Doing business, carrying out production activities by a participant in commodity-money relations is a complex and multifaceted process that requires constant attention and control. The main functions of management accounting are designed to help the owner make informed decisions in a timely manner based on reliable and up-to-date information.
Appointment of Management Accounting
Accounting information is absolutely accurate and reliable, as it is received and systematized in accordance with established requirements and rules. The accountant enters data on the completed financial and economic transaction on the basis of duly executed documents. Therefore, data on the activities of the enterprise, based on financial accounting information, do not meet the requirements of efficiency in making managerial decisions.
In modern economic conditions, the manager who owns the most up-to-date information will have an advantage over other business participants. The functions of managerial accounting are precisely to provide the business owner with the necessary information to facilitate the timely adoption of managerial decisions.
The information collected for the purpose of management accounting contains not only information that is the subject of financial accounting, but also information that is not supported by documents, but is more operational.
Based on this, you can determine the main functions of management accounting:
- Collection of information necessary for management to make decisions and manage a business.
- Determination of actual performance indicators and their deviations from the planned values.
- Performance evaluation of individual functional departments of the company.
An object
The most important function of management accounting is to form the relationships between the process itself and the adoption of management decisions.
Based on the fact that management is an impact for the purpose of leadership and obtaining the desired result, we can distinguish the main areas of management accounting:
- planning;
- organization and coordination;
- the control;
- stimulation.
Given these functions, objects of management accounting can be divided into production resources, business processes and the results obtained.
Production resources
The resources on the basis of the use of which the production activity is carried out include labor, intangible assets, inventories and fixed assets.
Labor resources - this is the personnel of the organization, consisting of workers of various professions and qualification groups. The competitiveness and success of the enterprise directly depends on the qualitative composition and effective use of these resources.
Intangible assets are trademarks, patents, rights of use, software products. That is, everything that is not clothed in physical form, but has a cost estimate.
Stocks - all those physical components of the production process, which, as a result of their single and full use, allow you to get finished products and form its cost.
Fixed assets (funds) are reusable assets of an enterprise that transfer their value to finished products gradually due to depreciation.
Business processes
This group of accounting objects includes the main activities of the economic complex: supply of production, directly the production process, marketing activities. All these areas are coordinated by organizational activities that perform the functions of the management accounting system listed below.
- Creation of a business structure, allocation of plots, workshops, departments, other functional structures.
- Creation of a system of information interaction between sections of the company, internal communication links, providing processes of planning, control and evaluation.
- Coordination of the activities of various production sites in order to manage and achieve the planned result.
Types of Information Used
The main function of management accounting is to provide management with the information that is necessary to monitor activities and make management decisions. Sources of such information are divided into those obtained from accounting data and extra-account data.
Sources of information
Management accounting functions make it possible to use the following sources of information: statistical, accounting, operational accounting and sample data.
From accounting data you can get the most reliable objective cost estimate of business transactions, the totality of assets by composition and sources of their formation. This information is based on the method of continuous documentation, systematization and grouping by articles of accounting.
Statistical accounting information is generalized information on mass phenomena and processes that are based on financial accounting data, which allows you to see certain economic laws.
Operational accounting information collected at individual production sites provides faster than financial and statistical accounting to obtain the required data. The importance of operational accounting for current management purposes is difficult to overestimate. Based on the data on daily revenue or shipment, the primary link of managers plans and adjusts the production process “in hot pursuit”, which allows you to quickly respond to the slightest economic changes. It is such efficiency that allows you to perform service functions of management accounting.
Sampled data is information obtained from a more in-depth study of credentials in a specific direction. A spot check is carried out if necessary to obtain detailed information on any direction of the production process.
Extra-account information sources
This type of information includes information obtained during external and internal audits, tax audits, and control of various supervisory services.
Also, off-accounting information may include the data of production meetings, contacts with contractors, guidelines and explanations of higher organizations.
The fulfillment of the control task and the management accounting function is impossible without analysis of the implementation of intermediate estimates and the resulting business plan. For this purpose, regulatory information is used, for example, contained in directories, technical documentation, production passports.
The nature of the information used in management accounting
The information used by managers is divided into quantitative and qualitative.
Quantitative information is information that can be expressed in any numerical indicators: rubles, pieces, liters. It is provided in cash (debt, revenue) or in physical units (productivity in units, stock balances in tons).
Qualitative information highlights issues that are not yet quantified. Such information can be found in explanatory notes, resumes.
System
Management accounting by a separate division is feasible only at large manufacturing enterprises. Small business owners, when making management decisions, are based on their own observations or on generalized accounting information provided by the accountant. In any case, it must be integrated into the general information system of an economic entity, since the functions of accounting, managerial accounting, and statistical are closely interconnected and are not feasible separately.
Only with the joint coexistence of all systems is it possible to adequately reflect all the information and minimize the costs of managing.
The functions of accounting and management are closely interconnected. The production management system will not be able to fully function without establishing interaction with other accounting systems - statistical, accounting, production. Without collaboration, there is a risk that management may use inaccurate, untimely, or incomplete information.
Methodological foundations of management
The Ministry of Economic Development in 2002 developed and recommended for use Methodological recommendations for the implementation and implementation of management accounting for Russian manufacturers. According to this document, management reporting has the following structure:
- Comprehensive reports drawn up on a regular basis at set intervals. Such reports contain the final comprehensive information on production results, global indicators.
- Reporting on individual indicators is provided at any required date and allows you to identify problem areas that require special attention.
- Analytical reporting can be prepared both regularly and on demand, but is intended for a detailed in-depth analysis of any aspect of financial and economic activity.
Similarities and differences between the two concepts
Both financial (accounting) accounting and management carry out a systematic collection of information. But if in accounting this information is systematized continuously and documentarily for the purpose of continuous accounting of all economic factors, then management accounting structures the information for analysis and decision making.
The difference in terminology is more conveniently reflected in the table.
| Parameter | Management Accounting | Financial Accounting |
| Purpose of accounting | Providing leadership information | Reporting to external users |
| Object of study | The enterprise as a whole and its units | Whole enterprise |
Obligatory reference | Not necessary | Required |
| Users | Domestic | External and internal |
| Methodology | Installed independently | Regulated legislatively |
| Time interval | Past and future | Past |
Credibility of information | Incomplete | Full |
| Used indicators | Natural, high-quality, value | Cost |
| Periodicity | Installed | Any |
| Relevance | High | Low |
As can be seen from the table, management accounting, unlike financial accounting, is not mandatory. It does not aim at the continuous collection of information, but its information is more timely and operational.
The principles and functions of management accounting are based on the need to immediately inform the management of the company about ongoing changes and timely management decisions.
Organization
The implementation of management accounting is unthinkable without interaction with financial. Accounting information about economic events that have occurred is used by management for their own purposes.
The most important area of management accounting is the management of costs and costs. For the organization and planning of expenses are used:
- extrapolation of past data to future ones, i.e. planning based on the study of costs that have already taken place;
- the standard-cost system, that is, planning based on established production standards.
Management accounting functions allow you to choose the most fair method of cost allocation and planning.
The task of management accounting is to provide the enterprise management with the information necessary for making crucial decisions with the greatest efficiency. The main requirement for information is timeliness and efficiency, and not thorough accuracy.