UPDATES IN

MANAGERIAL
ACCOUNTING
MAE 102
MAE 102: Updates in Managerial Accounting
Pre-requisite: NONE
Credits: 3 Units

• This course provides student’s knowledge about recent updates in

the field of management accounting from international
government bodies such as the Institute of Management
Accountants.

• A large part of this course will focus on updating the skills of

students that will be vital in their professional careers as
management accountants-this is to answer the changes brought
about by numerous technological advancements in the way
business enterprise are operating today globally
LEARNING OUTCOMES
At the end of the chapter, the learner should be able to:
• Enumerate and discuss the differences between financial and
management accounting
• Discuss the role of managerial accounting in a business
• Enumerate the various uses of managerial accounting information
• Differentiate the functions of Controller and Treasurer in an
organization
• Discuss the differences between staff and line functions
• Explain the ethical standards for management accountants
WHAT IS MANAGEMENT
Management

• is the coordination and administration of tasks to achieve a goal.

• It includes setting the organization’s strategy and coordinating the efforts of staff to
accomplish these objectives through the application of available resources

Management as;

• An ART- The art of managing involves the conception of a vision of an orderly whole, created
from chaotic parts and the communication and achievement of this vision
• As SCIENCE Management is a body of systematized knowledge accumulated and established
with reference to the practice and understanding of general truth concerning management.

MANAGEMENT is the process of

• Planning
• Organizing
• Controlling
MANAGERIAL ACCOUNTING IN THE
MANAGEMENT PROCESS

PLANNING ORGANIZING
• Defining Organization • Formulate
Vision-Mission Organizational
• Setting Goals and Structure
Objectives • Resource Allocation
• Strategizing • Job Design
• Plan of Actions to achieve
Goals
 BASIC FUNCTIONS OF MANAGEMENT
• LEADING/DIRECTING • CONTROLLING

• Leadership and • Process and

Direction Standards
• Motivation • Review and
• Coordination and Evaluation
Communication
• Corrective Actions
Management by
Objectives
Is a procedure in which a
subordinate and supervisor agree
on goals and the methods in
achieving them and develop a plan
in accordance with that agreement.
The subordinate is then evaluated
with reference to the agreed plan at
the end of the period
Management by
Exception
Is a technique of highlighting
those which vary significantly
from plans and standards in
line with the management
principle that executive time
should be spent on items that
are non-routine and are
identified as top priority
WHAT IS MANAGEMENT ACCOUNTING?????
• Refers to reports designed to meet the
needs of internal users, particularly the
managers.
• It is the application of appropriate
techniques and concepts in processing
the historical and projected economic
data of an entity to assist management
in establishing a plan for reasonable
economic objectives and in the making
of rational decisions with a view
towards achieving these objectives
(AAA)
WHAT IS MANAGEMENT ACCOUNTING?????

• It is a staff function that supports the management

process by providing reports to aid management in
planning, directing, controlling, improving and
decision making. This differs from financial
accounting, which provides information to users
outside the organization. It reports are designed to
meet the specific needs of management and aid
management in planning long-term strategies and
running the day to day operations.
 EXAMPLES OF MANAGERIAL ACCOUNTING
INFORMATION
1. Classifying manufacturing and other costs and reporting them in
financial statements
2. Determining the cost of manufacturing a product providing a business
3. Estimating the behavior of costs for various levels of activity and
assessing cost-volume-profit relationship
4. Analyzing changes in operating income
5. Planning for the future by preparing budget
6. Evaluating manufacturing cost by comparing actual and budgeted costs
as well as computing various measures of profitability
 EXAMPLES OF MANAGERIAL ACCOUNTING
INFORMATION
7. Evaluating decentralized operations by comparing actual with
expected results
8. Evaluating special decision-making situations by comparing
differential revenues and costs, and allocating product costs
9. Evaluating alternative proposals for long term investments in
fixed assets
10. Evaluating the impact of cost allocation on pricing products
and services and activity-based costing
11. Planning operations using just-in-time concepts
TOOLS OF MANAGEMENT ACCOUNTING
1. Financial Accounting
2. Financial Statement Analysis
3. Funds Flow Analysis
4. Cash Flow Analysis
5. Budgetary Control Analysis
6. Management Reporting
7. Cost Analysis
 MANAGEMENT ACCOUNTING
VS
FINANCIAL ACCOUNTING
• MANAGERIAL ACCOUNTING
is concerned with providing
information to personnel within an
organization so they can plan, make
decisions, evaluate performance, and
control operations. There are no rules
and regulations associated with this
field since the information is intended
solely for use within the
firm/organization
• FINANCIAL ACCOUNTING
in contrast, focuses on financial
statements and other financial
reports. This area deals with
reporting to groups outside of an
organization (e.g. stockholders,
lenders, government agencies) so that
some assessment of profitability and
overall financial health can be made. It
is regulated by Financial Accounting
Standards Board (FASB) and
Securities and Exchange
Commission (SEC)
 Summary of Differences

FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING

1. Users of Information Primarily for external users Exclusively for internal users
2. Accounting Principles Should be in accordance with Management wants and needs
Generally Accepted Accounting
Principles

3. Optional/Mandatory Mandatory, particularly by the Discretionary or optional

government

4. Type of information The end-product which is the Monetary and also non-monetary
financial statements are primarily like units produces, units sold,
monetary (financial) in nature number of labor hours, etc.

5. Emphasis on reports Reliability (precision of data) Relevance and timeliness of data

6. Purchase/End Result To produce financial statements To assist the management in

decision-making