Management Accounting: Managerial accounting is concerned with providing information to managers-that is people inside an organization who direct

and control its operations. According to the Chartered Institute of Management Accountants (CIMA), 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 (economics)resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities". The aims of management accounting are as follows, • • • • • • Formulating strategies Planning and constructing business activities Helps in making decision Optimal use of Resource (economics) Supporting financial reports preparation Safeguarding asset

Role of Management Accountants: The advent of mechanized production following the Industrial Revolution increased the size and complexity of production processes, which employed more people and required larger sums of capital to finance machinery. Accounting historians suggest that the increase in the number of limited companies that led to the separation of ownership from control caused an increase in attention to what was called ‘cost accounting’ (the forerunner of ‘management accounting’) in order to determine cost and exercise control by absent owners over their managers. Reflecting this emergence, the earlier title of management accountants was cost or works accountants. Typically situated in factories, these accountants tended to know how the business ran and advised non-financial managers in relation to operational decisions. The Chartered Institute of Management Accountants’ definition of the core activities of management accounting includes: • Participation in the planning process at both strategic and operational levels, involving the establishment of policies and the formulation of budgets. The initiation of and provision of guidance for management decisions, involving the generation, analysis, presentation and interpretation of relevant information.

The present and future role of management accountants in the process of financial decision making are listed below, Present and Future role of Management Accountants:

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Management accountants used to evaluate stocks and prepare monthly results speedily which is a part of the Cost and Management accounting system. There are all the obvious things to do: Statutory and Financial accounting, Taxation compliance, Funding, Management reporting etc. Management Accountant has to be futuristic instead of provider of historic or current information. He should ask “how better” and help management in decision-making level and for performance improvement. The responsibility of the management accountant is less on forecasting the future and more on contributing to its creation. Management Accountant will more often play the role of a catalyst / changing agent rather than an accountant. Management accountant will have to be more adaptable to be a versatile professional rather than an accounting specialist. Quality of “leadership” will be more in demand than that of a “manager” or an accountant. Out –cost ascertainment, product costing and cost control. In – cost management, activity-costing etc. Shift from “informational” role to an “influential” role. To develop alliance with- finance, MIS/IT, industrial engineering, corporate planning. To actively participate along with managers in decision making and strategy implementation Change in mind-set from product profitability to customer profitability analysis. Management accountant needs to lead the effort in training managers to use accounting information along with balancing it with other key data sources.

Management accounting plays a key role in organizations today. The top accountant in most organizations is the controller. All accounting functions report to this individual, including the cost accountants, the financial and tax accountants, the internal auditors, and systems support personnel. Though much management accounting originates within these positions, all decision makers in the organization must understand how to create and use good management accounting information.

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