The Nature of Management Accounting

Management Accounting
The professional environment of the management accountant is influenced by two types of organizations: one that sets guidelines and regulations regarding management accounting practices and one that promotes the professionalism and competence of management accountants.
type 1 of organizations
group of organizations includes a number of federal agencies, such as the Internal Revenue Service, which sets product costing guidelines for tax purposes, and the Federal Trade Commission (FTC), which, to foster competitive practices and protect trade, restricts pricing practices and requires that prices in most circumstances be justified on the basis of cost. In addition, the Securities and Exchange Commission (SEC) provides guidance, rules, and regulations regarding financial reporting.
type 2 of organizations
group of organizations supports the growth and professionalism of management accounting practice. The Institute of Management Accountants (IMA) is the principal organization devoted primarily to management accountants in the United States. The IMA provides journals, newsletters, research reports, management accounting practice reports, professional development seminars, and technical meetings that serve the broad purpose of providing continuing education opportunities for management accountants. Cover a broad range of practice issues for the management accountant: management control, governance, leadership, external reporting, cost management systems, and global business.
management control responsibilities of the management accountant
is to develop effective systems to detect and prevent errors and fraud in the accounting records, the management accountant commonly has strong ties to control-oriented organizations such as the Institute of Internal Auditors (IIA). Participation in professional organizations and their professional development programs are an important way for management accountants to update their skills to meet the changing needs of their organizations.
management accountant certifications
– Certified Management Accountant (CMA) designation administered by the Institute of Management Accountants.

– Certified Public Accountant (CPA) designation

Certified Management Accountant (CMA)
is achieved by passing a qualifying exam and satisfying certain background and experience requirements. The exam has two parts: (1) financial planning, performance, and control, and (2) financial decision making. Widely viewed as the most relevant for those dealing with cost management issues.
Certified Public Accountant (CPA)
is earned by passing a qualifying exam, and by satisfying certain background, education, and experience requirements. certificate is a professional license monitored in the United States by each state and territorial jurisdiction which has its own set of criteria.
Professional Ethics
the commitment of the management accountant to provide a useful service for management. This commitment means that the management accountant has the competence, confidentiality, integrity, and credibility to serve management effectively.
The IMA Statement of Ethical Professional Practice
specifies minimum standards of behavior that are intended to guide the management accountant and to inspire a very high overall level of professionalism. contains four main standards: (1) competence, (2) confidentiality, (3) integrity, and (4) credibility.
Each member has a responsibility to:
Maintain an appropriate level of professional expertise by continually developing knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical standards.
Provide decision support information and recommendations that are accurate, clear, concise, and timely.
Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.
Each member has a responsibility to:
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates’ activities to ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
Each member has a responsibility to:
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
Abstain from engaging in or supporting any activity that might discredit the profession.
Each member has a responsibility to:
Communicate information fairly and objectively.
Disclose all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendations.
Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.
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