Managerial accounting provides helpful information and reports to managers and
entrepreneurs, and it is a process of identifying, analyzing, and recording financial information.
In turn, management uses the information and reports on the company for both planning
activities and making decisions. Moreover, these reports can be used to compare the company’s
anticipated results to the actual results. However, managerial is more than just numbers,
budgets, and rules; it is also God’s work, and the Bible holds a wealth of information pertaining
to it. According to Hagerman (1980), “The Bible has references to budgeting and the helpfulness
of allowing participation in the budgeting process. In addition, the Bible provides advice on how
to evaluate a product. These are, of course, all managerial topics” (p. 74). There are also
numerous passages relating to the implications of fraud and the importance of ethics, and they
are just as applicable now as they were when the Bible was written.
One important aspect of the role of a managerial accountant is “determining the costs of
an organization’s products and services” (Wild & Shaw, 2018, pg. 4). By paying attention to
what accountants analyze and determine about a business, it can turn management’s attention to
possible profitable opportunities for the organization. While this may hold true, it can also
provide information that warns managers of impending issues within the company. One
important aspect for any company to consider is budgeting, and the Bible relates to this by
stating, “For which of you, desiring to build a tower, does not first sit down and count the cost,
whether he has enough to complete it” (Luke 14:28, ESV). Just as the Bible states budgeting is
important, companies must also closely consider their funding and budget wisely in order to run
a smooth operation. As Hagerman (1980) observes, “The Bible contains references to current
managerial accounting concepts. It recognizes the importance of budgeting and the behavioral
implications of participation in that process” (p. 75).
Managers are also interested in predicting the future of their organizations and this is
done through planning, which is a central role played by managers. Information is a prerequisite
in this quest and managerial accounting comes in handy to equip managers with the much-
needed information that is important in planning future activities (Wild & Shaw, 2018, p. 4).
Budgeting is a quantitative representation of what the future of a company will look like. As a
result, managers utilize budgeting information to plan and explore alternative actions to
determine the most appropriate action to be taken. For instance, budgets contain important
product information such as prices and cost estimates. Such information is useful in cost
allocation and choosing the products to manufacture with the available resources. Resources are
generally scarce, and optimum utilization is the target of managers. Achieving such optimum
levels of resource utilization can only be achieved by subjecting the budget to a sensitivity
analysis. By doing so, resource wastage by inefficient departments is minimized. Thus, the
importance of managerial accounting lies within the planning of the future. The scripture also
highlights the need for planning. In Proverbs 21:5 (ESV), Solomon explicitly explains that
diligent planning will be generously rewarded and that a lack of planning leads to poverty.
As budgets are planned and presented for future terms, we know that there can be
incidents that arise which can cause issues with the forecasted budget. As we make plans to
present quantities of expected output, whether it be in the terms of production or income, we use
the information that we have found from past terms and historical information to decipher what
we expect will happen. While we have created the budget based on this documentation, we also
must consider factors that can arise which can sway the outcome of the actual results. We know
that when Jesus walked the earth, His actions and teachings frustrated the chief priests in the
Jewish community. As the Bible states, “And the chief priests and the scribes were seeking how
to put him to death, for they feared the people” (Luke 22:2, ESV). They made a “plan” to bribe
Judas and created a budget of 30 pieces of silver to carry out their plan. Ultimately, their plan
worked in the short-term, but the long-term outcome was different from what they had
anticipated. According to the following Bible passage:
But on the first day of the week, at early dawn, they went to the tomb, taking the spices
they had prepared. And they found the stone rolled away from the tomb, but when they
went in they did not find the body of the Lord Jesus. (Luke 24:1-3, ESV)
Clearly, the plan and budget that the Jewish leaders established did not result in the
outcome that they had expected, and we know that this happens in business regularly. It is
important that when preparing the budget, those that are affected by the outcome should have an
opportunity to prepare and add input since it is their responsibility to ensure that the goals set
forth are met (Wild & Shaw, 2018, p. 257). The purpose of the planning process also
encompasses integrating and allowances for potential losses from the information that is derived
from past experiences, market trends, and information obtained from other sources. These
systems not only measure outcomes but also have an influence on the actions and the decisions
that are made by the employees (Wild & Shaw, 2018, p. 6). One thing that cannot be anticipated
when creating a plan and preparing for the actual outcome is the decision that leads to fraud.
While determining costs, planning, and comparing results are important parts of
operating a company, threats to the validity of the information being used can arise. Ethics are
an important part of every successful business from small family-owned companies to
international companies that employ thousands, and fraud can take a heavy toll on the business’
bottom line. According to the Wild and Shaw (2018), "The most common type of fraud, where
employees steal or misuse the employer’s resources, results in an average loss of $130,000.00
per occurrence" (p. 7). Fraud not only hurts the company and its employees, but it also affects
that company's customers as the cost is normally passed on to the consumer. Fighting fraud and
maintaining ethical business practices is not only essential for a company to succeed; it is also in
line with leading a biblical life. The Bible states, "Do your best to present yourself to God as one
approved, a worker who has no need to be ashamed, rightly handling the word of truth” (2
Timothy 2:15, ESV). Business can strive to remain fraud free by following best practices and
guidelines outlined by the Institute for Management Accountants (IMA), as well as employing
an internal control system to monitor activities, protect the company, ensure company policies
are followed and promote ethical operations.
It is also very important for a company to take every effort to ensure that a company’s
assets and its daily operations are protected against fraud. In order to provide the most reliable
protection, it is important that the people in charge of the monitoring utilize an up to date internal
control system. This system will help the business in a variety of different ways. It will ensure
reliable accounting, protect assets, uphold company policies, and promote efficient operations
(Wild and Shaw, 2018). While companies will take every effort to protect, there also needs to be
people who act with ethics.
Not only do these individuals need to recognize when unethical situations occur, but
they also need to know what to do should they encounter someone who is not acting with
integrity. Wild and Shaw (2018) suggest, “management accountants be competent, maintain
confidentiality, act with integrity, and communicate information in a fair and credible
manner” (p. 7). Similarly, God feels the same way about business transactions. According to
the Scripture, “And if you make a sale to your neighbor or buy from your neighbor, you shall
not wrong one another” (Leviticus 25:14, ESV). Without monitoring the ethical practices of
businesses, the protection of assets could go by the wayside. That is why it is very important to
honor the business with the utmost regard and protect it with integrity.
In addition to safeguarding assets and ensuring accurate accounting, an internal control
system provides the framework for creating policies and a code of ethics suitable for the
company. This system of policies and ethics is important in combatting fraudulent acts, and as
Hagerman (1980) asserts, “The rationale for internal control systems is that if employees have an
opportunity to steal, they may succumb to the temptation. Therefore, it is important to have a
system that reduces this temptation” (p. 73). Without the many facets of protection that an
internal control system provides, companies would be left vulnerable and management would
have no concrete way of deterring its employees from acting maliciously.
Although these policies and ethics can deter fraud, they are useless unless management
follows through with imposing them and holding employees accountable for their actions. The
Bible explicitly states, “You shall not steal; you shall not deal falsely; you shall not lie to one
another” (Leviticus 19:11, ESV). Just as God expects honesty and integrity from man,
companies rely on honesty and integrity to run a smooth operation. Management is the key role
player in ensuring that their company’s policies and code of ethics are being followed, and the
best way to do so is by setting the example. By having management conduct themselves
according to the IMA’s standards, employees are more likely to follow suit and respect the
company’s rules.
Overall, managerial accounting is a tough job when you consider the many
responsibilities of the role, which include determining product costs, planning activities, and
comparing results. To further complicate matters, management accountants must deal with the
threat of fraud and the possibility of unethical behavior daily. It is up to every employee to work
hard for their company in an honest and truthful way, and management accountants must
demonstrate these values. Promoting efficient operations involves planning, hard work, and
honest reporting. The accountant must protect his or her company with reliable reporting and
maintaining high ethical standards, and employers must protect and take personal responsibility
for their company’s assets and wellbeing. The Bible reminds us that lazy people want much but
get little, but those who work hard will prosper, and it is filled with promises of prosperity to
those who work hard. God always rewards integrity and faithfulness, and planning and hard
work are necessary for promoting efficient operations in a well-run and smoothly flowing
business. As the Bible points out, “The soul of the sluggard craves and gets nothing, while the
soul of the diligent is richly supplied” (Proverbs 13:4, ESV). God encourages us to be diligent
and to work hard if we are to expect His blessings for our effort.
References
Hagerman, R. L. (1980). accounting in the bible. The Accounting Historians Journal, 7(2), 71-
76. doi:10.2308/0148-4184.7.2.71
Wild, J. J., & Shaw, K. W. (2018). Managerial accounting (Sixth ed.). New York, NY:
McGraw- Hill Education.
