Managerial accountants need to use accounting information in seeing to it that they are able to plan, evaluate the company performance, manage risks and control the business operations in a manner that is deemed beneficial to the business as a whole (Caplan, n. d). This can be achieved through: having high standards of ethics in all situations; employing the techniques of management reports, budgetary control, and analysis of fund flows and financial statements; making prudent capital investment decisions; and maintaining continuous quality control systems.
The Definition of Managerial Accounting
Managerial accounting which is a synonym for management accounting refers to the provision of accounting information to the managerial accountants of particular organizations which they will in turn utilize in making informed decisions that touch on the business. This allows them to carry out their control and management duties effectively (Gao, 2002). According to Hall (2010), managerial accounting entails a process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information of accounting information by managers with the aim of assuring appropriate use of available resources and accountability.
Role of Managerial Accounting and the Management Accountant
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decisions concerning the kind of product to introduce into the market, when to introduce the product and where the production should take place. In performance evaluation, individual product lines and products are evaluated in terms of their productivity to the business. Other aspects of the business whose performance is evaluated by the top managers include the middle level managers and frontline managers, programs as well as the different department within the organization (Abdel-Maksoud, 2012). In the area of operational control, the managers should for instance be able to know the various inputs required at various production stage. This enables them to help the line managers to identify and eliminate any constraint that might come-by thus ensuring a flaw-less production process.
Maksoud (2011) asserts that management accounting involve strategic, performance and risk management. The managerial accountant should be a strategic partner within the organization helping in devising strategic plans for the organization. He or she should also see to it that there are frameworks to identify, measure, manage and repot all risks attached to endeavors directed at realizing the goals of the organization. Managerial accountants also prepare financial report for non-management groups such as the shareholders, and regulatory agencies.
Ethical Issues in Management Accounting
Ethics refers to the moral principles that...