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Module 1 – Basic Principles Management Accounting


I. Management functions and concepts

 Definition
Management – A process consisting of planning, organizing, actuating and controlling, performed to determine
and accomplish the objectives by the use of people and resources. It efficiently and effectively coordinate the work
of others.

 Management functions
1. Planning – Involves defining goals, establishing strategies to achieve those goals, and developing plans to
integrate and coordinate activities. Strategic plan for long-term goals & operational plan for short-term goals.
2. Organizing – The process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority, and establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.
3. Directing – Consists of process or technique by which instruction can be issued and operations can be carried
out as originally planned. It involves communication, leadership and motivation
4. Controlling – Involves establishing standards to measure performance, measuring actual performance,
comparing performance with the standard, and taking corrective action. Monitoring and feedback function.

II. Management accounting, cost accounting and financial accounting


Particular Management Accounting Cost Accounting Financial Accounting
Main Objective is to record and Report the financial Provide information to
Objective accumulate costs for financial performance and financial management to assist in
reporting and decision- condition through issuance of planning, controlling,
making. financial statements performance evaluation, and
decision-making.
User Internal Internal and external Internal and external
Basis Need not adhere with GAAP for cost accounting IFRS GAAP or IFRS (full)
standards (selected)
Focus Present condition and forecast Historical/ past-oriented Historical/ past-oriented
of future
Data needed Uses data in cost and financial Cost-related data Financial data
accounting
Scope Business segment Cost departments Organization as a whole
Format Format is informal and is on a Standard format and based on Format per standards or
per department/company company needs. regulatory requirement.
basis
Reporting As needed Periodic (annual, quarter, Periodic (annual, quarter,
monthly) monthly)
Independent Not required Required as part of financial Required
Audit reporting

III. Controller and Treasurer

Controllership and treasurership are both functions of financial management. The controller is considered the
head accountant for the company primarily responsible for financial reporting. Treasurer, on the other hand, is
the financial adviser primarily responsible for financing and investment. Both the controller and treasurer reports
to the Chief financial Officer (CFO).

MAS Notes – Module 1 Page 1 of 2


Module 1: Basic Principles Management Accounting

 Roles and activities of controller and treasurer:


Controllership Treasurership
 Planning for control  Provision of capital
 Financial reporting and interpreting  Investor relation
 Evaluating and consulting  Short-term financing
 Tax administration  Banking and cash custody
 Government reporting  Credits and collections
 Internal audit & asset protection  Investments
 Economic appraisal  Insurance

IV. International certification in management accounting

 Definition of management accounting

 Institute of Management Accountants (IMA)


Management accounting – profession that involves partnering in management decision making, devising
planning and performance management systems, and providing expertise in financial reporting and control to
assist management in the formulation and implementation of an organization's strategy.

 Chartered Institute of Management Accountants (CIMA)


Management Accounting – 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 resources.

 Role of management accountant per Institute of Certified Management Accountants (CMA)


Management accountant – applies his or her professional knowledge and skill in the preparation and
presentation of financial and other decision oriented information in such a way as to assist management in
the formulation of policies and in the planning and control of the operation of the undertaking.

 Three areas of management accounting per American Institute of Certified Public Accountants (AICPA)
a. Strategic Management – advancing the role of the management accountant as a strategic partner in the
organization.
b. Performance Management – developing the practice of business decision-making and managing the
performance of the organization.
c. Risk Management – contributing to frameworks and practices for identifying, measuring, managing and
reporting risks to the achievement of the objectives of the organization

 Global Management Accounting Principles per Chartered Global Management Accountant (CGMA)
a. Communication provides insight that is influential
b. Information is relevant
c. Impact on value is analyzed
d. Stewardship builds trust

 Four standards for ethical conduct for management accountant per IMA
a. Competence
b. Confidentiality
c. Integrity
d. Credibility

MAS Notes –Module 1 Page 2 of 2