Functions of management accountant

1. Planning of Accounting Function

An accounting system is maintained in an organization which should cover
standards of costs, sales forecast, production planning, profit planning,
allocation of resources, capital budgeting and short term and long term
financial planning. Moreover, he has to prepare the necessary procedures to
implement the plan effectively.
2. Controlling
The management accountant has to measure the actual performance and
compare with standard. Based on this comparison, he has to find the
differences and interpret the results of operation and submit the same to all
levels of management. This is done through appropriate accounting reports
for controlling.

3. Reporting
The top management requests the management accountant to prepare the
report for the root causes for an unfavorable event or operations. In this
report, the accountant can pin point real reasons and the persons who are
responsible.

4. Coordinating
He consults all levels of management for framing a policy or an action
programme. Such type of consultation brings co-ordination between the
accounts department and top management.

5. Interpreting
The accounting information is modified and presented before the
management with interpretation. The interpretation is made in different
phases. If so, real reasons for the operating results can be understood by the
management.

6. Evaluation
He has to evaluate the effectiveness of policies, organization structure and
procedures adopted for attaining the objectives. For which, he has to consult
the same with functional managers and top executives.

7. Advising
He has to advise the management in order to improve the performance of
operations.

8. Administration of Tax
A business organization is liable to pay value added tax, income tax and other
taxes to the local government, state government and central government. In
 this aspect, the management accountant is expected to pay the taxes and
maintain the accounting records as the case may be.

9. Government Reporting
He will have to supervise all the statements and returns which are to be
submitted to the government periodically within due date.

10. Appraisal of External Effects

There may be changes in the state and central government policy.
Sometimes, there may be amendments in the existing laws. These policy
changes and amendments have an impact on the attainment of business
objectives. The extent of impact has to be assessed by the management
accountant.

11. Economic Appraisal

The economic condition of the nation is periodically published by the central
government. Now, the management accountant is to make economic
appraisal and find the influence of economic condition over the business
activities. In this aspect, he can prepare a report and submit before top
management along with his/her comments.

12. Protection of Assets

This function is performed through maintenance of separate fixed assets
register for each type of fixed assets. Moreover, he can frame the rules and
regulation for using each type of fixed assets. He can take insurance coverage
to all types of fixed assets.

Duties:
The installation and interpretation of all accounting records of the corporative.
The preparation and interpretation of the financial statements and reports of the
corporation.
Continuous audit of all accounts and records of the corporation wherever located.
The compilation of costs of distribution.
The compilation of production costs.
The taking and costing of all physical inventories.
The preparation and filing of tax returns and to the supervision of all matters
relating to taxes.
The preparation and interpretation of all statistical records and reports of the
corporation.
 The preparation as budget director, in conjunction with other officers and
department heads, of an annual budget covering all activities of the corporation of
submission to the Board of Directors prior to the beginning of the fiscal year. The
authority of the Controller, with respect to the veto of commitments of expenditures
not authorized by the budget shall, from time to time, be fixed by the board of
Directors.
The ascertainment currently that the properties of the corporation are properly and
adequately insured.
The initiation, preparation and issuance of standard practices relating to all
accounting, matters and procedures and the co-ordination of system throughout the
corporation including clerical and office methods, records, reports and procedures.
The maintenance of adequate records of authorized appropriations and the
determination that all sums expended pursuant there into are properly accounted
for.
The ascertainment currently that financial transactions covered by minutes of the
Board of Directors and/ or the Executive committee are properly executed and
recorded.
The maintenance of adequate records of all contracts and leases.
The approval for payment(and / or countersigning ) of all cheques, promissory notes
and other negotiable instruments of the corporation which have been signed by the
treasurer or such other officers as shall have been authorized by the by-laws of the
corporation or form time to time designated by the Board of Directors.
The examination of all warrants for the withdrawal of securities from the vaults of
the corporation and the determination that such withdrawals are made in
conformity with the by-laws and /or regulations established from time by the Board
of Directors.
The preparation or approval of the regulations or standard practices, required to
assure compliance with orders of regulations issued by duly constituted
governmental agencies.

Objectives of Management Accounting:

1. Assistance in Planning and Formulation of Future Policies

2. Helps in the Interpretation of Financial Information
3. Helps in Controlling Performance
4. Helps in Organizing
5. Helps in the Solution of Strategic Business Problems
6. Helps in Coordinating Operations
7. Helps in Motivating Employees
8. Communicating Up-to-date Information
9. Helps in Evaluating the Efficiency and Effectiveness of Policies

Objective # 1. Assistance in Planning and Formulation of Future

Policies:
Management accounting assists management in planning the
activities of the business. Planning is deciding in advance what is to
be done, when it is to be done, how it is to be done and by whom it
is to be done. It involves forecasting on the basis of available
information, setting goals, framing policies, determining the
alternative courses of actions and deciding on the programme of
activities to be undertaken.

ADVERTISEMENTS:

Thus, planning is making intelligent forecasting. This forecasting is

based on facts. Facts are provided by past accounts on which
forecast of future transactions is made. Management accounting
helps management in its function of planning through the process
of budgetary control.

Objective # 2. Helps in the Interpretation of Financial

Information:
Accounting is a technical subject and may not be easily
understandable by everyone till the user has a good knowledge of
the subject. Management may not be able to use the accounting
information in its raw form due to lack of knowledge of accounting
techniques.

Management accountant presents the information in an intelligible

and non-technical manner. This will help the management in
interpreting the financial data, evaluating alternative courses of
action available and guiding the management in taking decisions
and having the most desired financial results.
Objective # 3. Helps in Controlling Performance:
Management accounting is a useful device of managerial control.
The whole organisation is divided into responsibility centres and
each centre is put under the charge of one responsible person. He
will be associated with the planning and framing of the budgets and
be required to execute the plans and standards and deviations are
analysed in order to pinpoint the responsibility.

Thus, management accountant helps in controlling the performance

of the different responsibility centres and take suitable actions in
order to correct the adverse deviations by revising the budgets if
need be.

Management accounting assists management in location of weak

spots and in taking corrective actions against such spots which are
not in conformity with the budgeted performance. Thus,
management accounting helps management in discharging its
control function successfully through budgetary control and
standard costing.

Objective # 4. Helps in Organizing:

ADVERTISEMENTS:

Thus management accountant recommends the use of budgeting,

responsibility accounting, cost control techniques and internal
financial control. This all needs the intensive study of the
organisation structure. In turn, it helps to rationalise the
organisation structure.

Objective # 5. Helps in the Solution of Strategic Business Problems:

Whenever there is a question of starting a new business, expanding
or diversifying the existing business, strategic business problem has
to be faced and solved.

Similarly when in a particular situation, there are different

alternatives as whether labour should be replaced by machinery or
not, whether selling price should be reduced or not, whether to
export the item or not etc., a management accountant helps in
solving such problems and decision-making.
He provides accounting data to a management with his
recommendation as to which alternative will be the best. For such
decisions, the management accountant may take the help of
marginal costing, cost volume profit analysis, standard costing,
capital budgeting etc.

ADVERTISEMENTS:

Management accounting provides feedback to the management

such as what business to engage in or diversify how to run that
business efficiently. This is most important contribution which the
management accountant has made.

Objective # 6. Helps in Coordinating Operations:

Management accounting helps the management in co-coordinating
the activities of the concern by getting prepared functional budgets
in the first instance and then co-coordinating the whole activities of
the concern by integrating all functional budgets into one known as
master budget. Thus, management accounting is a useful tool in co-
ordinating the various operations of the business.

Objective # 7. Helps in Motivating Employees:

The management accountant by setting goals, planning the best and
economical course of action and then measuring the performance
tries his best to increase the effectiveness of the organisation and
thereby motivate the members of the organisation.

Objective # 8. Communicating Up-to-date Information:

Management accounting assists management in communicating the
financial facts about the enterprise to the persons who are
interested in these facts so that they may be guided to a line of
action to be pursued. Management needs information for taking
decisions and for evaluating performance of the business.

ADVERTISEMENTS:

The required information can be made available to the management

by means of reports which are an integral part of the management
accounting. Reports are means of communication of facts which
should be brought to the notice of various levels of management so
 that they may be guided for taking suitable action for the purposes
of control.

Objective # 9. Helps in Evaluating the Efficiency and Effectiveness

of Policies:
Management accounting also lays emphasis on management audit
which means evaluating the efficiency and effectiveness of
management policies. Management policies are reviewed from time
to time to make an improvement in them so that maximum
efficiency may be achieved.

Scope:

1. Determine of Aim: Management accounting on the basis of the information available determines its goal
and tries to find out the route through which it can reach the goal.

2. Helps in the Preparation of Plan: Present age is the age of planning. That producer is considered as
most successful producer who produces articles according to the plan and needs of the consumers. Before
taking any plan the manager must study and analyze the present and future of the business.

3. Better Services to Customers: The cost control device is management accounting enables the reduction
in prices of the Product. All employees in the concern are made cost Conious. The quality of the Product
become good because quality standards ate pre-determined. The Customers are supplied goods and goods
quality at reasonable price.

4. Measurements of performance: The techniques of budgetary control standard costing enables the
measurement of performance In standard costing, standards are determined 1st and then actual cost of
compared with standard cost. It enables the management to find out deviations between standard cost
and actual cost. The performance will be good it actual cost does not exceed the standard cost. Budgetary
control system too helps in measuring efficiency of all employees.

5. Its Increase Efficiency of the business: Management accounting increases efficiency of the business
concern. The targets of different departments of the enterprise are determined in advance and the
achievement of these goals is taken as a tool for measuring their efficiency.

6. Its Provide effective management control : The Tools and techniques of the management accounting
are helpful to the management in planning controlling and coordinating activities of the business, the
 getting of standard and assessing actual performance regularly enables the management to have
management by exception. Everybody assesses his own work and immediate actions are taken as a tool
for measuring their efficiency.

7. Maximum profits of can be obtained: in this process every possible effort are made to control
unnecessary expenses. The incapability or inefficiency is removed. New systems or techniques are found
out to achieve the goal, so that there may be maximum profits out if the capital invested in the Business.

8. Safety and security from trade cycle: The Information received form the management accounting gives
more or throws enough light over the past trade cycle. The management tries to ascertain the Causes of
trade cycle and its affect. Thus, management accounting tries to safeguard the organization from the
affect of trade cycle.

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 Aggregation. Financial accounting reports on the results of an entire business. Managerial
accounting almost always reports at a more detailed level, such as profits by product,
product line, customer, and geographic region.
Efficiency. Financial accounting reports on the profitability (and therefore the efficiency) of
a business, whereas managerial accounting reports on specifically what is causing problems
and how to fix them.
Standards. Financial accounting must comply with various accounting standards, whereas
managerial accounting does not have to comply with any standards when information is
compiled for internal consumption.
Systems. Financial accounting pays no attention to the overall system that a company has for
generating a profit, only its outcome. Conversely, managerial accounting is interested in the
location of bottleneck operations, and the various ways to enhance profits by resolving
bottleneck issues.
Time period. Financial accounting is concerned with the financial results that a business has
already achieved, so it has a historical orientation. Managerial accounting may
address budgets and forecasts, and so can have a future orientation.
Timing. Financial accounting requires that financial statements be issued following the end
of an accounting period. Managerial accounting may issue reports much more frequently,
since the information it provides is of most relevance if managers can see it right away.
Valuation. Financial accounting addresses the proper valuation of assets and liabilities, and
so is involved with impairments, revaluations, and so forth. Managerial accounting is not
concerned with the value of these items, only their productivity.