The Function Of Management Accountant Accounting Essay

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Management accounting is the process of identifying, measuring, analyzing and communicating financial information needed by internal users the such as managers, employees and executive of the company to plan, evaluate and control an organization's operations. The role of a cost and management accountant is to ensure that information meet the requirements of allocating cost between cost of goods sold and inventories for users within or outside of the business, to deliver relevant information to assist managers to make decisions so that they are able to plan, control, measure the performance and continuous improvement to the business (Drury 2008).

In the management accounting field, the allocating of cost between cost of goods sold and inventories are important. Unlike financial accounting that calculates only the profit of the business without considering the goods that are unsold or partly completed stocks, the management accountants takes detailed parts of the business into consideration such as the actual cost of the product, the overhead cost, production cost, fixed cost, variable cost, etc (Drury 2008). As the reports are for internal users such as the managers to make decisions for the company, the reports are based on the past and future events. For example, a big organization that producers a large amount of goods, it is necessary to evaluate the stocks. Every detail of production such as the completed products, work in progress, unused raw materials helps internal users to evaluate the stocks to calculate the business's profit (Drury 2008). Thus a managerial accountant would have to prepare reports such as budgetary planning, cost findings, cost and profit analysis and performance reports (Managerial Accounting n.d.).

Furthermore, the cost and management accountants have to deliver relevant information to assist managers to make decisions that they are able to strategize the operations in the business and to make financial decisions (Burch n.d.). Information is divided into both routine and non-routine reporting. Routine information is information taken from segments of the business that provides profit into the business such as products, services, customers and distribution channels. Non-routine information however is where information is based on strategic decisions such as investments for the company, introduction of new product and services, contracts for the business etc (Drury 2008). In addition, the quality of the information provided to managers must be practiced by every accountant as it is to assist managers in understanding the flow of the business to enable them to make the right decisions for the organization. A management accountant must ensure that the quality of the information includes attributes such as accuracy, relevancy, timeliness, fairness and usability. The accuracy of the information is to make sure that it is free from errors and mistakes (Burch n.d.). Accurate cost information prepared helps to distinguish between profitable and non profitable activities in the organization (Drury 2008). Besides that, Relevancy of the information is also needed as it must be applicable to the purpose intended. Not only that, the timeliness of it is to get information on time for the managers and employees. Fairness of the information however will make sure that information is free from biasness within the business. Lastly, the usability of information is to ensure that information should be easily be understood by mangers when presented to them (Burch n.d.). If these attributes are not met, it may lead to managers making the wrong decisions and may bring a downfall to an organization's profitability (Drury 2008).

Planning, controlling, measurements of performance and continuous performance are also the few of the functions of a management accountant. In the planning process, it involves trying to achieve business's goals by forming an action that should be taken and how it should be done in order to reach their objective which is to maximize profits (Managerial Accounting n.d.). The plans of management will thus be presented in budget form which will be done annually. After the planning stage, accountants will move on to the controlling stage where it is to ensure that the planned outcomes are tallied with the actual outcomes. This will be done by using the budgeted report comparing it to the actual report (Drury 2008). To compare both planned and actual outcomes, is where the measurement of performance stage comes in, where companies will refer to the feedbacks given. One of the feedbacks that are used to compare would be the performance report. The performance report will give an insight of how to business is performing and whether they require additional attention to improve their business (Managerial Accounting n.d.). An economic feedback to managers should also be presented in order to help them in controlling costs and also to improve the business' operations (Drury 2008).

In conclusion, the function of management accountants actually plays an important role in assisting an organization to achieve their goals and to improve their business' performance. If however the management accountants fail in its role, it may lead to a business's downfall in terms of profitability.