FILAMER CHRISTIAN UNIVERSITY

Autonomous Status–Commission on Higher Education

Accredited Level IV – ACSCU-AAI
Roxas Avenue, Roxas City, Capiz, 5800

MANAGERIAL ACCOUNTING
Hand outs

MADELINE D. DEMONARCA VIOLETA BARREDO, CPA, MBA

MBA Student Course Facilitator

Management Accountant

The management accountants must support the management in all phases of business
decision making. As specialist in accounting, they must be intelligent, well prepared, up to date
with new developments, and familiar with the customs and practices of all countries and places
in which their firms operate. They are expected to be knowledgeable about legal environment of
the business.

1. Activities of Management Accountant

Management accountants are responsible for identifying, collecting, measuring,

analyzing, preparing, interpreting, and communicating information used by management to
achieve the basic objectives of the organization. Management accountants need to be sensitive
to the information needs of managers. Management accountants serve as staff members of the
organization and are responsible for providing information; they are usually intimately involved in
the management process as valued members of the management team.

Here are some of the key activities of Management Accountant

• Budgeting
• Financial Reporting
• Variance Analysis
• Internal Controls Monitoring

2. Relationship with Cost Accountant

Management accounting collects data from cost accounting and financial accounting.
Thereafter, it analyzes and interprets the data to prepare reports and provide necessary
information to the management.
On the other hand, cost books are prepared in cost accounting system from data as
received from financial accounting at the end of each accounting period.
S.No. Cost Accounting Management Accounting

1 The main objective of cost accounting The primary objective of management accounting is to
is to assist the management in cost provide necessary information to the management in the
control and decision-making. process of its planning, controlling, and performance
evaluation, and decision-making.

2 Cost accounting system uses Management accounting uses both quantitative and
quantitative cost data that can be qualitative data. It also uses those data that cannot be
measured in monitory terms. measured in terms of money.

3 Determination of cost and cost control Efficient and effective performance of a concern is the
are the primary roles of cost primary role of management accounting.
accounting.

4 Success of cost accounting does not Success of management accounting depends on sound
depend upon management financial accounting system and cost accounting systems of
accounting system. a concern.

5 Cost-related data as obtained from Management accounting is based on the data as received
financial accounting is the base of from financial accounting and cost accounting.
cost accounting.

6 Provides future cost-related decisions Provides historical and predictive information for future
based on the historical cost decision-making.
information.

7 Cost accounting reports are useful to Management accounting prepares reports exclusively
the management as well as the meant for the management.
shareholders and creditors of a
concern.

8 Only cost accounting principles are Principals of cost accounting and financial accounting are
used in it. used in management accounting.
9 Statutory audit of cost accounting No statutory requirement of audit for reports.
reports is necessary in some cases,
especially big business houses.

10 Cost accounting is restricted to cost- Management accounting uses financial accounting data as
related data. well as cost accounting data.

3. Code of Conduct for Management Accountant

Standards of Ethical Conduct for Management Accountants

Organizations commonly establish standards of conduct for their managers and

employees. Professional associations also establish ethical standards. For example, the Institute
of Management Accountants has established ethical standards for management accountants. In
2005, the IMA issued a revised statement outlining standards of ethical conduct for management
accountants. Called the “Statement of Ethical Professional Practice,” the revised statement was
designed to accord with the provisions of the Sarbanes-Oxley Act of 2002 and to meet the global
needs of IMA’s international members. The revised statement is based on the principles of
honesty, fairness, objectivity, and responsibility.
On July 2017 the Institute of Management Accountants (IMA) has released an updated
version of its ethic guidance, Statement of Ethical Professional Practice. The specific standard
requirements include:

1. Competence
2. Confidentiality
3. Integrity
4. Credibility

4. Organization Structure and the Management Accountant

The role of management accountants in an organization is one of support. They assist

those individuals who are responsible for carrying out an organization’s basic objectives. Positions
that have direct responsibility for the basic objectives of an organization are referred to as line
positions. Positions that are supportive in nature and have only indirect responsibility for an
organization’s basic objectives are called staff positions.
The organizational chart shown below illustrates the organizational positions for the production
and finance.