Vid # 2 BUSINESS MANAGEMENT ACCOUNTING Module 1 Part 2
Summary
TLDRThis 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
- π Management and financial accounting are both integral to a business's success, utilizing the same accounting principles such as accrual basis and matching principle.
- π 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.
- π¦ 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.
- π΅οΈββοΈ Management accounting provides analysis to support internal decision-making, encompassing a broader range of activities like budgeting, forecasting, and cost analysis.
- π Historical data is fundamental to both accounting types, but management accounting also includes forward-looking projections to inform future business strategies.
- π 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.
- π The role of a management accountant within an organization involves providing financial insights to help shape the organizational structure and improve operational efficiency.
- π‘οΈ Controllership is a function focused on financial reporting, compliance, and oversight within a company, typically headed by a certified public accountant.
- π Controllers often have a strong educational background in accounting or finance, with many holding a CPA certification and substantial experience in financial management.
- π€ Management accountants are expected to adhere to a code of ethics emphasizing integrity, objectivity, and professional competence.
- π 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
π 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.
π 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.
π 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.
π’ 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.
π 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.
π 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.
π 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.
Mindmap
Keywords
π‘Management Accounting
π‘Financial Accounting
π‘Accounting Principles
π‘Financial Data
π‘Decision Making
π‘Historical Data
π‘Accounting Standards
π‘Internal Decision Making
π‘External Decision Making
π‘Organizational Structure
π‘Controllership
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
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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
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