Discussion: Importance of Managerial Accounting

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Managerial accounting is critical in evaluating the internal financial matters of the users within the organization. They include product managers, executives, and any person who use the accounting data to make course-changing decisions. It deals with future projections and helps the organization to make decisions to improve productivity. An increase in productivity may lead to increased revenue and profits. For managerial accounting purposes, organizations need to consider both the non-financial and financial information for decision-making purposes. Managerial accounting can also be used for planning and control purposes. Organizations can use planning to implement ideas based on tedious research conducted over the years. Planning can be used to create goals and communicate those goals to the entire staff and executives of the organization. Planning can be achieved through the budgeting process. Budgeting allows organizations to set funds for various tasks in the future. These financial allocations allow the organization departments to receive those funds and turn them around for implementing the plans. The control process involves checking whether those planned financial allocations have worked as planned. 

The controller in the organization is tasked with the responsibility of managing the accounting-related office staff. Managerial accountants prepare accounting information that is useful for decision-making in the organization. The managerial accountant reports directly to the controller in most of organizations. Managerial accounting is different from financial accounting where the emphasis is on the historical data and providing information to the public. Financial accounting follows the US Generally Accepted Accounting Principles (U.S. GAAP) and provides an overall picture of the organization. Managerial accounting is applicable irrespective of the size of the company. Shelleman (2016) discussed managerial accounting in micro-SMEs where the author conducted a sample survey and provided its important role in the organization planning and execution.

Reference:

Shields, J., & Shelleman, J. M. (2016). Management Accounting Systems in Micro-SMEs. Journal of Applied Management & Entrepreneurship, 21(1), 19–31.