Tasks and goals of management accounting. Management Accounting and Budgeting Courses

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The goals of management accounting come down to competent work with data relating to the cost of products or services, as well as the costs of the enterprise. Such information allows managers to make accurate and effective decisions within their responsibilities.

Essence of management accounting

Both tax and financial accounting are strictly regulated by law and existing standards. As for management accounting, the information needs of the management of a particular company are used as the main guidelines in the process of its maintenance.

For this reason, different approaches are taken to effectively develop such a system. Management accounting methods may also differ. Such a system is often implemented by top management.

The essence of management accounting and its main goal is to provide persons managing the company with the full amount of data that is necessary for effectiveenterprise work. This is explained by the fact that managers often lack management information.

This data collection system is also often used by directors of structural divisions and specialists who are responsible for the formation and implementation of long-term goals of the company. At the same time, the larger the enterprise becomes, the stronger the management needs to develop subsystems.

Training

To work effectively, you need to set up the management system, taking into account the characteristics of the company. Without special skills, the specialists of the enterprise will not be able to do this.

For this reason, it is advisable to send employees to management accounting courses. Such training events are aimed at senior managers, middle managers and company executives. Accountants, economists and specialists in planning departments can also study.

The course "management accounting" in most cases is focused on the study of the basic rules, principles of the system, features of budgeting, pricing and cost management. The program should also contain information on how to correctly analyze the cost of products or services.

The purpose of such training is to ensure that managers and specialists of the enterprise can gain practical skills in the formation and subsequent use of the system. For this reason, the course deals with examples of management decisions within the framework of the use of data accounting.

Accounting objects

A system that allows you to control andanalyze the activities of the enterprise, should be aimed at working with the right base. If we single out the main objects of management accounting, then they include:

• business results;
• internal pricing;
• expenses of companies, as well as their structural divisions;
• internal reporting;
• forecast of financial transactions that will be necessary or inevitable in the future.

As a result, we can conclude that the subject of accounting is the production side of the company and its divisions. Moreover, regardless of the type of the latter.

Goals of management accounting

The implementation of the main task within the framework of such a control system includes working with different information flows. Accordingly, the goals are divided into specific groups:

1. Formation of integrated management reports. This includes information on the results of financial, investment and production activities of the enterprise. Such a report also includes data received from key structural units for the current and past period.
2. Materials of the analysis of the influence of external and internal factors on the activities of the company itself and its branches.
3. Forecasted and planned indicators. In this case, work is carried out with information related to the upcoming period. According to the basic theory of decision-making, leaders, before formulating specific tasks, draw up an operational strategy. Its main goal is to identify the bestways to achieve long-term goals of the company. At this stage of work, reports on the activities of branches in the current period are used.

Key tasks of management accounting

If we talk about this system more specifically, we can highlight the main areas of analysis and reporting that are used on an ongoing basis.

We are talking about the following managerial tasks:

• Determination of the actual cost of production. Work is also carried out with various types of services and works. In addition to information on the cost of the product, data is collected regarding planned and standard indicators.
• Accounting for the movement and availability of labor, financial and material resources. Information on these categories is sent to managers.
• Determining the results of activities within the framework of financial indicators. Such data coming from structural units is evaluated taking into account various positions: responsibility centers, partial production costs, etc.
• Accounting for income, expenses and deviations from them. As the main evaluation criterion, estimates, standards and established norms of both the company itself and its structural divisions are taken. Also, when analyzing data, the existing technological solutions and responsibility centers are taken into account at the enterprise.
• Control and analysis of financial and economic activities. Data on the structure, its branches and other responsibility centers are taken into account.
• Forecasting and evaluation of the forecast itself. The essence of management accountingat this stage is reduced to providing an opinion on what events in the future may affect the company's activities.
• Planning of financial and economic activities. It is about drawing up a common plan of action - both for the company and for its departments.

Please note that the content of reports is subject to change. It all depends on their current target value.

Functions

There are a number of processes that allow you to quickly achieve the goals of management accounting. We are talking about the following functions of the system, making it one of the most effective management tools:

• Communication. In this case, the information necessary for the full communication of various levels of management and structural units is collected. Its use can significantly improve the quality of data exchange.
• Informational. We are talking about timely provision of the necessary data to managers at all levels.
• Forecast. It helps to predict the prospects for the development of the company and timely adjust its activities, giving it the right direction. The main task in this case is the achievement of strategic goals. To do this, it is necessary to identify inefficient lines of development in time and change them.
• Control-analytical. This function is necessary to fully control the achievement of planned budgets, indicators, strategic and tactical goals of the enterprise. This element of management accounting is used to obtain information regarding the effectiveness of decisions made by individual performers anddepartments in general. Their impact on the performance of the entire company is also taken into account. This part of the research and analysis includes identifying the reasons for the deviation of actual costs from available estimates.

In addition to the described basic processes, other additional functions can be used in the activities of various companies:

1. Organization. This function is needed to highlight expenses, incomes and responsibility centers. It also allows for interaction and coordination between different levels of management, departments and even individual performers.
2. Motivation. It is necessary to form indicators of the contribution of individual employees to the overall result of the entire company.
3. Planning. This includes budgeting and budgeting at multiple levels: strategic, tactical and operational.

Requirements

The objectives of management accounting inevitably involve working with data. And the information that is analyzed and transmitted to managers must meet certain requirements:

• Completeness. Management should always have access to the amount of information that will allow them to effectively manage the company and departments. The most complete include systems that include the use of double entry and accounts. They allow you to control costs, results, investments, inventories, as well as the degree of efficiency of enterprise management within the framework of current activities.
• Reliability. Implieda level of information at which accurate and reliable conclusions can be drawn from the data obtained.
• Integrity. The essence of this requirement is to ensure a systematic accounting, even if accounts, double entries and primary documentation are not used. Consistency should be understood as the use of the same principles for reflecting accounting data and the comparability of information with financial statements.
• Regularity. Information must be received on a continuous basis.
• Timeliness. Management accounting data must be available to the manager by the time a decision needs to be made.
• Relevance. Within the framework of the system, the appropriate data will be formed taking into account the conditions in which managers will make a decision.
• Clarity. Information must be presented in a form that can be analyzed quickly without missing important details. We are talking about data formats such as tables, time series, graphs, etc.

Decision theory involves working with valid data that has been provided on time. Otherwise, it will be difficult to make accurate, quick and effective adjustments to the goals and activities of the company.

If the management accounting base is compiled correctly and the system is formed correctly (taking into account all the characteristics of the company), then managers will be able to identify risks and weaknesses in the business. Also, managers can easily identify unprofitable, inefficient services,goods and places of their sale.

Budgeting

Company management is not only about analysis and planning, but also about the process of delegation of authority.

Budgeting (planning and budgeting) is used in the process of transferring authority to the level of systemic motivation and responsibility centers. This method allows you to quickly obtain accurate data and ensure the efficient operation of the company. For this reason, management accounting and budgeting are closely related.

It is important to understand that there is no one or more templates of such systems that would suit different companies. For each business, it is necessary to develop methods of management and budgeting separately.

Thus, you should always opt for an individual approach.

As for the types of budget, there are 4 key areas:

• Basic. Income, expenses, balance sheet and cash flow.
• Additional. Plans for individual programs and projects, distribution of profits.
• Auxiliary. Credit plan, taxes and capital investments.
• Operational.

If we talk about examples of management decisions, then in real companies budgeting is usually used to build a cost management system.

This approach makes it possible to assess the contribution of each business unit to the process of achieving strategic goals and predict the company's costs. Budgeting also allows you to identify hidden reservesenterprises, monitor the implementation of plans and evaluate their effectiveness.

Accounting Methods

For starters, it is worth noting that legislation, including tax legislation, does not contain strict requirements regarding this issue. In other words, the company can choose the methods of management accounting that it will need in order to achieve its strategic goals.

The main thing is that they do not go towards the bureaucracy and thus do not interfere with the production process.

The most common methods include:

• Cost calculation. Various types of calculation can be used: design, normative, conversion, process. Which one will be chosen depends largely on the characteristics of production and its scale.
• Direct costing. We are talking about determining the cost of production in the amount of direct costs.
• Cost accounting. The expenses incurred are taken into account without division into deviations and norms. To determine the cost, information is used on the balance of work in progress, as well as inventory.

Results

Management accounting is always focused on determining the cost of products / services and company costs. At the same time, each enterprise independently determines how information will be processed within the framework of a particular production. If accounting is used wisely, then managers will be able to determine break-even points and correctly budget.