The Role of the Management Accountant in Organizations

A management accountant’s duty is to provide information to users who are part of the organization from various levels. However, different levels of management has different information needs. Thus, a management accountant has to tailor the information for them.

The first step that should be taken before the management accountant provides any type of information is that he should be clear and understand the company vision as the top, middle and bottom management of an organization. The top-level management is responsible for the long term strategic plan with strategic decisions for about 5 to 10 years time. Therefore the top management will create a mission, which will consist of a more specific goal that unifies company’s efforts. So, the management accountant should prepare budgets for top management accountant to decide which projects have to undertaken to achieve the company’s goals. Budget is a strategic plan that details the action that must be taken during the following year. It also pinpoint the responsibility of achieving the budgets to respective managers inline the company policies. For example, management accountant prepare the imposed budgets to top management before imposed to middle management to achieve targets. In the top-level management, a management accountant should be responsible for all or a part of a company’s financial status, actions and transactions. The management accountant should also maintain budgets, perform financial analysis, build business strategies and also manage their relationships with investors and auditors.

In middle management, they are responsible for developing and carrying the tactical plans to accomplish the organization’s mission. Tactical plans specify how company will use resource, budgets and people to achieve company goals within its mission. In this level, management accountant will use various methods to decide the profit with minimum production costs. Profit volume analysis is one of the methods to calculate changes in cost and sales in determine the profit. Management accountant will calculate breakeven point where the level of sales of company needs to achieve at zero profit. After that, management accountant also prepared the report on scare resources which the supply of resources is limited by define the limit factor. Then, management accountant will produce the product that give higher contribution per limiting factor and take considerations of qualitative factors before final decisions is made. Final decisions is means whether to make or to buy the decision. It is situation where an organization is given a choice to produce by own resources or pay other organization to make the product. After management accountant prepare the information in form of cost volume profit, limiting factors analysis and decisions about activities either to buy or to make, middle management have to decide, carrying the tactical plans and delegating the responsibility of jobs to the operational management. In a summary, the types of information that a management accountant should tailor to middle-level management is like preparing financial statements, assess internal controls, supervise accounting staffs, complete and review tax returns and also help to manage the general ledger.

Lower lever management is responsible to carry the operational plans where it is related to day to day plans in producing products or services. For example, management accountant will determine the economic order quantity for lower management to know the amount of inventory they should reorder order to minimize ordering cost and holding costs. Therefore, lower level management will order the maximum order. In the lower level, the types of information’s a management accountant should tailor are receivables and payrolls, financial statement and compliance audit, help in the budget department and also prepare reports for the controller’s department.

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