Chapter 1

OVERVIEW OF MANAGEMENT
ACCOUNTING

MA.Lê Hoàng Oanh

LEARNING OBJECTIVES
Knowing origin of managerial accounting
Explaning why managers need managerial accounting
information
Understanding the work of management and the role of
managerial accounting
Identify the differences between financial accounting and
management accounting
Be aware of professional ethics of management accountants

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 ORIGIN OF MANAGEMENT
ACCOUNTING
ORIGIN OF MANAGERIAL ACCOUNTING
…… Period 1 1956 Period 2
Goals
Simplify information, provide
information for cost controlling
and product pricing
à Focus on definition
of product cost calculating
process & financial control
How?
Cost acc, collecting &
Processing economic & financial
information - financial,
ROI (1920, Donalson B)
Technical activities
1980
Goals
Provide information to
planning and controlling
How?
Analyse for decision making,
responsibility accounting
Restrictions
Based on three theoretical
assumptions
Indirect management activities4
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ORIGIN OF MANAGERIAL ACCOUNTING

1980 P3 1995 P4 today

Goals Goals
- Provide inf to the forecast, Create value for customers,
the operating organization, shareholders, the changes in
control and decision making internal business operational
- Focus on reducing process
consumption of resources
How How
Process analyses Evaluation of
Cost management factors creating value

Component of management Component of management5

process process

ROLE OF MANAGERIAL ACCOUNTING

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MANAGERS’ FUNCTIONS

Formulating long and

short-term plans
(Planning)

Comparing actual Implementing

to planned plans
Decision making
performance (Directing &
(Controlling) Motivating)

Mesuring performance
(Controlling)

ROLE OF MA INFORMATION IN THE MANAGEMENT

Decision information
Managers
making

inf Financial
Business
accounting
activities

Other departments
Managerial
& parties outside
information accounting
the organization

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ROLE OF MANAGERIAL ACCOUNTING
MA is the process of
identifying, measuring, Providing information about the
analyzing, interpreting & org’s and competitors’ financial
communicating information status, operating status; market
for the pursuit of an conditions, customer tastes and
organization's goals. technical initiatives
Providing Providing inf to
inf about Planning build & develop
actual & a logical human
planned resource structure
Cont. Dir & and daily inf.
performance Decision
as well as making Moti Inf has to feedback
their on the effectiveness
differences and quality of work
Controlling has been done

Providing inf related 9

to business strategies

COMPARISION OF FINANCIAL AND

MANAGERIAL ACCOUNTING

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5
COMPARISION OF FINANCIAL AND MANAGERIAL
ACCOUNTING
MANAGERIAL ACC FINANCIAL ACC
Reports to those inside the Reports to those
Objects using org for planning, directing & outside the org
information motivating & controlling
performance evaluation
Emphasis is on summaries Emphasis is on
of financial consequences of decisions affecting
past activities the future
Measured in physical unit, Measured in unit of
unit of time and unit of currency
Characteristics currency
of information
Relevance and flexibility of Objectivity and
data are emphasied verifiability of data
are emphasied
Timeliness of inf is required Precision of inf is 11
required

SO SAÙNH KTQT & KTTC

MANAGERIAL ACC FINANCIAL ACC
Information Need not follow GAAP Must follow GAAP and
handling and accounting accounting standards
principles standards
Scope to - Each part of product, Entire enterprise
provide inf each product, each
group of product, each
business area,…
- Entire enterprise
Reports Not mandatory Mandatory for
external reports
Reporting Often Periodically
period
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6
 PROFESSIONAL ETHICS OF
MANAGERIAL ACCOUNTANTS

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PROFESSIONAL ETHICS OF MANAGERIAL ACCOUNTANTS

Competence Confidentiality

IMA’S STANDARDS OF ETHICAL CONDUCT

Objective Integrity

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7
PROFESSIONAL ETHICS OF MANAGERIAL ACCOUNTANTS

Competence

Maintain an appropriate level of proffesional

competence by on going development of their
Knowledge and skills

Perfom their professional duties in according

with relevant laws, regulations,
and technical standards

Prepare complete and clear reports and

Recommandations after appropriate anlyses
of relevant and reliable inf

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PROFESSIONAL ETHICS OF MANAGERIAL ACCOUNTANTS

Refrain from disclosing

Refrain from using
confidential information
confidential inf for
acquired in the course of
unethical of illegal
their work unless legally
benefit either
obligated to do so personally or 3rd
parties

Confidentiality

Inform subordinates regarding using the

confidential information appropriately and monitor
their activities to assure the maintenance of that
confidentiality 16

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PROFESSIONAL ETHICS OF MANAGERIAL ACCOUNTANTS

Avoid actual conflicts Refrain from engaging in any

of interest and activity that would prejudice
advise all their ability to carry out their
appropriate parties duties ethically
of any potential
conflict
Integrity
Refrain from
engaging or
supporting any
Refuse any gift, favor, or activity that
hospitality that would influence would discredit
or would appear to influence their the profession
actions 17

PROFESSIONAL ETHICS OF MANAGERIAL ACCOUNTANTS

Communicate
inf fairly &
objectively Objectivity

Disclose fully all relevant inf that could reasonably

be expected to influence an intended user understanding
of the reports comments and recommendations presented
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