Role and Practices in Management Accounting Today

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|ACC601: Managerial Accounting | | | | | |Role and Practices in Management Accounting Today | | | | | | | | |

Table of Contents
1.Definition3
1.1 Management Accounting As Practice3
1.1.1 Strategic Management:3
1.1.2 Performance Management:3
1.1.3 Management Accountant and Risk Management:3
2.Scope/Aim of Management Accounting4
3.PURPOSE OF MANAGEMENT ACCOUNTING—THE STRATEGIC TRIANGLE5 4.Traditional vs. Innovative Management Accounting Practices5 4.1Traditional and Innovative’ Management Accounting Practices.6 5.Management Accounting and Decision Making7

5.1Decision Making and Risk7
5.2Management Accountant Role in Decision Making Processes7 5.3Qualitative and Quantitative Analysis8
5.4Role of Management Accountant8
6.Role of Management Accountants within the Corporation9
6.1Activities of management accountant9
6.2Tasks where accountability may be more meaningful to the business9 7.Current and Future Trends of Management Accounting10
8.New ways of management accounting12
8.1Total quality management (TQM),12
8.2Just-in-time (JIT) production and purchasing methods.12 8.3Activity-based costing.12
9.CONCLUSION14
10.List of References15

Definition

According to Chartered Institute of Management Accountants (CIMA – UK) 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 Resource (economics 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 American Institute of Certified Public Accountants (AICPA) describes 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".

1.1 Management Accounting As Practice

Management accounting as practice extends to the following three areas

1.1.1 Strategic Management:

Advancing the role of the management accountant as a strategic partner in the organization.

1.1.2 Performance Management:

Developing the practice of business decision-making and managing the performance of the organization.

1.1.3 Management Accountant and Risk Management:

Management accountants are contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

Scope/Aim of Management Accounting

Revised International management accounting Practice 1 (IMAP #1), published in March 1998 by the Financial Management and Management Accounting Committee (FMAC) of the International Federation of Accountants (IFAC) states that

“Management accounting is an activity that is interwoven in the management processes of all organizations. Management Accounting refers to that part...
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