In today's fast paced world, Ethics have emerged as an integral part of every system. With the growing number of organizations worldwide and fierce competition, every firm wants a larger share of the pie. It is just a matter of time before businesses collapse and financial markets stumble on a worldwide scale. In order to avoid such a catastrophe, today's accountants have been given more challenges to face and higher roles to play within their organizations. Managerial and financial accountants are required to operate with highest ethical standards.
Managerial Accounting is the process of identifying, measuring, analyzing, interpreting and communicating information in order to achieve an organization's goals (Thompson, 2006). Managerial Accounting is widely known as Cost Accounting all over the world. Management accounting is concentrated towards managers of organizations to assist them in management making decisions and plan the company's operations. It revolves around the inner management teams and usually is confidential in nature. With increasing competition, both locally and globally, management accountants are now faced with more responsibility and their scope of accountancy has drastically widened. They focus more on the managerial activities at all levels within the organization. This is done to help the internal users to improve the effectiveness and efficiency of the organization by delivering better quality goods and services (Thompson, 2006).
On the other hand, financial accountants are in charge of making financial statements for external decision makers. These decision makers include banks, suppliers, stockholders and government agencies that play a vital role in financing the company (Horngreen, Stratton, & Sundem, 2002).
Since external users have limited access to the company's information, there own success depends on getting reliable and consistent external reports. These reports are general-purpose financial statements such as income statements, owner's equity statements, cash flow statements and balance sheet. These financial statements report on the financial performance of the company and are an important indicator of the company's progress. These reports help investors to understand the financial health of the company and invest into these companies (Larson & Jenson, 2002).
Managerial accounting provides special purpose reports created to meet the information needs of internal users. Usually internal reports would deal with the best marketing mix of products to maximize profits and minimize costs. "The Institute of Management Accountants (IMA) is the world's leading organization dedicated to empowering management accounting and finance professionals to drive business performance." (Institute of Management Accountants, 1997, Para...