Definition
According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"(CIMA Official Terminology).
The Institute of Management Accountants (IMA) recently updated its definition as follows: "management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems,and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy".
The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas:
- Strategic Management—Advancing the role of the management accountant as a strategic partner in the organization.
- Performance Management—Developing the practice of business decision-making and managing the performance of the organization.
- Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.
The Institute of Certified Management Accountants(ICMA), states "A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking". Management Accountants therefore are seen as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (score keeping) aspects of the profession. Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc.
The International Federation of Accountants (IFAC) depicts the roles and domain of professional accountants in business (management accountants) in its publication Competent and Versatile: How Professional Accountants in Business Drive Sustainable Organizational Success
Read more about this topic: Management Accounting
Famous quotes containing the word definition:
“Mothers often are too easily intimidated by their childrens negative reactions...When the child cries or is unhappy, the mother reads this as meaning that she is a failure. This is why it is so important for a mother to know...that the process of growing up involves by definition things that her child is not going to like. Her job is not to create a bed of roses, but to help him learn how to pick his way through the thorns.”
—Elaine Heffner (20th century)
“Beauty, like all other qualities presented to human experience, is relative; and the definition of it becomes unmeaning and useless in proportion to its abstractness. To define beauty not in the most abstract, but in the most concrete terms possible, not to find a universal formula for it, but the formula which expresses most adequately this or that special manifestation of it, is the aim of the true student of aesthetics.”
—Walter Pater (18391894)
“According to our social pyramid, all men who feel displaced racially, culturally, and/or because of economic hardships will turn on those whom they feel they can order and humiliate, usually women, children, and animalsjust as they have been ordered and humiliated by those privileged few who are in power. However, this definition does not explain why there are privileged men who behave this way toward women.”
—Ana Castillo (b. 1953)