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What is Managerial Accounting?

Managerial accounting, or management accounting, is the branch of accounting that focuses on providing
information for use by internal users.
Internal users pertain to those working within the company, specifically the management.
As defined by the American Accounting Association,
"Managerial accounting involves the application of appropriate techniques and concepts in processing
information to assist management in establishing plans and making rational decisions towards the
achievement of the organization's objectives."

Line and Staff Function

There are two broad functions in an organization: line and staff. Line function is the one that is directly
involved in the core operations of the company such as sales and production. Staff function, on the other
hand, provides advisory and support to the organization.
Management accountants provide a staff function, supporting the company by providing information to
enable decisions which are vital for the company's performance and continuity.

The Management
1. Top Management - The top management or administrative level consists of the Chief Executive Officer
(CEO) and the board of directors (BOD). The CEO is also called the managing director or president, and
is selected by the board of directors from among themselves. The BOD is selected by the shareholders to
represent them in managing the company. The top level management is in-charge with the overall
direction of the company. They set company goals, policies and long-term plans.
2. Middle Management - Also known as executory management, the middle-level management consists of
departmental heads and branch managers. They implement and execute the plans and policies set by the
top managements. The middle management is the intermediary between the top and low level
management. They report to the top management as well as communicate the plans of the top level to
the lower levels.
3. Low level - The lower level management or front-line management is responsible in directing and
controlling the day-to-day operations of the company. They report directly to the middle management.
The lower level management consists of supervisors, foremen, and officers who are in-charge of directing
the workers and employees.

Chief Management Accountant (Controller)

The Chief Management Accountant or Controller, sometimes Comptroller, is mainly responsible for the
accounting aspects of management planning and control. The controllership department carries out the
following functions:
1. Planning and control - making budgets, determining expectations regarding future outcomes
2. Internal reporting and interpreting - accumulating and summarizing financial data and disclosing its
implications to different levels of management
3. Evaluation and consulting - assessing different alternatives giving advice to the management to come
up with appropriate decisions
4. Tax administration - supervising the formulation and implementation of tax policies and procedures of
the organization and evaluating implications of tax-related decisions
5. External reporting - preparation of financial statements in accordance with appropriate accounting
standards to meet the information needs of external users, especially the government
6. Protection of assets - implementing internal controls, insurance and performing internal audits to protect
the company from losing its assets because fraud, theft, natural disasters, etc.
7. Economic appraisal - assessing the value the economic and social and government influences, and
interpret their effects or impact on the business.

Managerial accounting processes economic information to aid the management in making decisions. It is
very important. Without managerial accounting, a company will suffer in information deficiency leading to
uninformed decisions which could be detrimental to a company's performance and even to its existence.