1 

MANAGERIAL ACCOUNTING

Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization's goals. It varies from financial accounting because the intended purpose of managerial accounting is to assist users internal to the company in making well-informed business decisions.

FINANCIAL ACCOUNTING

Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company's operating performance over a specified period.

ROLE OF FINANCIAL ACCOUNTANT AND MANAGERIAL ACCOUNTANT

FINANCIAL ACCOUNTANT

1) Provides financial information to management by researching and analyzing accounting data; preparing reports.

2) Prepares asset, liability, and capital account entries by compiling and analyzing account information.

3) Documents financial transactions by entering account information.

4) Recommends financial actions by analyzing accounting options.

5) Summarizes current financial status by collecting information; preparing balance sheet, profit and loss statement, and other reports.

6) Substantiates financial transactions by auditing documents.

7) Maintains accounting controls by preparing and recommending policies and procedures.

8) Guides accounting clerical staff by coordinating activities and answering questions.

9) Reconciles financial discrepancies by collecting and analyzing account information.

10) Secures financial information by completing database backups.

11) Maintains financial security by following internal controls.

12) Prepares payments by verifying documentation, and requesting disbursements.

13) Answers accounting procedure questions by researching and interpreting accounting policy and regulations.

14) Complies with federal, state, and local financial legal requirements by studying existing and new legislation, enforcing adherence to requirements, and advising management on needed actions.

15) Prepares special financial reports by collecting, analyzing, and summarizing account information and trends.

16) Maintains customer confidence and protects operations by keeping financial information confidential.

MANAGERIAL ACCOUNTANT

1) Preparing reports, budgets, commentaries and financial statements

2) Undertaking financial administration and internal audits

3) Liaising with managerial staff and other colleagues

4) Supervising a team of accounting technicians

5) Developing and managing financial systems/policies

6) Negotiating and obtaining finance for major projects

7) Controlling and forecasting income and expenditure

8) Creating business strategies to generate shareholder value.

BASIS	FINANCIAL ACCOUNTANT	MANAGERIAL ACCOUNTANT
OBJECTIVES	The main objectives of financial accounting are to disclose the end results of the business, and the financial condition of the business on a particular date.	The main objective of managerial accounting is to help management by providing information that is used to plan, set goals and evaluate these goals.
AUDIENCE	Financial accounting produces information that is used by external parties, such as shareholders and lenders.	Managerial accounting produces information that is used within an organization, by managers and employees.
OPTIONAL	It is legally required to prepare financial accounting reports and share them with investors.	Managerial accounting reports are not legally required.
SEGMENT REPORTING	Pertains to the entire organization. Certain figures may be broken out for materially significant business units.	Pertains to individual departments in addition to the entire organization
FOCUS	Financial accounting focuses on history; reports on the prior quarter or year.	Managerial accounting focuses on the present and forecasts for the future
FORMAT	Financial accounts are reported in a specific format, so that different organizations can be easily compared.	Format is informal and is on a per department/company basis as needed.
RULES	Rules in financial accounting are prescribed by standards such as GAAP or IFRS. There are legal requirements for companies to follow financial accounting standards.	Managerial accounting reports are only used internally within the organization; so they are not subject to the legal requirements that financial accounts are.
REPOR TING FREQUENCY AND DURATION	Defined - annually, semi-annually, quarterly, yearly.	As needed - daily, weekly, monthly
INFORMATION	Monetary, verifiable information	Monetary and company goal driven information

 

2 

Intimidation threat is when may be accountant is deterred from acting objectively by threats.

Accepting of gifts with the possibility of it being subsequently made public is an example of Intimidation threat.