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TITLE
Definition of Management
Accounting
CREDITS
IMA would like to acknowledge the work of the
Foundation for Applied Research subcommittee on
whose work this SMA is based. Committee members
included Ed Blocher, Ph.D., University of North Carolina
at Chapel Hill; David Dearman, Ph.D., CMA, University
of ArkansasLittle Rock; Hugh Glover, Ph.D., CMA,
CPA, REDE Inc.; Zafar Khan, Ph.D., CMA, Eastern
Michigan University; Mark Kovacic, Federal Reserve
Published by
Institute of Management Accountants
10 Paragon Drive
Montvale, NJ 07645
www.imanet.org
EXECUTIVE SUMMARY
This Statement on Management Accounting
(SMA) presents a new definition of management
accounting, together with an explanation of the
background leading to the new definition, the
process undertaken to prepare the definition,
and the criteria and rationale used in developing
the new definition. The new definition is:
Management accounting is a profession
that involves partnering in management
decision making, devising planning and
per formance management systems,
and providing exper tise in financial
reporting and control to assist management in the formulation and implementation of an organizations strategy.
BACKGROUND
The definition of a profession serves many purposes. It can serve as a basis for teaching the
cognitive aspects of the subject and for evaluating the behaviors characteristic of the professions members. The definition can also help
define the place of the profession in society now
and in the future, its boundaries, and its identity.
In recognition of this fact, the Institute of
Management Accountants (then the National
Association of Accountants) issued its first SMA in
1981. Titled Definition of Management Accounting,
it defined management accounting as:
the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by
management to plan, evaluate, and control an organization and to assure appropriate use of and accountability for its
resources. Management accounting
also comprises the preparation of finan-
Information
(Real or
Estimates)
Knowledge
Decision
Business
Event
C R I T E R I A A N D R AT I O N A L E F O R
THE DEFINITION
In developing the definition, the FAR committee
focused on three important components of management accounting. In order of priority, they
were:
REFERENCES
Michael Anastas, The Changing World of
Management Accounting and Financial
Management, Management Accounting,
October 1997.
CFO Research Services, in collaboration with
PricewaterhouseCoopers LLP, The CFO as
Chief
Performance
Advisor,
2005,
www.imanet.org/pdf/3041.pdf.
The Economist, in collaboration with KPMG
International, Being the BestInsights from
Leading
Finance
Functions,
2006,
www.kpmg.ca/en/ser vices/advisor y/oi/bei
ngbest.html.
Ernst & Young, Whats Next for the CFO?, 2008,
www.ey.com/Global/assets.nsf/Estonia_E/
CFO_report/$file/CFO%20report.pdf.
IBM Corporation, The Agile CFO, IBM Institute for
Business
Value,
2006,
www935.ibm.com/services/us/imc/pdf/ge5106239-agile-cfo-full.pdf.