Reading A: Management Accountants are not Accountant

Accountant & Management Accountant must be undergraduate degree or equivalent professional

qualification, and the differences are:

Accountant/Financial Accountant provide information to the company’s external stakeholders, about how
value was generated in the past. While, Management Accountant provide future/strategic performance
based on financial reporting.

Financial accountants prepare financial report that are primarily used by external persons of the company,
such as stockholder, tax office and lender or banks.

Management accounting reports provide their recipients with benefits report and use achievements of the
past to provide estimates and insight into future. Manager needs projections and would rather use
estimates on what will happen.

Key differences between Financial Accounting and Management Accounting.

Financial Accounting Management Accounting

Users Used by external parties Used within an organization
Application Assists to make investment decisions & in Work with management to record, plan, control
s credit rating activities and to aid the decision making
Focus Focuses on history Utilises history to focus on future, probability and
risk
Objectives To report past result to present snapshot of Providing the critically important information
financial condition
Legal Mandatory No legal requirements
Obligations
Standards Required to follow IFRS or GAAP No mandatory standards
Format Account format determined by IFRS No specific format
Time Span 12 months No specific
Unit of Monetary nature Monetary or alternatively non-monetary
Measure
Criteria Emphasizes precision & standardization Emphasize on relevance to management
The Process Full process of recording, classifying and Analyses the relevant data captured within
summarizing organization

Mandatory knowledge area in Management Accounting:

1. Financial modelling >>> Core knowledge

2. Economics >>> Core knowledge
3. Business law and governance >>> Core knowledge
4. Information management >>> Core knowledge
5. Strategic management >>> Core knowledge
6. Management accounting >>> Core knowledge
7. Financial management >>> Core knowledge
8. Financial statement analysis >>> Core knowledge
9. Strategic cost management >>> Specialist knowledge
10. Strategic business analysis >>> Specialist knowledge