Week 1

Introduction to
Managerial Accounting

Amanda Acintya, M.Sc

 Learning Objectives
1. Explain the meaning of managerial accounting.
2. Explain the differences between managerial
accounting and financial accounting.
3. Identify and explain the current focus of managerial
accounting.
4. Describe the role of managerial accountants in an
organization.
5. Explain the importance of ethical behavior for
managers and managerial accountants.
6. Identify three forms of certification available to
managerial accountants.
 The Meaning of
Managerial Accounting

• To provide information for planning the organization’s actions.

1

• To provide information for controlling the organization’s

actions.
2

• To provide information for making effective decisions.

3

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 MA Model
Planning, Controlling and Decision Making

• E.g. Performance
Measurement

Top Management Use

of Information
Interaction
Accounting between Top
Information and Operational
Level
Operational Level Use
of Information

• IFRS compliance • E.g. Profitability

Analysis • Goal Congruence
• E.g. Forecast
 Planning
• The detailed formulation of action to achieve
a particular end is the management activity
called planning.
Example
Setting objectives Improve Quality

Identifying methods to Supplier Evaluation

achieve those objectives Program
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 Controlling
• The managerial activity of monitoring a plan’s
implementation and taking corrective action
as needed is controlling.
Compare

Actual Expected
Performance Performance

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 Decision Making
• The process of choosing among competing
alternatives is called decision making.

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What Constitutes Managerial
Accounting Information

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 Financial Accounting
and Managerial Accounting
• Financial Accounting provides information for
external users:
– Investors, creditors, customers, suppliers,
government agencies, and labor unions.
• Financial accounting is historical:
– Investment decisions, stewardship evaluation,
monitoring activity, and regulatory measures.

LO-2
 Financial Accounting
and Managerial Accounting (cont.)
• Financial statements must follow rules defined
by:
– Securities and Exchange Commission (SEC)
– Financial Accounting Standards Board (FASB)
– International Accounting Standards Board (IASB).
• Managerial Accounting produces information
for internal users, such as managers,
executives, and workers.
LO-2
 Financial Accounting
and Managerial Accounting (cont.)
• Managerial accounting Internal accounting

• Financial accounting External accounting

• Managerial Accounting identifies, collects,

measures, classifies, and reports financial and
nonfinancial information to internal users in
planning, controlling, and decision making.
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 Comparison of Financial and
Managerial Accounting
Financial Accounting Managerial Accounting
Externally focused Internally focused
Must follow externally imposed rules No mandatory rules

Objective financial information Financial and information; subjective

information possible nonfinancial

Historical orientation Emphasis on the future

Information about the firm as a whole Internal evaluation and decisions based
on very detailed information

More self-contained Broad, multidisciplinary

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 The Role of the Managerial
Accountant
• The role of managerial accountants is one of
support.
• Assist those who are responsible for carrying
out an organization’s basic objectives.

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 Managerial Accounting
and Ethical Conduct
• The objective of profit maximization should be
constrained by the requirement that profits be
achieved through legal and ethical means.
• Ethical behavior involves choosing actions that
are right, proper, and just.
• Behavior can be right or wrong; it can be proper
or improper; and the decisions we make can be
fair or unfair.
• Companies in business for the long term find that
it pays to treat all of their constituents with
honesty and loyalty.
LO-5
 Managerial Accounting
and Ethical Conduct (cont.)
• To promote ethical behavior by managers and
employees, organizations commonly establish
standards of conduct referred to as Company
Codes of Conduct.
• Professional associations also establish ethical
standards.
• Both the American Institute of Certified Public
Accountants (AICPA) and the Institute of
Management Accountants (IMA) have established
ethical standards for accountants.
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 Managerial Accounting
and Ethical Conduct (cont.)
• Professional accountants are bound by these
codes of conduct.
• The biggest challenge with ethical dilemmas is
that when they arise, employees frequently
do not realize
1. That such a dilemma has arisen
2. The ‘‘correct’’ action that should be taken
to rectify the dilemma.
LO-5
 Certification
• Three major forms of certification for managerial
accountants:
– Certificate in Management Accounting
– Certificate in Public Accounting
– Certificate in Internal Auditing
• Each certification offers particular advantages to
a managerial accountant.
• All three certifications offer proof of achievement
at a minimum level of professional competence.
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THANK YOU