You will find two types of financial accounting: Internal-functional and External-functional. In simple words, internal-functional financial accounting is concerned with recording expenses, transactions, and material movements within the organization. On the other hand, external-functional accounting is concerned with recording activities outside the organization. The main goal of both types is to provide managers with a comprehensive picture of the costs of doing business. The main difference between the two is that one deals with the financial statements while the other deals with the cost accounting principles.
A good management accounting service will provide the following services: Cost accounting, Material recording and inventory accounting, Performance measurement, Strategic and tactical management accounting, and Auditing. Cost accounting is the process of estimating costs of production, sale, and resource usage. Material recording assists managers in the preparation of the inventory, resource planning, and production planning. This is an important part of managerial accounting because it enables management to manage raw materials, finished goods, and labor properly. It is also used to calculate shipping charges and costs associated with delivery.
Performance measurement is an evaluation of management accounting processes and their effect on the performance of the firm. Strategic and tactical management accounting are applied to organizations as a whole. These methods enable managers to achieve planned results and organize their resources effectively. Audits are carried out periodically to ensure accuracy in financial information and management accounting practices.
There are many job titles given to those in the field of management accounting. One is public accounting. Public accountants, auditors, and other financial accountants report to a supervisor or an inspector general. They must follow the guidelines of the IRS, especially regarding the yearly reports that detail how the nonprofit organizations they audit file their financial statements. The inspector general will conduct a routine inspection of the organization to ensure that the organization meets all its tax filing requirements.
Auditors are responsible for examining the accuracy and completeness of the organization’s financial statements. They collect information from the various aspects of the organization and perform tests to verify the accuracy of the financial statements. To be qualified as an auditor, an individual should have a bachelor’s degree in business or accounting. Some auditors work independently to review the business plans and determine if the business is making sound business decisions or if any errors are being made in its financial reports. A CPA is a better choice for people who want to become management accountants because he or she has greater professional responsibility and higher compensation.
Another important role that these accountants play is that of controller. A controller is in charge of the company’s assets, liabilities, and ownership structure. The duties of a controller are to protect the assets, maintain accurate books and records, and make sure that the company is paying the proper taxes. If a controller is appointed by a court then it is required to have a law degree and the experience of a former accountant.
Management accountants are responsible for reviewing the financial statements and reporting them to the company supervisors or to the board of directors. If any wrong information is found in the financial statements then they must correct it. Auditors and staff accountants must meet specific educational requirements and qualifications. They may have to submit written reports to the boards of directors or provide other services as decided by the company.