Unlike a financial accountant, a management accountant has several areas of expertise. These areas are above and beyond what a financial accountant would normally find performing. Some of the functions and responsibilities that a financial account can perform are the following: record, classify and archive accounting information. Maintaining one’s specialty in providing services covering managing cash, payroll, accounts receivable, accounts payable, inventory, or purchase transactions. Lastly, the financial accountant may also be involved in a small part of the overall accounting responsibility of a business, as in relation to an accountant working with management who has a broader view of the operation and greater responsibilities.
The following are six areas of expertise that one would expect a management accountant to be able to perform effectively and efficiently in accordance with Generally Accepted Accounting Principles (GAAP):
- Accounting information system. The management accountant in this area designs and implements manual and computerized accounting systems to collect managerial information for better management practices.
- Financial Accounting. Based on the accounting data prepared by the financial accountant, the management accountant prepares various reports and financial statements, and helps to analyze, operate, invest and make financial decisions for the effectiveness and efficiency of the administration.
- Cost accounting. The cost of production or provision of services must be measured. An accountant working with management also performs additional analysis to determine whether products and services are being produced in the most profitable manner.
- Budget. In the budgeting process, a management accountant helps management develop a financial plan that positively impacts profitability and improves cash flow.
- Tax accounting. Instead of hiring a certified public accountant, a business can use its own management accountant. For example, one can focus on tax planning, preparing tax returns, and dealing with the Internal Revenue Service and other government agencies.
- Internal audit. Internal auditors review the accounting and operational control procedures adopted by management to ensure that controls are adequate and are being followed. The management accountant may also monitor the accuracy and timeliness of reports provided to management and external parties to verify accuracy and compliance with rules and regulations in accordance with GAAP.
© Joseph S. Spence, Sr., 7/9/09
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Submitted by “Epulaeryu Master”.