Management Accounting/Reporting
Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
In contrast to financial accountancy information, management accounting information is:
usually confidential and used by management, instead of publicly reported;
forward-looking, instead of historical;
pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards.
As such Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its Resource.
Distinction to controlling
The distinction between management
Accounting and Controlling is difficult and in many
companies the term is used interchangeably.
However in companies where both term
and respective departments exist, the focus of Management
accounting is very much on information for management versus
controlling being information provided to operational middle
management.
Very often Management Accounting
forms the interface between Management and Accounting,
Management and the operation commercial controllers and
Management and the Company controllers.
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Conclusion
Management accounting ranges from
Controlling (as described in the section controlling) to the
dedicated interface for management which becomes the focus
when a separate controlling department exists.
In certain circumstances and very
often in big companies, a dedicated team of people providing
executive summaries as well as detailed explanations to top
managers can be a valuable investment as efficient decisions
might be easily hindered by too much information on a too
low level.
As such the regular accounting
output or controlling output for that matter would not be
suitable for executive decision making. Hence a balanced
executive reporting is in such situations pertinent.
It is easily to be seen that the
establishment of such a management reporting is everything
else then straight forward an in most cases very much
dependent on executive personnel's way of working.
Hence a flexible system needs to be
in place, which is able not only to provide executive
suitable information, but is also able to gear the
granulation and focus of reporting as an integral part of
their operational activities.
In order not to get sidetracked it is
advisable to get external support coaching you through the
establishment process.
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