Management Accounting Process
Title: Management Accounting Process. Management accounting entails the process of identifying, analyzing, recording, and presentation of informed management information to the different management in entities so as to make informed decisions. The informed decisions are both short and long term ones. The information provided may be wide covering different areas like the sale made in ascertain period and the budgets, the growth in profitability, customer base and payments made. The information being provided relates to the management, is always timely and is useful in making the entity’s decision.
The managerial information is critical in making different strategic decisions, helps in making performance decisions which are involved in creating an area of comparing the profits of the entity with previous periods and coming up with better techniques of improving on the same (Drury, 2013, p.17).The organization is also involved in the creation of risk managing actions on different lines of management whereby this will be through ensuring that the entity ventures in different business through taking risks which may lead to better performance.
The data which is collected by the different management accountants are involved in the process of planning, performance rating and maintaining operational status. Planning enables the different entities to know what to produce and when. This is aided by knowing the amount of the raw materials being needed and the labor force too. The planning process enables the entities to take into consideration performance rating which entails comparing the input rate for the different employees and the resultant profit.
Maintaining the operational status enables the different management to know the cost incurred in the production process and keeping a record of what is occurring in the entity. The costs incurred in the production process can be identifying from the different raw materials and the input in the production process based on the labour force and the time employed. The improvement in the operational status of an entity will hence lead to achievement of different set target which will motivate the different management personnel and the staff too. These goals can only be achieved with good setting of strategies by the management accountants from the initial states and making the different responsible personnel on what to do. The different roles assigned will at the end evaluated and the achievement of the different target evaluated too.
Role of Management Accountants
The traditional management accountants role were mainly geared towards cost control and reduction but the Strategic accountants in the current era are focused on a wide area of activities like ensuring that there is improved competitiveness, identifying new opportunities in different markets and ensuring that the decisions being made are longterm and of benefit to the different organizations (Hilton, 2013,p.39).The roles of the management accountants have hence highly changed in the current period as compared to the past. This has been brought about by the increasing level of technological advancements, increased business sizes and the existence of different opportunities in different areas. The following are the different roles played by the Strategic management accountants in the current world which are quite different from the traditional management accountants.
Keeping a Prospective View in the Entity
The management accounting process management is employed today by the strategic management accountants is of more benefit as compared to the traditional one resulting from the different changes in the global environments. The management accountants today use information which is more broad-based and doesn’t consider only internal information in an organization and is highly prospective. The broad-based information has been made through having a broad information base through the enterprise resource planning systems. The newly implemented systems by the management accountants enable them to be able to keep track of huge amounts of data relating to different parties. The data can be kept for the different customers and suppliers of the entity which will enable them to keep a track of the active and frequent customers and suppliers too. The data enables the different management accountants in ensuring that the make the payments to the different suppliers in time and hence they don’t build up their balances which may lead to the inability to settle them in future.
Keeping this track enables the different suppliers need to be met in time and hence that will also increase and improve on their supply of the different resources to the entities as there will be no fear of losing any amount upon their supply. The customers’ data can have also been kept to track the different purchasing habits and in case some of the customer’s claims of any balances owed to the entity, it can be easily traced (Malmi,2016, p.32).This has enabled the entities to be able to identify the different measures to meet their customers’ needs and overcome competition in their environment.
The use of the prospective data on how the entity may be performing with the different customers and suppliers has enabled the different management accou tan ts to come up with different strategies of maintaining the existing customers and suppliers and acquiring new more ones and hence being able to open up in a wider area which leads to an improvement in their competitiveness.
Management Accounting Create Competitive Focus
The strategic management accountants are involved in creating a competitive focus in their different environments as compared to the manufacturing focus of the tradition alk management accountants. The traditional management accountants were focusing only on the manufacturing process and the monetary value benefit they will get. This made most of the entities produce different products with the concerned of the value they would acquire, while in the new era the management accountants are taking into consideration the value of the different non-financial information in an entity like the predicted sales, the market share, the potential competitiveness.
The environmental concerns which have no direct costs but have a great impact on the public and the future generations are also taken into consideration (Hasniza Haron,2013, p.104).The consideration of the different budgeted sale has enabled different entities performance to be high as they are forced to work on tight schedules to ensure that they meet the different standards. The entities are also involved in ensuring that these deadlines are kept in track and improvements in the quality of the products with far pricing which lead to an improvement in their sales.
Taking into consideration the different aspects of their market share in the market has enabled the different entities to keep information on their performance and hence be able to track on the weak areas where improvement is highly needed. The market share size enables the different entities to borrow more from their competitors in getting to identify the gaps which exist between them and the competitors too. These gaps are core in ensuring that the entities are to out-win the other customers in the wider competitive market. The new strategic management accountants are able to identify the different non-direct cost acts which have an impact on the entity now and in the future.
The management accounts in the current era are involved in ensuring that they meet the different cost acts which are involved in creating good relations with their different stakeholders. These activities are like being involved in the different community development projects and providing incentives to the different customers and suppliers too like providing trips to the customers who made the high purchase in the entity (Malmi, 2016, p.34). These incentives create a good gesture to the different stakeholders and hence the organization can easily be in a line of attracting and maintaining more different customers and stakeholders too.
Acquiring the different information of stakeholders from the different periodicals, business magazines and newspapers to have enabled the management accountant to be able to keep a track of the potential market opportunities in the different environment. Benchmarking in the different entities which have been performing well in their environments leads to the entity acquiring the different new skills which enable them to be more competitive and hence improve on their performance.
Identifying New Economic Possibilities
The strategic management accountants are involved in learning more of the potential economic possibilities which enable them to create a new marketing area and acquiring more new market. The new possibilities are obtained from the different researches which are carried out by the accountants and the teams in their entities. The strategic management accountants are involved in researching more on the different changes in the accounting and reporting field, the new potential markets and the possibilities of any challenges in the future.
Researching on the different possibilities has hence led to the creation of a wider line of management techniques which are enabling the different organization thrives well in their markets. The researches on the increasing demands of the different products of an entity enable the different manufacturers to come up with more efficient production mechanisms which will not only cut costs but also increase on the quality of the different commodities (Goretzki,2017, p.20). Researches on using the computerized production techniques in different entities has enables the organizations to cut costs on manpower as a lot of data can be easily compiled through the use of computers by only a few individuals.
The cut cost can be employed in different fields like in research or improvement of the production process in the entities. The entities are also able to identify new potential marketing areas in different zones. This will hence lead to more improved production process by the different entities which will mean that there will be a high level of increasing quality to attract more customers. The new marketing areas will also lead to more researches on how to target supply over a wider market scope which will lead to more research in the area of the population growth with demands of the different products. This leads to the opening of different branches by the different organizations in the different parts so as to be able to efficiently supply to their potential customers (Malmi,2016,p.38).
Management Accounting Decision Making
The strategic accountants are involved in creating an environment of tracking the past and ensuring that they focus on improving on the same. This has been enabled through having different lines of sequence and pattern analysis in the different entities. The different entities are hence employing the use of the Target cost techniques in planning their different daily operations. This technique includes the use of patterns in terms of customer growth, growth in sales and profitability.
These are carried out on a monthly basis and the trend of the movements are extrapolated over the other years and the final amounts are compared to the budgeted ones (Puyou,2018, p.13). The use of the sequences and patterns has enabled the different entities in creating a room of potential improvement in performances are the different operation lines are considered while carrying out this.
The strategic accounts considered the possibilities of improving on the past sequences and patterns since the different cycles like increasing more technologically advanced production machines which will cut staff costs. The accountants are also involved in creating an environment in which the different patterns which have been existing can be employed in making decisions on the future performance of the entity which will be through ensuring that the past weakness is sealed. The accountants are also involved in enabling the management know the area where more cost is being incurred in the running of their business and hence come up with new techniques on how to cut on the same while maintaining or improving on their values. The sequence of the decisions being made are all long term and are of great impact on the entity.
Identifying New Opportunities
The strategic management accountants are involved in making decisions of relative positions as compared to the traditional management accountants who were only focused on a single entity. The strategic management accountants are hence involved in creating a decision on different entities which involves coming g up with plans on how to come up with new entities in different areas. Making decisions for a wider scope has hence enabled most of the strategic accountants to come up with new plans of creating a new potential business in different areas.
Decision making on a wider scope leads to the increase in the level of acquiring more new techniques in running the entity which leads to more improvements in the different areas of management (Puyou, 2018 ,p.22) Making decisions on different areas enables the accountants to learn more on different line businesses which are of advantage to the whole entity. this will hence mean that the final decisions will be of great importance as this will lead to more borrowings on the different areas which lead to better performance. Making decisions in the different entities leads to the creation of more opportunities in identifying new business opportunities which will be of great importance to the different operations in the entities.
Creating Linkages With Management Accounting
The management accounts take into consideration of creating different linkages. The creation of linkages is made through creating new market opportunities in the different business areas and also in meeting different accountants globally. There have been different conferences which are held for the different accountants globally which lead to the creation of linkages in sharing the different management techniques by the different accountants. Traditionally, the different accountants were not able to create linkages in their operations as they were overlooking them. The creation of the linkages creates an opportunity for different accounts in acquiring more new skills in learning their different management roles (Janin, 2017, p.16). The creation of the linkages makes the different accounts to be in the line of making new opportunities in their operations and hence be able to know the different changes which have occurred in the new management positions. Creation of linkages in different matters in an entity leads to the creation of more room for embracing different changes in an entity.
The linkages enable different accountants to link different acts to an entitled cause. This will hence create a room for the different accountants to know the cause of different challenges in an entity and also come up with the solutions to the same challenges.
The management accountants are hence core in running the different entities as they are considered when there is an arising in a challenge in the management in terms of operations and in determining the performance of the entity in future. The strategic management accountants are hence core in ensuring that the different entity operations are running efficiently while ensuring cost-cutting measures and quality of the different products. The accountants are hence core in ensuring that the different set targets are achieving and helping in guiding on how the same should be achieved.
Management accountants are very core in the running of an entity and their contributions towards the performance of an entity should always be appreciated as they are core in guiding on the planning, decision making and implementation of the different processes too.
Drury, C. M. (2013). Management and cost accounting. Springer.
Goretzki, L., & Strauss, E. (Eds.). (2017). The Role of the Management Accountant: Local Variations and Global Influences. Routledge.
Hasniza Haron, N., Kamal Abdul Rahman, I., & Smith, M. (2013). Management accounting practices and the turnaround process. Asian Review of Accounting, 21(2), 100-112.
Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.
Janin, F. (2017). When being a partner means more: The external role of football club management accountants. Management Accounting Research, 35, 5-19.
Malmi, T. (2016). Managerialist studies in management accounting: 1990–2014. Management Accounting Research, 31, 31-44.
Maskell, B. H., Baggaley, B., & Grasso, L. (2016). Practical lean accounting: a proven system for measuring and managing the lean enterprise. Productivity Press.
Otley, D. (2016). The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, 45-62.
Puyou, F. R. (2018). Systems of secrecy: Confidences and gossip in management accountants’ handling of dual role expectations and MCS limitations. Management Accounting Research, 40, 15-26.
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