An Introduction to Managerial Accounting

Most accounting professionals and teachers focus on specific types of accounting. The three most popular fields include tax, audit, and financial (in fact many programs only offer accounting in these two fields). However a very exciting area in accounting is the managerial area. This post will be a brief intro to managerial accounting.

If you consider yourself a person who likes to collect all the necessary information in order to make sound business decisions, then you may want to consider being or at least hiring a managerial accountant.

Accounting Managerial Vs Accounting Audit

When you audit a company, you are making sure that what someone else created is honestly reflected. It sometimes seems like auditors do not directly add value to a business because they are just looking over what someone else has done. It can be depressing being an auditor (I know from experience) because you feel like you aren’t creating anything of value. You aren’t directly helping the companies you audit, except for the fact that people will now believe the financial statements they have put out. You aren’t guiding the business.

With managerial accounting you are looking at the company and saying to yourself “what can I do to make this company successful?.” A managerial accountant then sets about looking for ways to improve the company. This usually includes gathering useful accounting information.

While it is true that internal auditors gather information for companies, they don’t do so in the same manner as a managerial accountant. The auditor has to collect specific information and present it in a certain way (according to GAAP). The managerial guy collects information he/she thinks is helpful and presents it to management in any way he/she wants (hopefully in the way that makes the most sense).

Personalities differ, but it seems that most people would get more of a rush out of helping steer a corporation as opposed to making sure what someone else did is okay.

Some Roles of Management Accountants

• Looking at product profitability. Does this product make us money? Would adding a new product benefit the company? Are these costs being correctly assigned to this product?
• Break even analysis. When will this company become profitable? When will this product become profitable?
• Cost Allocation
• Strategic Planning

In the past few years, managerial accounting has had several breakthroughs. Recently the field developed something named the balance scorecard. Basically it is a scorecard is a way to align the activities of an organization with its ultimate objectives and goals. It includes both financial measures and non-financial measures such as customer satisfaction and employee morale. This was quite the breakthrough because previously accounting only dealt with financial numbers.

Finding managerial accounting jobs can be a little more difficult than traditional accounting jobs. This is because the fields of tax and audit are well developed and most people think accountants do little more than make journal entries. However, if you search individual corporations they will sometimes have openings for management accountants. Note: in a lot of cases internal accountants have multiple roles; they may be doing some managerial work as well as some auditing or financial work.

If you want to get serious about becoming a managerial accountant, it is recommended that you have your certified management accountant (CMA) certificate. This is a lot like the CPA but in the managerial field. You will have to take an excruciating exam to get the certificate (just like the CPA). If you are looking for managerial accounting help, feel free to leave a comment in the box below and I’ll be in touch with you as soon as possible.