The Impact of Management Accounting in My Workplace
Management accounting is about providing information in support of the internal management processes (Walther & Skousen, 2019). Management accounting also supports the executives in making future projections for the company since it gives detailed financial and non-financial information for them in order to support the decision-making process, planning, and control activities (Heisinger & Hoyle, n.d.).
Before we go to each topic, I would like to describe my company first. I have been working in a small (start-up-like) IT company in Osaka, Japan since 2019. Our main business activities mostly software development, website development, mobile app development, data analysis consulting, and IoT system planning and development.
Even though we are still a small company, we realized that in making important decisions, we need to utilize accurate financial and accounting data to support our decision-making process so that we can determine what is the best business direction for our company.
The role of management accounting in relation to the company
Management accounting supports startups to overcome the challenges that arise along with the business growth and bridging the information gap with external partners (Pelz, 2018). From this statement, we know that the roles of management accounting are not only as guidance for making internal decisions but also as tools to overcome challenges as the company grow.
How the principles of management accounting can be utilized by my company
As stated by Cooper (2021), CIMA and AICPA published the 4 management accounting that are:
- Influence: management accounting encourages interspersed thought processes of the company’s executives.
- Relevance: management accounting examines the best accessible resources for information relevant to decision-making.
- Value: management accounting connects the company’s approaches to its value proposition.
- Credibility: management accounting supports the company to maintain and improve the trust as well as reliability of its stakeholders.
What specific managerial accounting activities would be useful
Since the company where I work is a small start-up-like company, the most useful managerial accounting activities will be:
- Budgeting: by doing budgeting, the top management can establish the limit or thresholds for the business operational expenditure (Codija, 2017).
- Financial reporting: by using the data from the financial statements, the company can project its future policy related to financial management.
- Variance analysis: this helps top management to recognize compelling expenses in operational activities (Codija, 2017).
Conclusion
Management accounting in an organization is a crucial practice to support the decision-making process, no matter how big or small the organization is. Even with a small start-up-like company like mine, the role of management accounting is really important. Without management accounting, the top management might find any difficulties deciding the business direction and the external parties might think that the organization is not reliable.
References
Codija, M. (2017, September 26). The Key Activities of Management Accounting. Bizfluent. Retrieved June 20, 2022, from https://bizfluent.com/list-6727118-key-activities-management-accounting.html
Cooper, A. (2021, November 19). Four Managerial Accounting Principles Every Business Must Comply With. Cogneesol Blog. Retrieved June 20, 2022, from https://www.cogneesol.com/blog/four-managerial-accounting-principles-to-comply-with/
Heisinger, K., & Hoyle, J. B. (n.d.). Accounting for Managers. https://2012books.lardbucket.org/books/accounting-for-managers/index.html
Pelz, M. (2018). How Management Accounting Can be Helpful for Startup Companies [Doctoral dissertation]. https://publikationen.bibliothek.kit.edu/1000081317/7338139
Wather, L. M., & Skousen, C. J. (2009). Managerial and Cost Accounting. Bookbon.
Note:
This article is written based on University of The People Managerial Accounting (BUS 5110) written assignment by Fristy Tania in June 2022
