Management Services 

– the function of providing professional advisory (consulting) services, the primary

purpose of which is to improve the client’s use of his capabilities and resources to achieve the objectives of the
organization.

Stages in management advisory services

 Negotiating the engagement

 Engagement planning

 Problem definition

 Data gathering and analysis

 Solution development

 Preparing and presenting the report and recommendations

 Implementing the recommendations

 Evaluating the engagement and post-engagement follow-up

 Management Accounting- is the application of appropriate techniques and concepts in processing the
historical and projected economic data of an entity to assist management in establishing a plan for
reasonable economic objectives and in the making of rational decisions with a view toward achieving
these objectives.

 Is an organized system used to provide vital financial and other quantitative information to aid
management in their decision-making function and in their dealings to business partner

 The process of identification, measurement, accumulation, analysis, preparation, interpretation, and

communication of information (both financial and operating) used by management to plan, evaluate,
and control within an organization and to assure use of and accountability for its resources

 Generally, management accounting involves the following functions.

 To assist management in determining policies and in making plans

 To assist management in the planning, direction, coordination and control of operations

 To maintain records and procedures which will adequately protect all interest related to the business

Managerial vs. Financial Accounting

The following table summarizes the distinction between managerial and financial accounting:

Basis of Comparison Managerial Accounting Financial Accounting

Provides information to parties Provides information to parties

As to users
within the organization outside the organization

As to nature of reports Special-purpose reports General-purpose reports

As to details More detailed Concise, less detailed

As to compliance with IFRS Not governed by IFRS Must follow IFRS

As to time covered Current and future periods Primarily historical

Obtained from within and outside

As to sources of data Obtained from within the entity
the entity

Relatively long-time period,

As to period covered Usually short-time period
usually 1-year
 As to objectivity Allows subjective data Emphasizes objective data

Functions of Management -à Planning, Directing, Controlling, Decision Making

The Controller- the management accountant is an important member of the management team. In most
business organizations, the chief management accountant is called the controller. The controller is the
executive manager responsible for a widely diverse set of activities. Although they vary from organization to
organization, the duties most frequently assigned to the controller’s office include the following:

 Designing, installing and maintaining the accounting system

 Preparing financial statement for external users

 Coordinating the development of the budget

 Accumulating and analyzing cost data

 Preparing and analyzing performance reports

 Providing information for problem solving and special decisions

 Consulting with management about the meaning of accounting information

 Planning and administrating taxes

 Internal auditing

 Designing, installing, and maintaining computer based information systems

The Treasurer- is the officer responsible for money management and serves chiefly as the custodian of the
organizations funds. Typical duties of the treasurer include:

 Receiving, maintaining custody of, and disbursing funds and securities

 Investing the organizations funds

 Directing the granting of credit

 Maintaining sources of short-term borrowing

 Establishing and maintaining a market for the organization’s debt and equity securities

Controller vs. Treasurer’s Functions

The following table summarizes the distinctions between the controller’s and the treasurer’s function.

Controller's Functions Treasurer's Functions

1. Planning and control 1. Provision of capital

2. Internal reporting 2. Short-term financing

3. Evaluation and consulting 3. Banking and custody

4. External reporting 4. Credits and collections

5. Protection of Assets 5. Investor relation

6. Economic Appraisal 6. Foreign exchange management

 

Basic Functions of Management Accounting

1. Plan and Control all activities of business including operating, investing, and financing activities.

2. Report financial and relevant quantitative information to be used in decision making.

3. Evaluate performance of men in accordance with established standards, e.g. Budgets, industry
standards, government regulations etc.

4. Government reporting and relations in compliance with laws, regulations, circulars, ordinances and
related policies.

5. Protection of assets to preserve and conserve resources as a hedge against unnecessary wastes,
errors, irregularities, and illegal acts.

6. Economic appraisal to assess the relevance of the systems being applied.

7. Tax administration to rationally give what is due to the government for public services and welfare.

Emerging trends in management accounting

Recent developments in organizational managing have brought forth new and evolving models in strategic cost
and management accounting systems, such as:

1. Backflush accounting

2. Throughput costing

3. Life-cycle costing

4. Kaizen Costing

5. Activity based costing

6. Environmental accounting

 Standards for ethical conduct for practitioners of management accounting and financial management

Management accounting is a profession has the following standards for ethical conduct to be followed by its
practitioners:

Competence

1. Maintain an appropriate level of professional competence by ongoing development of their knowledge

and skills

2. Perform their professional duties in accordance with relevant laws, regulations and technical
standards

3. Prepare complete and clear reports and recommendations after appropriate analyses of relevant and
reliable information.

Confidentiality

1. Refrain from disclosing confidential information acquired in the course of their work except when
authorized, unless legally obligated to do so.

2. Inform subordinates as appropriate regarding the confidentiality of information acquired in the course
of their work and monitor their activities to assure the maintenance of that confidentiality
 3. Refrain from using or appearing to use confidential information acquired in the course of their work
for unethical or illegal advantage either personally or through third parties.

Integrity

1. Avoid actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict

2. Refrain from engaging in any activity that would prejudice their ability to carry out their duties
ethically

3. Refuse any gift, favor, or hospitality that would influence or would appear to influence their actions

4. Refrain from either actively or passively subverting the attainment of the organization’s legitimate and
ethical objectives

5. Recognize and communicate professional limitations or other constraints that would preclude
responsible judgment or successful performance of an activity

6. Communicate unfavorable as well as favorable information and professional judgments or opinions

7. Refrain from engaging or in supporting any activity that would discredit the profession

Objectivity

1. Communicate information fairly and objectively

2. Disclose fully all relevant information that could reasonably be expected to influence an intended
user’s understanding of the reports, comments and recommendations presented.

Resolution of ethical conflict

1. Discuss such problems with the immediate superior except when it appears that the superior is
involved, in which case the problem should be presented initially to the higher managerial level.

2. Clarify relevant concepts by confidential discussion with an objective advisor to obtain an

understanding of possible course of action.

3. If the ethical conflict still exists after exhausting all levels of internal review, the management
accountant may have no other recourse on significant matters than to resign from the organization
and to submit an informative memorandum to an appropriate representative of the organization.