Define Management accounting.

 Define Management accounting.

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions. Unlike financial accountancy information, management accounting information is used within an organization “typically for decision-making” and is usually confidential and its access available only to a select few.

According to the Chartered Institute of Management Accountants (CIMA)
“Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities.

The American Institute of Certified Public Accountants (AICPA) states that management accounting practice extends to the following three areas:
• Strategic Management— advancing the role of the management accountant as a strategic partner in the organization.
• Performance Management— developing the practice of business decision-making and managing the performance of the organization.
• Variable costing— contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

The Institute of Certified Management Accountants (ICMA) states -"A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking."

Management Accountants therefore are seen as the - "value-creators" amongst the accountants. Management accounting knowledge and experience can therefore be obtained from varied field sand functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc.