Why Management Accounting is Important to Your Business

Do you need a management accountant? If you’re one of many managers in a big business, then a management accountant is most likely a very wise investment. Management accounting is a subset of accounting that involves providing accounting and financial information to managers so as to help them make informed business decisions with the purpose of helping them run the business and make better managerial decisions.


According to the American Institute of Certified Public Accountants, there are three areas of management accounting: Strategic Management, which involves advancing the role of the management accountant into that of a strategic partner within the business; Performance Management, which involves developing the practice of business decision-making and managing the performance of the organization; and Risk Management, which involves contributing to practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

If you have a large business, then a management accountant might be necessary. One of the common goals of a management accountant is to help plan and prepare budgets so the company can plan ahead. As goals and finances change, the management accountant will use this information to change the budget if needed.

If you plan on expanding your company, a management accountant can be used to help assess new business and investment opportunities. This will help determine whether or not if a potential new investment is worth it. If the investment occurs, a management accountant can be used to help determine the potential for future returns on the investment. Finally, a management accountant can also be used to help formulate and maintain the financial systems necessary to help a business run efficiently.

Similar to financial accounting but possessing different objectives, a management accountant can provide a wide variety of services to a business or manager. Before you choose a business accountant, however, you should always perform adequate insurance so as to ensure your business is in good hands.

(Source 1 2) (Photo)
Posted on May 31, 2012 at 9:00 AM