INTRODUCTION
Management accountant plays a vital role in any business organization by having a closer vision on the financial activities. Before discussing THE ROLE OF MANAGEMENT ACCOUNTANT AS BUSINESS PARTNER, I would like to explain, What the Management Accounting is?
The management accountant works with the management accounting and according to A.A.A. (American Accounting Association), the definition of management accounting is “Management accounting is the application of appropriate techniques and concepts in processing historical and projected economic data of an entity to assist management in establishing plans for reasonable economic objectives and in the making of rational decisions with a view towards achieving these objectives.”
This definition indicates that: -
1- Management accounting is concerned with accounting information which is useful for the management
2- Management accounting covers all rearrangements, combinations or adjustments of orthodox accounting figures which may provide to the chief executive / management, on the basis of such information Chief Executive / management takes decisions.
THE MANAGEMENT ACCOUNTANT
Now I’ll move towards our topic “Role Of Management Accountant As Business Partner”. Management accountant provides significant economic and financial data to the management and the management accountant is the channel through which this information efficiently and effectively flows to the management. The management accountant has very significant role in the installation, development and functioning of an efficient and effective accounting system, which is considered as the BACKBONE for any business organization.
He designs the framework of the financial and cost control reports for management at the most appropriate time. He educates the executives how to control information and ways of using it. This is because his position is unique with respect to information about the organization, apart from the top management. He is, therefore, sometimes called as Chief Intelligence Officer of top management.
He compares the actual performance with planed one and reports and interprets the results of operation to top level management. Thus, in brief, management accountant is the person who designs the MIS (Management Information System) for the organization, operates it by means of interlocked Budgets, computes variances and encourages other to establish corrective measures.
Mr. P.L. Tandon has beautifully explained the position of Management Accountant, in a business organization, in the following words: -
“ The management accountant is exactly like spoke in a wheel, connecting the rim of the wheel and the hub receiving the information. He processes the information and then return back to where it came from.”
FUNCTIONS OF MANAGEMENT ACCOUNTANT
The important functions of management accountant in any business organization are as follows: -
1- PLANNING. He has to establish, coordinate and administer as an integral part of the management, a sufficient plan for the control of operations. Such as profit planning, programs of capital investment and financing, sales forecasts, expense budgets and cost standards.
2- CONTROLLING. He has to compare actual performance with operating plans and standards and to report and interpret the results of operations to all levels of management. This is done through the compilation of appropriate accounting and statistical records and reports.
3- COORDINATING. He consults all segments of managements responsible for policy or action. Such consultation might concern any phase of the operation of the business relating to the attainment of objectives.
There are some other functions of management including; administer tax policies, supervisions of reports’ preparation for the public / government agencies, ensures the fiscal protection of assets, proper internal and insurance coverage.
LEADING QUALITIES
What qualities do you look for when selecting future management? While the probability is rather remote for finding or even developing a leader, manager, rainmaker, and multi-skilled technician in one Management Accountant, there are attainable leadership and management attributes.
Graduate level education in management is available at most colleges and universities. Recognizing the increased need, a number of state, Management Accountant societies and other professional organizations are expanding their courses and seminars (like the one is going to be conducted at Istanbul, Turkey in November 2006 by the International Federation of Accountants, IFAC) on topics specifically related to producing Management Accountants. Formal education, however, is only part of the cost of preparing for management succession.
Management Accountants evaluate the operating efficiency and effectiveness of production and service by collecting, compiling, organizing, verifying, comparing and analyzing information from different departments of the organization. In large organizations, this information may be made available on computer-based systems specially designed to systemize the work. The process involves critical monitoring of relevant costs and overheads like material, labor, capital costs etc., involved in making a product or providing a service. They analyze the sales trend to strike a balance between the demand and supply, to prevent over-production. They also monitor the performance, to spot and report on problems and prevent them from occurring in future. This analysis helps in comparing the financial performances, making assessments and projections, providing figures for future costing and pricing policies and other managerial decisions
MANAGEMENT ACCOUNTANT; GOOD DECISION MAKER
Decision-making is the purposeful choice from among a set of alternative course of action designed to achieve some objective. Decision-making is very mush related with time. Management accountant works with a three-dimensional tool for decision-making. He focuses on future based on current and previous activities. He looks backwards, What was the performance of company? He also looks at present, that What and how the company is producing? He also focuses on future that is the operating and strategic plans feasible. Management accountant supplies profitability, liquidity, activity and management information by using tools of management accenting, for instance, Using relevant information supplied by management accounting the symptoms and roots causes can be well identified that facilitates solutions of problem. In both practice and theory it is said that problem identification means 50% problem is solved.
Management accountant nowadays are playing the supreme role in designing the companies vision, identifying, current position and chalking out the means to get the desired goal.
CONCLUSION
It must be noted that the functions of the management accountant are more of those of a ‘staff official’. Besides serving the management with information concerning the company as a whole, he supplies detailed information to the line officers regarding alternatives plans and their profitability, which help them in decision-making. Management accountant is capable of being a successful, efficient and effective Business Partner.
Management accountant plays a vital role in any business organization by having a closer vision on the financial activities. Before discussing THE ROLE OF MANAGEMENT ACCOUNTANT AS BUSINESS PARTNER, I would like to explain, What the Management Accounting is?
The management accountant works with the management accounting and according to A.A.A. (American Accounting Association), the definition of management accounting is “Management accounting is the application of appropriate techniques and concepts in processing historical and projected economic data of an entity to assist management in establishing plans for reasonable economic objectives and in the making of rational decisions with a view towards achieving these objectives.”
This definition indicates that: -
1- Management accounting is concerned with accounting information which is useful for the management
2- Management accounting covers all rearrangements, combinations or adjustments of orthodox accounting figures which may provide to the chief executive / management, on the basis of such information Chief Executive / management takes decisions.
THE MANAGEMENT ACCOUNTANT
Now I’ll move towards our topic “Role Of Management Accountant As Business Partner”. Management accountant provides significant economic and financial data to the management and the management accountant is the channel through which this information efficiently and effectively flows to the management. The management accountant has very significant role in the installation, development and functioning of an efficient and effective accounting system, which is considered as the BACKBONE for any business organization.
He designs the framework of the financial and cost control reports for management at the most appropriate time. He educates the executives how to control information and ways of using it. This is because his position is unique with respect to information about the organization, apart from the top management. He is, therefore, sometimes called as Chief Intelligence Officer of top management.
He compares the actual performance with planed one and reports and interprets the results of operation to top level management. Thus, in brief, management accountant is the person who designs the MIS (Management Information System) for the organization, operates it by means of interlocked Budgets, computes variances and encourages other to establish corrective measures.
Mr. P.L. Tandon has beautifully explained the position of Management Accountant, in a business organization, in the following words: -
“ The management accountant is exactly like spoke in a wheel, connecting the rim of the wheel and the hub receiving the information. He processes the information and then return back to where it came from.”
FUNCTIONS OF MANAGEMENT ACCOUNTANT
The important functions of management accountant in any business organization are as follows: -
1- PLANNING. He has to establish, coordinate and administer as an integral part of the management, a sufficient plan for the control of operations. Such as profit planning, programs of capital investment and financing, sales forecasts, expense budgets and cost standards.
2- CONTROLLING. He has to compare actual performance with operating plans and standards and to report and interpret the results of operations to all levels of management. This is done through the compilation of appropriate accounting and statistical records and reports.
3- COORDINATING. He consults all segments of managements responsible for policy or action. Such consultation might concern any phase of the operation of the business relating to the attainment of objectives.
There are some other functions of management including; administer tax policies, supervisions of reports’ preparation for the public / government agencies, ensures the fiscal protection of assets, proper internal and insurance coverage.
LEADING QUALITIES
What qualities do you look for when selecting future management? While the probability is rather remote for finding or even developing a leader, manager, rainmaker, and multi-skilled technician in one Management Accountant, there are attainable leadership and management attributes.
Graduate level education in management is available at most colleges and universities. Recognizing the increased need, a number of state, Management Accountant societies and other professional organizations are expanding their courses and seminars (like the one is going to be conducted at Istanbul, Turkey in November 2006 by the International Federation of Accountants, IFAC) on topics specifically related to producing Management Accountants. Formal education, however, is only part of the cost of preparing for management succession.
Management Accountants evaluate the operating efficiency and effectiveness of production and service by collecting, compiling, organizing, verifying, comparing and analyzing information from different departments of the organization. In large organizations, this information may be made available on computer-based systems specially designed to systemize the work. The process involves critical monitoring of relevant costs and overheads like material, labor, capital costs etc., involved in making a product or providing a service. They analyze the sales trend to strike a balance between the demand and supply, to prevent over-production. They also monitor the performance, to spot and report on problems and prevent them from occurring in future. This analysis helps in comparing the financial performances, making assessments and projections, providing figures for future costing and pricing policies and other managerial decisions
MANAGEMENT ACCOUNTANT; GOOD DECISION MAKER
Decision-making is the purposeful choice from among a set of alternative course of action designed to achieve some objective. Decision-making is very mush related with time. Management accountant works with a three-dimensional tool for decision-making. He focuses on future based on current and previous activities. He looks backwards, What was the performance of company? He also looks at present, that What and how the company is producing? He also focuses on future that is the operating and strategic plans feasible. Management accountant supplies profitability, liquidity, activity and management information by using tools of management accenting, for instance, Using relevant information supplied by management accounting the symptoms and roots causes can be well identified that facilitates solutions of problem. In both practice and theory it is said that problem identification means 50% problem is solved.
Management accountant nowadays are playing the supreme role in designing the companies vision, identifying, current position and chalking out the means to get the desired goal.
CONCLUSION
It must be noted that the functions of the management accountant are more of those of a ‘staff official’. Besides serving the management with information concerning the company as a whole, he supplies detailed information to the line officers regarding alternatives plans and their profitability, which help them in decision-making. Management accountant is capable of being a successful, efficient and effective Business Partner.
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