Vid # 2 BUSINESS MANAGEMENT ACCOUNTING Module 1 Part 2

Summary

This script delves into the comparison between management accounting and financial accounting, highlighting their similarities and differences. It emphasizes the use of accounting principles, financial data, and historical information for decision-making within a business. The script also touches on the role of management accountants in organizational structure and the importance of controllership in ensuring financial compliance and accuracy. The discussion concludes with the qualifications and ethical considerations for management accountants, setting the stage for further exploration in the next module.

Takeaways

• 📊 Management and financial accounting are both integral to a business's success, utilizing the same accounting principles such as accrual basis and matching principle.
• 📈 Both disciplines rely on financial data and financial statements to analyze a business's financial performance, but they serve different audiences; financial accounting is for external stakeholders, while management accounting is for internal decision-making.
• 🏦 Financial accounting is regulated by standards like GAAP and IFRS to ensure accuracy and comparability, whereas management accounting is more flexible and tailored to internal needs.
• 🕵️‍♂️ Management accounting provides analysis to support internal decision-making, encompassing a broader range of activities like budgeting, forecasting, and cost analysis.
• 📚 Historical data is fundamental to both accounting types, but management accounting also includes forward-looking projections to inform future business strategies.
• 🌐 The scope of financial accounting is more narrowly focused on preparing periodic financial statements, while management accounting has a wider scope and is not limited to periodic reporting.
• 🔑 The role of a management accountant within an organization involves providing financial insights to help shape the organizational structure and improve operational efficiency.
• 🛡️ Controllership is a function focused on financial reporting, compliance, and oversight within a company, typically headed by a certified public accountant.
• 🎓 Controllers often have a strong educational background in accounting or finance, with many holding a CPA certification and substantial experience in financial management.
• 🤝 Management accountants are expected to adhere to a code of ethics emphasizing integrity, objectivity, and professional competence.
• 📈 The relationship between management accounting and cost accounting is close, with cost accounting focusing on the calculation and analysis of production costs to aid in decision-making.

Q & A

What are the similarities between management accounting and financial accounting?

Management accounting and financial accounting share several similarities, including the use of the same accounting principles such as the accrual basis of accounting, the matching principle, and the post-closing principles. Both rely on financial data and financial statements to analyze the financial performance of a business, and they are both regulated by accounting standards such as GAAP and IFRS.

How do management accounting and financial accounting differ in terms of their purpose?

Financial accounting is primarily aimed at providing external stakeholders like investors, creditors, and regulators with accurate and reliable financial information about a business, while management accounting focuses on providing internal stakeholders, such as managers and executives, with financial information to support decision-making.

What is the role of historical data in both management accounting and financial accounting?

Historical data plays a crucial role in both management accounting and financial accounting. It is used to analyze past performance and make projections for the future, forming the basis for decision-making and compliance with regulatory bodies.

How does the audience for management accounting differ from that of financial accounting?

The audience for management accounting is internal, consisting of managers and executives within the company, whereas the audience for financial accounting is external, including investors, creditors, and other stakeholders outside of the business.

What are the key differences between management accounting and financial accounting in terms of scope and regulatory requirements?

Management accounting has a broader scope, encompassing activities like budgeting, forecasting, cost analysis, and performance management. It is more flexible and based on probable events that will happen to the business. Financial accounting, on the other hand, is more focused on the preparation and presentation of financial statements like the balance sheet, income statement, and cash flow statement. It is subject to strict regulatory requirements and accounting standards for accuracy and comparability.

What is the relationship between management accounting and cost accounting?

Management accounting and cost accounting are closely related disciplines. While management accounting involves creating financial reports and analyzing financial data for decision-making, cost accounting involves the calculation and analysis of production costs, including materials, labor, and overhead.

How does a management accountant contribute to the organizational structure of a company?

A management accountant plays a crucial role in the organizational structure by providing financial information to help management make informed decisions about the company's structure. They analyze financial performance and recommend ways to streamline operations, reduce costs, and improve efficiency. They also assess the financial impact of different organizational structures and monitor the effectiveness of the chosen structure.

What is controllership and what are its main responsibilities?

Controllership refers to the function of managing a company's financial reporting, accounting, and compliance with financial regulations. The controller, who heads this function, is responsible for overseeing the preparation of financial statements, internal financial controls, and ensuring compliance with accounting standards and regulations.

What are the primary responsibilities of a controller in a company?

A controller's primary responsibilities include financial reporting, budgeting and forecasting, internal controls, tax compliance, and risk management. They manage the accounting department and staff, and provide financial information to support decision-making by management and other stakeholders.

What qualifications and skills are typically required for a controller?

A controller typically holds a bachelor's degree in accounting or finance, with a master's degree or CPA certification preferred. They should have strong technical skills in accounting, financial analysis, and reporting, as well as leadership, communication skills, and professional ethics. Experience in financial management, accounting, and auditing is also important.

What is the importance of professional development for management accountants?

Professional development is crucial for management accountants as it allows them to continuously improve their skills and knowledge, ensuring they stay current with best practices and regulatory changes. This helps them provide better financial analysis and recommendations, ultimately contributing to the success of the company.

Outlines

00:00

📊 Introduction to Management and Financial Accounting

This paragraph introduces the fundamental concepts of management and financial accounting, highlighting their importance in business success. It emphasizes the similarities between the two disciplines, such as the use of accounting principles like accrual basis, matching principle, and post principles. Both rely on financial data and financial statements for analysis and decision-making. The paragraph also distinguishes between the two by noting that financial accounting is for external stakeholders, while management accounting is for internal decision-making. Both are regulated by accounting standards like GAAP and IFRS.

05:16

🔍 Differences Between Management and Financial Accounting

The second paragraph delves into the differences between management and financial accounting, despite their shared foundation in accounting principles and financial data. It clarifies that financial accounting is aimed at external stakeholders and focuses on compliance with regulatory bodies, whereas management accounting serves internal stakeholders and supports decision-making for profit maximization. The paragraph also touches on the broader scope of management accounting, which includes activities like budgeting, forecasting, and cost analysis, in contrast to the more standardized reporting of financial accounting.

10:20

📈 The Relationship Between Management Accounting and Cost Accounting

This paragraph explores the relationship between management accounting and cost accounting, two closely related disciplines. It explains that while management accounting involves creating financial reports and analyzing data for decision-making, cost accounting is concerned with the calculation and analysis of production costs. The paragraph also discusses how management accounting can inform decisions on organizational structure and efficiency, and how cost accounting is integrated within it, especially in the context of manufacturing businesses.

15:27

🏢 Organizational Structure and the Role of Management Accountants

The fourth paragraph discusses the role of management accountants within an organization's structure. It describes how management accountants provide financial information to help determine the most effective organizational structure, analyze financial performance, and recommend ways to streamline operations and reduce costs. The paragraph also explains the importance of management accountants in implementing and monitoring the chosen organizational structure, ensuring that it contributes to the company's financial health and efficiency.

20:53

🛠 The Controllership Function in Financial Management

This paragraph defines controllership as the function responsible for a company's financial reporting, accounting, and compliance with financial regulations. It outlines the responsibilities of a controller, including overseeing the preparation of financial statements, managing internal financial controls, and ensuring compliance with accounting standards. The controller's role also extends to managing the accounting department, providing financial information for decision-making, and overseeing additional responsibilities like stock compliance, internal audit, and risk management.

25:54

🎓 Qualifications and Functions of a Controller

The sixth paragraph outlines the qualifications and functions expected of a controller. It mentions that controllers typically hold a bachelor's degree in accounting or finance, with a master's degree or CPA certification being preferred. The paragraph emphasizes the importance of experience, technical skills in accounting and financial analysis, leadership abilities, and communication skills. It also underscores the need for professional ethics, including integrity, objectivity, and due diligence, as well as the importance of continuous professional development.

30:54

🌐 Professional Development and Ethical Standards for Management Accountants

The final paragraph wraps up the discussion by emphasizing the importance of professional development for management accountants. It mentions the need for continuous skill and knowledge enhancement to improve professional practice. The paragraph also highlights the ethical standards that management accountants must adhere to, including integrity, independence, and compliance with relevant laws and regulations. It concludes by mentioning various associations and institutes that management accountants can be part of for further education and networking.

Keywords

💡Management Accounting

Management accounting is a field of accounting that provides financial information to internal stakeholders such as managers and executives to support decision-making. It is crucial for planning and controlling the organization's activities. In the script, it is discussed as having similarities with financial accounting, such as using the same accounting principles but differing in its purpose and audience.

💡Financial Accounting

Financial accounting is the process of recording, summarizing, and reporting financial transactions to provide external stakeholders like investors and creditors with a company's financial performance. It is mentioned in the script as being regulated by standards such as GAAP and IFRS and is used for external decision-making.

💡Accounting Principles

Accounting principles are the standardized rules and guidelines that govern financial accounting practices. The script highlights that both management and financial accounting use principles like the accrual basis and the matching principle to ensure consistency and comparability in financial reporting.

💡Financial Data

Financial data refers to numerical information related to a company's financial status, including financial statements. The script emphasizes that both management and financial accounting rely on financial data for analysis and decision-making.

💡Decision Making

Decision making in the context of the script pertains to the use of financial information to make informed choices about a business's future. Both management and financial accounting provide the necessary data for this process, with management accounting focusing on internal decisions and financial accounting on external reporting.

💡Historical Data

Historical data in accounting refers to past financial information that is used to analyze trends and make projections. The script mentions that both management and financial accounting are based on historical financial data to assess performance and plan for the future.

💡Accounting Standards

Accounting standards are a set of rules and guidelines that ensure the accuracy and consistency of financial reporting. The script discusses how both management and financial accounting are regulated by standards like GAAP and IFRS to maintain compliance and reliability in financial reporting.

💡Internal Decision Making

Internal decision making is the process by which managers and executives use financial information to make strategic choices within the company. The script explains that management accounting is specifically geared towards supporting this internal decision-making process.

💡External Decision Making

External decision making involves stakeholders outside the company, such as investors and creditors, who use financial accounting information to make decisions about investments or loans. The script contrasts this with internal decision making, highlighting the different audiences for management and financial accounting.

💡Organizational Structure

Organizational structure refers to the arrangement of tasks and reporting relationships within a company. The script discusses the role of the management accountant in providing financial analysis to help determine the most effective organizational structure for the company's operations and efficiency.

💡Controllership

Controllership is the function within a company that oversees financial reporting, accounting, and compliance with financial regulations. The script describes the controller's role as critical for ensuring the reliability of financial information and compliance with regulations, which is essential for the company's success.

Highlights

Management accounting and financial accounting are both crucial for business success, sharing similarities in accounting principles and reliance on financial data.

Both disciplines use the same accounting standards, such as the accrual basis and matching principle, for financial data analysis.

Financial statements are common to both management and financial accounting, serving as tools for analyzing business performance.

Management accounting is primarily for internal decision-making, while financial accounting focuses on external stakeholders.

Historical financial data forms the basis for both management and financial accounting to make future projections.

Regulation by Accounting Standards like GAAP and IFRS ensures compliance and consistency across both accounting types.

The role of management accounting extends to maximizing profit through adherence to accounting principles and regulatory compliance.

Financial accounting's purpose is to provide external stakeholders with accurate financial information about a business.

Management accounting encompasses a broader range of activities, including budgeting, forecasting, and cost analysis.

Financial accounting processes historical data periodically, while management accounting includes forward-looking projections.

Regulatory requirements for financial accounting ensure accuracy and comparability, whereas management accounting has more flexibility.

The relationship between management accounting and cost accounting is explored, highlighting their interdependence in business management.

Management accountants play a key role in determining the most effective organizational structure for a company.

Controllers oversee financial reporting and compliance, ensuring the reliability of financial information and regulatory adherence.

Controllers are responsible for financial reporting, budgeting, forecasting, and managing financial risks within a company.

The qualifications and functions of a controller include education, experience, technical skills, leadership, and professional ethics.

Management accountants are expected to maintain integrity, objectivity, and professional competence in their practice.

Due diligence and compliance with regulations are essential responsibilities for management accountants.

Professional development is crucial for management accountants to improve their skills and knowledge continuously.

Transcripts

foreign

of our lesson the comparison of

management accounting and financial

accounting

so start monetizing similarities

management accounting and financial

accounting are both important areas of

accounting that are essential to the

success of any business here are some of

the similarities both use accounting

principles both management accounting

and financial accounting use the same

accounting principles such as the

accrual basis of accounting the matching

principle and the post principles

we use the same standards both use

financial data both management

accounting and financial accounting rely

on financial data

such as financial statements to analyze

the financial performance of a business

so we talk about the same Financial

statements management

[Music]

business management accountant

so both provide financial information

both management accounting and financial

accounting provide financial information

the issues to make decisions about the

future of the business

both are used for decision making so

both management accounting and financial

accounting provide information

that is used to make decisions about the

future of the Business Financial

Accounting is used for external decision

making by investors creditors and other

stakeholders while management accounting

issues for internal decision making by

managers and Executives

Financial

Accounting management accounting and

financial statements Financial

accountants

external use

um

and other

stakeholders outside of the business

foreign

business management financial statements

managers and investors

both are based on historical data

both management accounting and financial

accounting are based on historical

financial data which is used to analyze

performance and make projections for the

future so a basic principlementary

historical data accounting so both in

management accounting and financial

accounting is based on historical data

both are regulated regulated by

Accounting Standards both management

accounting and financial accounting are

regulated by Accounting Standards such

as generally accepted accounting

principles

and international financial reporting

standards

us

Accounting Standards I generally

accepted accounting principles

say your role in particular

High School

so 1979 up to 1983

generally accepted accounting principles

Authority from the United States Europe

um

International financial reporting

standards

Philippines so

accounting standards

IFRS or International financial

reporting standards

um

is a generic

U.S options

overall well management accounting and

financial accounting have different

audiences and purposes they share many

similarities in terms of the accounting

principle and financial data values as

well as their importance for decision

making and compliance with Accounting

Standards so I'm focused on financial

accounting

preparation and financial statement to

comply

to comply with the regulatory bodies of

the

government and management account in

Naman

um

the financial statement that can be a

basis of the decision that will increase

profit

is

when you talk about compliance this is

based on the accounting standards

principles

accounting principles

Young

accounting principle

business management accounting

interested in

business management accounting

compliance with the regulatory body

principles regarding regulatory body

principles that will maximize profit so

um business management accounting

course

rules and regulations and government

agencies

Financial Accounting so on

Anonymous differences

so one management accounting and

financial accounting share some

similarities such as the use of

financial data and accounting principles

they are different in terms of their

purpose audience

audience

is scope

time frame

and regulatory requirements uh in

passing I have already discussed now

some obvious differences so young

purpose

the main purpose of financial accounting

is to provide external stakeholders such

as investors creditors and Regulators

with accurate and reliable financial

information about a business in contrast

the main purpose of management

accounting is to provide internal

stakeholders such as managers and

Executives with financial information

and Analysis to support decision making

so Pastor purpose of audience

um

management accounting is internal and

purpose

financial accounting is to comply or

compliance with regulatory

orders or rules and purpose now business

management accounting I

information

that could serve as a basis for decision

making okay so the audience science

external School

financials accounting focuses on the

preparation and presentation of

financial statements such as balance

sheet income statement and cash flow

statement they are that are used to

report on the financial position

performance and cash flow of the

business management accounting on the

other hand encompasses a broader range

of opportunities such as budgeting

forecasting cost analysis and

performance management

accounting you know overseas

appreciate new management accounting

interrelated

marketing strategies

Financial uh

management accounting is that in the

sense that it has a broader School

flexible

rules and regulations

based on the financial information

provided by the company so maganda and

based on uh probable events that will

happen to the business the time frame

financial accounting for process on

historical financial data and is

required to be prepared on a periodic

basis such as quarterly or annual

so you have to prepare financial

statement quarterly and then at the end

of the year you have to play to prepare

the annual income tax return so you have

to prepare an annual income statement

perison management accounting uh the

news historical data but it incorporates

forward-looking projections and Analysis

so more on future young business

management accounting so our management

accounting is

a management accounting data and

projections the future

regulatory requirements or another

distinction financial accounting is

subject to a range of regulatory

requirements and accounting standards

such as

or IFRS and they are designed to ensure

accuracy and comparability of financial

reporting

management accounting is also subject to

regulatory

oversight

in the Indigenous

basis

external people or people outside the

business

regulations

and regulations

foreign

[Music]

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next will be the relationship of

management accounting and force

accounting

a relationship or distinction

Financial Accounting

management accounting and management

accounting and cost accounting so

business management accounting and cross

accounting are two closely related

disciplines that are essential in

managing a business business management

accounting is the process of creating

Financial reports and analyzing

financial data to help management make

informed decisions while cost accounting

involves the calculation and Analysis of

production costs improving cost of

materials labor and overhead so

decision making

financial statement based on

decision making pairing course

accounting

accounting is part of financial

accounting

financial statement No you have your

sales then cost of goods sold for

manufacturing business and your portion

and cost of goods

accounting record

finished goods

okay

so business management

[Music]

the financial accounting management

accounting entirely uh different but

maintaining the same standard because

the scope and the users are different

with regards to post account

um

decision

managers is

product

the organizational structure and

management accountant

so organizational structure refers to

how a company is designed and how the

roles and responsibilities of employers

are defined the management accountant

plays a crucial role in organizational

structure by providing financial

information to help management make

informed decisions about the company's

structure the management accountant

provides financial analysis to help

management determine the most effective

organizational structure for the company

they may analyze the company's financial

performance and make recommendations on

how to streamline operation reduce costs

and improve efficiency so it will be

basically

now

management accountant is streamline

operations operations

reduce costs

and then improve efficiency

the management of all that

is

an operation in such a way

in addition the management accountant

May provide insight into the financial

impact of different organizational

structure for example they may provide

analysis on the costs and benefits of a

centralized versus decentralized

structure by the impact of our

organization and the company's financial

performance so

um some management accounting

organizational structure

business with efficiency and that can

generate the targeted income

the management accountant also plays a

key role in implementing and monitoring

the effectiveness of the chosen

organizational structure they may

develop Financial reports and Analysis

to help management assess the success of

the new structure and make adjustments

as needed overall the management

accountant is a critical part of the

organizational structure of the company

their financial analysis and

recommendations help management make

informed decision about the company's

structure and they play a key role in

implementing and monitoring the

effectiveness of the chosen structure

organizational structure

documents

items that will be covered by taxation

in a report bir and Financial

to engage in public practice must pass

the

CPA board exam uh CPA got certified

public accountants

management accountant

um

financial statements

are public and to assert

it will take another accountant which is

a certified public accountant to attest

to the work of the internal accountant

for the management accountant

management accountant

financial statement I fairly present in

the financial position of the business

financial statements

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managers or investors

accepted accounting principles

okay what is controllership no

what is controllership controllership

refers to the function of a managing

company's financial reporting accounting

and compliance with financial

regulations

the controller is the head of the

controllership function and this is and

is responsible for overseeing the

preparation of credential statements

internal Financial controls and ensuring

compliance with accounting standards and

regulations so the same perennial

controller accounting

nothing

Indian conclusive

certified public accountant

reliable

controller

um

controller

the controller is also responsible for

managing the company's accounting

department and staff for providing

financial information to management and

other stakeholders to support decision

making

in addition to financial reporting the

controllership function may also include

responsibilities such as stocks

compliance internal audit and risk

management

tax compliance internal audit and

release management

Financial accountant

in tax compliance uh

so the primary goal of controllership is

to provide accurate and timely financial

information to support decision making

and to ensure the company is operating

in compliance with financial regulations

effective controllership is critical to

the success of a company and it helps

ensure the financial information is

reliable and that the company is meeting

its financial obligations

so control controllership is a key

function in managing a company's

financial reporting and compliance with

financial regulations

and financial accounting and

um

management accounting uh

compliance with financial regulations

pero

uh

management accounting Business

Financial accountant or certified public

accountants

okay role of a controller as a top

management accountant the controller has

a Christian role to play in a company's

financial management their primary

responsibilities include financial

reporting

budgeting and forecasting internal

controls tax compliance risk management

financial reporting a preparation you

know financial statements budgeting and

forecasting

internal controls and internal control

business I uh

um

safety measures

from damage or

disruption to minimize laws that's

compliance

taxes

business taxes

risk management the controller lays a

hero in identifying and managing

Financial risks to the company this

includes Financial analyzing financial

data to identify areas of risk

developing strategies to mitigate risk

and monitoring the effectiveness of

Waste Management

strategies okay

so basic qualifications and functions of

a controller

regulations controller

their private events

in

board exam

okay

so functions financial management

qualifications education

controllers a controller typically holds

a bachelor's degree in accounting or

finance a master's degree or CPA

certification is preferred better this

time you need a CPA certification MH

certification you must prefer it says

management

accounting so experience a controller

typically has seven to ten ten years of

experience in financial management

accounting and auditing technical skills

a controller should have a strong

technical skills in accounting financial

analysis and financial reporting

leadership skills a controller should

have strong leadership skills including

the ability to motivate and manage a

team and then communication skills

professional ethics

and code of conduct of management

accountants

management accountant

um

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requirement for ethics and code of

stand-ups integrity

honesty and truthfulness in all

professional and business relationships

relationships

no objectivity management accountant

should not allow via City buyers

there should be no conflict of interest

and or undue influence to interfere with

their professional judgments

so and you influences

but a professional competence

I am

um

foreign

Ty professional Behavior

foreign

rights of others

prevailing

um

you have to learn a lot

from other members of the profession

One Click Of Interest

ing

conflict of interesting

business

you should still maintain

uh

and integrity an independent judgment no

um

due diligence what is the due diligence

required here due diligence of a good

father of our family

so foreign

foreign

foreign

S have a responsibility to comply with

relevant loss and regulation

regulations and to report any suspected

violations professional development

management accountants should

continuously develop their skills and

knowledge to improve their professional

practice Americans practicing

um

public accountants and

I know

and management accountants

Institute of Management accountants

Philippine Association of management

accountants

Association of

uh certified public accountant in

education

certified public accountants in

government services

uh

ma

Association of management accountants

Institute of Management

umbrella organization so this winds up

our discussion for this video the next

video will be on the

module 2 management accounting and the

business environment okay