Management accounting is a field of business accounting that caters to internal users such as management, owners and employees with customized reports and variances to explain trends and deviation for planning and decision making purposes. Financial accounting, on the other hand, is more standardized since it is regulated by accounting standards and is circulated to people outside of your company.
In Singapore, the professional body which brings management accountants together and maintains its level of competency is the Chartered Institute of Management Accountants or CIMA. It provides updates and offer professional qualifications for management accountants.
Role of Management Accountant
Management accounting is defined 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.” This definition highlights the importance of a management accountant to you – the business owner, investor or manager. Management accountants add value to your company by being relevant in the following key activities of management:
- Decision making. To help you make more informed decisions, management accountants give you estimates of the costs to implement available business options.
- Planning. More effective planning is achieved using detailed financial description of anticipated operations (i.e. projected revenues and costs) developed by management accountants.
- Directing operational activities. To assist your management team in running your company on a day-to-day basis, management accountants record and maintain financial and operational data (e.g. demand for your product or service, resources available, performance measures).
- Controlling. Using comparisons of actual and budgeted costs and revenues prepared by management accountants, you can efficiently identify problems and ensure that your company is operating as intended.
In summary, the benefits of management accounting include improved decision making, more effective planning, greater operating efficiency at lower costs and better control of operations. However, just like other products and services, information resulting from management accounting has associated costs. These costs include the cost of compensation for accounting personnel, the cost of purchasing and operating computers, the cost of maintaining accounting systems and the cost of the time spent by users of information. It is vital for business owners to identify the proper cost-benefit trade-off while still achieving your company’s goals. A key to reaching the right trade-off is to invest in accounting systems that have good user interfaces and easily customisable reports. These features will help both accounting and non-accounting personnel record financial and operational data and prepare management reports more efficiently.
Need Management Accounting Service?
Let us know if you need management accounting service to cater to your business’ internal decision making and resource allocation. We will be glad to help you with any accounting issues, including tax and corporate secretarial issues. Just call us at [CompNumber] or communicate with us via the form on the right hand side.