The Profession
What is Management Accountancy?
Management accountancy is the application of the principles of accounting and financial management to create, protect and increase the value of organisations in both the public and private sectors.
Management accountancy is an integral part of management and a management accountant is required to identify and use relevant information to:
- Provide data and insight for the strategic decision-making process and formulate business strategy.
- Plan long, medium and short-run operations.
- Determine capital structure and fund that structure.
- Design reward strategies for executives and shareholders.
- Inform operational decisions.
- Control operations and ensure the efficient use of resources.
- Measure and report financial and non-financial performance to management and other stakeholders.
- Safeguard tangible and intangible assets.
- Implement corporate governance procedures, risk management and internal controls.
One of the core activities of a management accountant is providing information to support strategic decision-making. Management accountants therefore need to possess strong communication skills as they need to interpret management requirements and present relevant information.
They also need to be comfortable dealing with uncertain, qualitative or future-oriented information.
The information management accountants provide may involve analysis of previous financial or operational performance, but the main focus is to appraise or predict likely future performance or evaluate the consequences of adopting different strategies.
Unlike financial accountants, who generally follow the methodology laid down by accounting standards or Generally Accepted Accounting Practices (GAAP), management accountants choose the solutions to their technical problems from a wide range of academic or commercial approaches.
This makes management accounting an attractive career for problem-solvers who combine a certain amount of imagination with strong analytical skills.
Their role is geared towards assessing business possibilities, grasping opportunities and shaping the future of organisations. They will have the strategic insight to assess risk and make vital business decisions based on a robust understanding of the business environment.
Examples of the types of activities include:
- Working across the business interpreting financial data for non-financial managers.
- Advising managers on the financial implications of project management.
- Explaining the financial consequences of management decisions and suggesting possible courses of action.
- Making strategic decisions and suggesting possible courses of action.
- Managing risk and business assurance.
- Evaluating existing financial information systems and suggesting improvements.
- Explaining the impact of the competitive landscape.
Chartered Institute of Management Accountants (CIMA) members work in small, medium and multinational companies as well as organisations throughout the public and not-for-profit sector. CIMA members are well represented in the manufacturing sector (most, if not all, of the well known blue chip companies covering automotive, aerospace, electronics and pharmaceuticals) and in the health, retailing, tourism and hospitality, travel, transport and consultancy sectors.
The variety of roles CIMA members have in their organisations include chairman, CEO, finance director, director of operations (with responsibility for Finance, IT and HR), director of IT, business analyst, project manager, management accountant, director responsible for change, director of business planning, group treasurer, managing director and forensic accountant to name but a few.
Ethical Standards
The Four Golden Rules
- Competence: Ensure work is within the bounds of all relevant laws and regulations. This will be made easier by achieving professional qualifications.
- Confidentiality: Do not disclose private or sensitive information, particularly if it may be used unethically.
- Integrity: You must always avoid conflicts of interest and refrain from any activity that may prejudice your ability to perform your duties.
- Objectivity: Always communicate information fairly and that includes favourable and unfavourable news.
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