreed upon and their roles in these plans.

⮚ Facilitates control: Management accounting helps in translating given objectives and strategy into specified
goals for attainment by a specified time and secures effective accomplishment of these goals in an efficient

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 manner. These are made possible through budgetary control and standard costing which is an integral part of
management accounting.

⮚ Uses qualitative information: Management accounting does not restrict itself to financial data for helping the
management in decision-making but also uses such information, which may not be capable of being measured
in monetary terms. Such information may be collected form special surveys, statistical compilations,
engineering records, etc.

SCOPE OF MANAGERIAL ACCOUNTING

The main objective of managerial accounting is to maximize profit and minimize losses. It is concerned with the

presentation of data to predict inconsistencies in finances that help managers make important decisions. Its scope is

quite vast and includes several business operations. The following points discuss what management accounting can

do to make a business run better. 

1. Managerial accounting is a rearrangement of information on financial statements and depends on it for making
decisions. Therefore, the management cannot enforce the managerial decisions without referring to a concrete
financial accounting system.

2. What you can infer from financial accounting is limited to numerical results like profit and loss, but in Management
Accounting, you can discuss the cause and effect relationships behind those results.

3. Managerial accounting uses easy-to-understand techniques such as standard costing, marginal costing, project
appraisal, and control accounting.

4. Using historical data as a reference, the management observes the current information to check the impacts of
business decisions.

5. Management can use this type of accounting to set objectives, format plans to meet them, and compare the
performance of various departments.

6. Managerial accounting is used for forecasting. It concentrates on supplying information that would ease the effect of
a problem rather than arriving at a final solution.

TECHNIQUES IN MANAGERIAL ACCOUNTING

In order to achieve business goals, managerial accounting uses a number of different techniques.

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⮚ Marginal analysis: This assesses profits against various types of costs. It primarily deals with the benefits of
increased production. It involves calculating the break-even point, which requires knowing the contribution
margin on the company’s sales mix. Here, sales mix is the proportion of a product that a business has sold
when compared to the total sales of that business. This is used to determine the unit volume for which the
business’ gross sales are equal to total expenditures. Managerial accountants to determine the price points for
various products use this value.

⮚ Constraint analysis: Managerial accounting monitors the constraints on profits and cash flow with respect to a
product. It analyzes the principal bottlenecks and the problems they cause, and calculates their impact on
revenue, profit, and cash flow.

⮚ Capital budgeting: This is an analysis of information in order to make decisions related to capital expenditures.
In this analysis, the managerial accountants calculate the net present value and internal rate of return to help
managers with capital budgeting decisions like calculating payback period or calculating accounting rate of
return.

⮚ Inventory valuation and product costing: This deals with determining the actual cost of goods and services.
The process generally involves computing the overhead charges and assessment of direct costs associated
with cost of goods sold.

⮚ Trend analysis and forecasting: This primarily deals with variations in product costs. The resulting data is
helpful in identifying unusual patterns and finding efficient ways to identify and resolve the underlying issues.

MANAGERS’ RESPONSIBILITIES

Setting goals and objectives Overseeing day-to-day operations Evaluating results of operations Directing
Decision Making Planning Controlling

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 Figure 1 Managers’ Responsibilities

1. PLANNING -From an accounting perspective, planning is the communication of a company’s goals.

Because ultimately a company’s results are translated into income, planning is achieved through the
budgeting process as a basis for decisions made by managers. Budgets are the financial plans of a
company. They identify the sources or inflows of economic resources, and the uses or outflows of
economic resources of a company. Budgets identify the source from which assets will be derived and
how they will be used. They ultimately create benchmarks of profits, cash flows, and the financial
position that the company expects to achieve. Setting goals and objectives and how to achieve them
Examples - Generate more sales via opening new stores. Reduce labor costs by reducing store hours
Budgets – the financial plan for inflows and outflow

2. DIRECTING - While planning, managers have to oversee and supervise day-to- day business
undertakings. They have to delegate roles and responsibilities, guide the employees on how to
accomplish their chores, motivate and inspire them until the fulfillment of the tasks, and respond to
employees’ queries on how to pull off their tasks. Using a computerized accounting system,
managerial accountants take into account and list all the assignments and undertakings that must be
realized. Some of these include running trial balances and wrapping up accounting processes every
end of the month. Overseeing company’s day-to-day operations Example: Using daily/weekly sales
reports to adjust marketing strategies Example: Using product cost reports to adjust raw material
usage

3. CONTROLLING - Controlling keeps all business activities on track and identifies if the company’s
objectives are met. This can be achieved by measuring performance, comparing actual performance
with budgets, and taking action when needed. In evaluating and assessing the performance,
managers have different gauges evaluating results of operations against plans and making
adjustments as needed. Example: Comparing budgeted sales with actual sales to take corrective
actions .

4. DECISION MAKING - Good decisions are derived from tireless accession and assessment of
information. With good decisions comes business value. Managerial accounting supplies the
information necessary to incite decision-making processes. In addition, the management team
determines which among the other possible choices or courses of action will support the company in
effectively achieving its objectives. Management is continually making decisions while it plans, directs,
and controls operations Price setting or product offerings Renovation of facilities Operation openings
or closings

THE FOLLOWING AREAS THAT ARE WITHIN THE SCOPE OF MANAGEMENT ACCOUNTING.

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1. Financial Accounting-The major function of management accounting is the rearrangement or modification
of data. Financial accounting provides the very basis for such a function. Hence, management accounting
cannot obtain full control and coordination of operations without a well-designed financial accounting
system.

2. Cost Accounting- Planning, decision-making and control are the basic managerial functions. The cost
accounting system provides necessary tools such as standard costing, budgetary control, inventory
control, marginal costing, and differential costing etc., for carrying out such functions efficiently. Hence,
cost accounting is considered a necessary adjunct of management accounting.

3. Revaluation Accounting -Revaluation or replacement value accounting is mainly concerned with ensuring
that capital is maintained in real terms and profit is calculated on this basis.

4. Statistical Methods - Statistical tools such as graph, charts, diagrams and index numbers etc., make the
information more impressive and comprehensive. Other tools such as time series, regression analysis,
sampling techniques etc., are highly useful for planning and forecasting.

5. Operations Research - Modern managements are faced with highly complicated business problems in
their decision-making processes. OP techniques like linear programming, queuing theory, decision theory,
etc., enable management to find scientific solutions for the business problems.

6. Taxation- This includes computation of income tax as per tax laws and regulations, filing of returns and
making tax payments. In recent times, it also includes tax planning.

7. Organization and Methods -O&M deal with organizations reducing cost and improving the efficiency of
accounting, as also of office systems, procedures, and operations etc.

8. Office Services - This includes maintenance of proper data processing and other office management
services, communication and best use of latest mechanical devices.

9. Law- Most of the management decisions have to be taken in a legal environment where the requirements
of a number of statutory provisions or regulations are to be fulfilled.

10. Internal Audit- This includes the development of a suitable system of internal audit for internal control.

11. Internal Reporting- This includes the preparation of quarterly, half yearly, and other interim reports and
income statements, cash flow and funds flow statements, scarp reports, et

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 LIMITATIONS OF MANAGERIAL ACCOUNTING

Managerial accounting may define the pace and process of development of an organization yet it has its set of
drawbacks. Due to this, the strength or weakness of accounting decisions made depends solely on the quality of basic
records. Meanwhile, different managers may interpret the same information in different ways depending on their
capacity and experience in the field

A managerial accounting system is more suitable for bigger enterprises, which are at the peak of growth. This is
possible because the company can afford the price of installing a system in place and even hire professionals to make
the best of it to prevent the company from future meltdowns.

Management accounting, being comparatively a new discipline, suffers from certain limitations, which limit its
effectiveness. These limitations are as follows:

⮚ Limitations of basic records: Management accounting derives its information from financial accounting, cost
accounting and other records. The strength and weakness of the management accounting, therefore, depends
upon the strength and weakness of these basic records. In other words, their limitations are also the limitations
of management accounting.

⮚ Persistent efforts. The conclusions draws by the management accountant are not executed automatically. He
has to convince people at all levels.

⮚ Management accounting is only a tool: Management accounting cannot replace the management.
Management accountant is only an adviser to the management. The decision regarding implementing his
advice is to be taken by the management. There is always a temptation to take an easy course of arriving at
decision by intuition rather than going by the advice of the management accountant.

⮚ Wide scope: Management accounting has a very wide scope incorporating many disciplines. It considers both
monetary as well as non-monetary factors. This all brings inexactness and subjectivity in the conclusions
obtained through it.

WHO IS MANAGEMENT ACCOUNTANT?

The management accountant designs the format of the financial and cost control reports. These reports are
presented before each level of management with the most useful data at the most appropriate time. Moreover,
he/she educates management executives as the ways of using reports. Hence, sometimes, he/she described
as the Chief Intelligence Officer of the top management.

Management Accounting provides significant economic and financial data to the management and the

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⮚ Management Accountant is the channel through which this information efficiently and effectively flows to the
management. The Management Accountant has a very significant role to perform in the installation,
development and functioning of an efficient and effective management information system.

⮚ He designs the framework of the financial and cost control reports that provide each management level with
the most useful data at the most appropriate time. He educates executives in the need for control information
and ways of using it. This is because his position is unique with respect to information about the organization.
Apart from top management, no one in the organization perhaps knows more about the various functions of
the organization than him. Sometimes he described as the Chief Intelligence Officer of the top management.

⮚ He gathers information, breaks it down, sifts it out and organizes it into meaningful categories. He separates
relevant and irrelevant information and then ranks relevant information in an intelligible form to the
management and sometimes to those who are interested in the information in the information outside the
company. He also compares the actual performance with the planned one and reports and interprets the
results of operations to all levels of management and to the owners of the business. Thus, in brief,
management accountant or controller is the person who designs the management information system for the
organization, operates it by means of interlocked budgets, computes variances and exhorts others to institute
corrective measures.

FUNCTIONS OF MANAGEMENT ACCOUNTANT

1. Planning of Accounting Function-An accounting system is maintained in an organization which should cover
standards of costs, sales forecast, production planning, profit planning, allocation of resources, capital
budgeting and short term and long term financial planning. Moreover, he has to prepare the necessary
procedures to implement the plan effectively.

2. Controlling- The management accountant has to measure the actual performance and compare with standard.
Based on this comparison, he has to find the differences, interpret the results of operation, and submit the
same to all levels of management. This is done through appropriate accounting reports for controlling.

3. Reporting- The top management requests the management accountant to prepare the report for the root
causes for an unfavorable event or operations. In this report, the accountant can pin point real reasons and
the persons who are responsible.

4. Coordinating- He consults all levels of management for framing a policy or an action programed. Such type of
consultation brings co-ordination between the accounts department and top management.

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5. Interpreting-The accounting information is modified and presented before the management with interpretation.
The interpretation is made in different phases. If so, real reasons for the operating results can be understood
by the management.

6. Evaluation- He has to evaluate the effectiveness of policies, organization structure and procedures adopted for
attaining the objectives. For which, he has to consult the same with functional managers and top executives.

7. Advising- He has to advise the management in order to improve the performance of operations.

8. Administration of Tax- A business organization is liable to pay value added tax, income tax and other taxes to
the local government, state government and central government. In this aspect, the management accountant
is expected to pay the taxes and maintain the accounting records as the case may be.

9. Government Reporting- He will have to supervise all the statements and returns which are to be submitted to
the government periodically within due date.

10. Appraisal of External Effects- There may be changes in the state and central government policy. Sometimes,
there may be amendments in the existing laws. These policy changes and amendments have an impact on
the attainment of business objectives. The extent of impact has to be assessed by the management
accountant.

11. Economic Appraisal - The central government periodically publishes the economic condition of the nation.
Now, the management accountant is to make economic appraisal and find the influence of economic condition
over the business activities. In this aspect, he can prepare a report and submit before top management along
with his/her comments.

12. Protection of Assets- This function is performed through maintenance of separate fixed assets register for
each type of fixed assets. Moreover, he can frame the rules and regulation for using each type of fixed assets.
He can take insurance coverage to all types of fixed assets.

DESCRIBE ORGANIZATIONAL STRUCTURE AND THE ROLES AND SKILLS REQUIRED OF MANAGEMENT
ACCOUNTANTS WITHIN THE ORGANIZATION

ORGANIZATIONAL STRUCTURE

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 Figure 1.1 Organizational Structure

⮚ A typical organizational structure for publicly held companies starts with the board of directors, elected by the
stockholders (owners) of the company to oversee the company. Because the board meets only periodically,
they hire a chief executive officer (CEO) to manage the day-to-day operations.
.
⮚ The CEO hires other executives to run various aspects of the organization, including the chief operating
officer (COO) and the chief financial officer (CFO). The COO is responsible for the company’s operations, and
the CFO is responsible for all of the company’s financial concerns.

⮚ The internal audit department reports to the CFO or CEO for day-to-day administrative matters. This internal
audit department also reports to a subcommittee of the board of directors called the audit committee.

⮚ The audit committee oversees the internal audit function as well as the annual financial statement audit by
independent CPAs. Both the internal audit department and the independent CPAS report to the audit
committee for one reason: to ensure management will not intimidate them or bias their work.

CHANGING ROLES OF MANAGEMENT ACCOUNTANTS

⮚ Technology has changed the roles of management accountants. • They are still involved with the traditional
tasks of ensuring accurate financial records; however, computers have taken over the task of performing
routine mechanical accounting tasks. Freed from the routine mechanical work, management accountants
spend more time planning, analyzing and interpreting accounting data to provide decision support. Impact of
technology
⮚ Ensuring accurate financial records planning, analyzing, and interpreting accounting data Providing decision
support.

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 REQUIRED SKILLS OF MANAGERIAL ACCOUNTANTS

Today’s management accountant requires solid knowledge of both financial and managerial accounting,
analytical skills, knowledge of how a business functions, the ability to work on a team, and oral and written
communications skills. Knowledge of financial and managerial accounting Analytical skills (critical thinking)
Knowledge of how a business functions Ability to work on a team Oral and written communications skills

MANAGEMENT ACCOUNTING AND FINANCIAL ACCOUNTING

Financial accounting and management accounting are closely interrelated since management accounting is to
a large extent rearrangement of the data provided by financial accounting. Moreover, all accounting is
financial in the sense that all accounting systems are in monetary terms and management is
Responsible for the contents of the financial accounting statements. In spite of such a close relationship
between the two, there are certain fundamental differences. These differences can be laid down as follows:

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 Figure 1.3 Financial Accounting vs Managerial Accounting

1. Objectives: Financial accounting is designed to supply information in the form of profit and loss account
and balance sheet to external parties like shareholders, creditors, banks, investors and Government.
Information is supplied periodically and is usually of such type in which management is not much
interested. Management Accounting is designed principally for providing accounting information for
internal use of the management. Thus, financial accounting is primarily an external reporting process
while management accounting is primarily an internal reporting process.

2. Analyzing performance: Financial accounting portrays the position of business as a whole. The financial
statements like income statement and balance sheet report on overall performance or statues of the
business. On the other hand, management accounting directs its attention to the various divisions,
departments of the business and reports about the profitability, performance, etc., of each of them.
Financial accounting deals with the aggregates and, therefore, cannot reveal what part of the
management action is going wrong and why. Management accounting provides detailed analytical data
for these purposes.

3. Data used: Financial accounting is concerned with the monetary record of past events. It is a post-
mortem analysis of past activity and, therefore, out the date for management action. Management
accounting is accounting for future and, therefore, it supplies data both for present and future duly
analyzed in detail in the 'management language' so that it becomes a base for management action.

4. Monetary measurement: In Financial Accounting only such economic events find place, which can be
described in money. However, the management is equally interested in non-monetary economic events,
technical innovations, personnel in the organization, changes in the value of money, etc. These events
affect management's decision and, therefore, management accounting cannot afford to ignore them.

5. Periodicity of reporting: The period of reporting is much longer in financial accounting as compared to
management accounting. The Income Statement and the Balance Sheet are usually prepared yearly or in
some cases half-yearly. Management requires information at frequent intervals and, therefore, financial
accounting fails to cater to the needs of the management. In Management Accounting there is more
emphasis on furnishing information quickly and at comparatively short intervals as per the requirements
of the management.

6. Precision: There is less emphasis on precision in case of management accounting as compared to

financial accounting since the information is meant for internal consumption.

7. Nature: Financial accounting is more objective while management accounting is more subjective. This is
because management accounting is fundamentally based on judgment rather than on measurement.

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 8. Legal compulsion: Financial accounting has more or less become compulsory for every business
because of the legal provisions of one or the other Act. However, a business is free to install or not to
install system of management accounting.

The Institute of Management Accountants (IMA) is the professional association for management
accountants.
⮚ The goal of the IMA is to advance the management accounting profession primarily through
certification, practice development, education and networking.
⮚ The IMA issues two different professional certifications: the Certified Management Accountant
(CMA) and the Certified Financial Manager (CFM). Certification (CMA) Practice Development
Education Networking Ethical Standards Public Education

SUMMARY OF IMA ETHICALSTANDARDS

The IMA Statement of Ethical Professional Practice requires compliance with four ethical standards:

Competence, Confidentiality, Integrity and Credibility. -Failure to comply with the standards may result in disciplinary
action. Maintain professional competence Preserve confidentiality of information Uphold integrity Perform duties with
credibility
ETHICALBEHAVIOR
Steps to resolve ethical dilemmas

• To resolve ethical dilemmas, the IMA suggests that management accountants

⮚ First, follow their company’s established policies for reporting unethical behavior.
⮚ If not resolved in this way, discuss the situation with the immediate supervisor unless the supervisor is
involved in the unethical situation.
⮚ If the immediate supervisor is involved and is the CEO, notify the audit committee or board of directors.
⮚ Discuss the unethical situation with an objective advisor such as an IMA ethics counselor for clarification.
⮚ Consulting an attorney regarding legal obligations and rights is also advisable. Follow company’s policies for
reporting unethical behavior Discuss with immediate supervisor Discuss with objective advisor Consult an
attorney

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