For mathematically inclined people looking to go down a career path that includes corporate management experience, a future in management accountancy could be the right route to take.
Management accountants play a huge role in making sure the best financial decisions are made for their company. They can handle a wide range of jobs, including budgeting, auditing, analysis, and everyday staff supervision.
Read on to learn more about management accountancy as a career option.
What is Management Accounting?
The Institute of Management Accountants (IMA) defines the job in the following terms:
"Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy.”
The typical role of a management accountant encompasses a number of tasks, all of which are important in dictating future decision making within the company.
Management accountants often supervise a team of lower-level accountants who compile data, create statements, and handle the basic accounting needs of any business. They use the information gathered by their team to predict the company’s fiscal forecast, and guide decision makers into making financially sound decisions moving forward.
Management accountants may also be responsible for observing trends and patterns in financial reports and suggesting ways to tweak spending and transactional policies for the good of the business. They often act as risk management specialists and can help executives and directors iron out any potential kinks that could arise in the future.
As a staff member in a management role, management accountants are often responsible for ensuring compliance and accuracy within the accounting department. They may handle most As a staff member in a management role, management accountants are often responsible for ensuring compliance and accuracy within the accounting department. They may handle most issues regarding their company’s financial systems and may perform regular internal audits to make sure business keeps running smoothly.
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How Is Management Accounting Unique?
There are several ways in which management accounting differs from traditional accounting.
Most financial accountants spend their time analyzing trends and numbers from transactions that have already occurred. In management accounting, the focus is more on looking ahead at the future instead of studying the past. Management accounting largely has to do with using the information gleaned from traditional accounting in ways that can sustain a company’s financial health moving forward.
Management accountants have access to both the internal and external financial information compiled by their employing business. This allows them to offer the best information for consulting purposes, instead of being able to access only the general information available to shareholders and the public. Management accountants are considered to be members of the company’s personnel, whereas public accountants and consulting services are often external sources who receive the data compiled by management accountants.
Traditional financial accounting looks at transactions on a case-by-case basis, and accumulate information from each one. Management accounting looks at the larger picture, and takes into account factors that could impact future operations. Accountants will make projections and advise decisions based on the business as a whole, while making sure that management has all of the information needed to make prudent financial choices.
When Are Management Accountants Used?
There are several areas of concentration where managerial accountants can use their unique skill set and perspective.
In the role of a budget analyst, managerial accountants can help the management team create a budget that sets their company up for financial success. Owners and directors will have a clear sense of what their fiscal situation really looks like, and accountants can help to guide decisions regarding issues like hiring, inventory, investments, and more.
In this concentration, management accountants are valuable goal-setters. They have a realistic grasp on their company’s finances and will often create benchmark goals to meet throughout the fiscal year. This can give supervisors and managers an idea of how and when to motivate their employees to meet their goals.
To create a solid budget, accountants need a full view of current finances. Management accountants have access to information that can help them to create the best budget for any business.
As a controller, management accountants give owners and executives the financial data that they can use to steer the ship.
Controllers make sure that the people in charge of making major budget and personnel decisions have the most updated financial information available. Oftentimes they’ll be in charge of overseeing a company’s accounting office.
This is a basic financial management position that allows business owners to take a step back from the day to day operations without sacrificing their knowledge of what’s fiscally going on behind the scenes. The responsibilities of controllers are similar to those in comparable positions like accounting manager, finance manager, or corporate comptroller.
Cost Accounting and Decision Making
Management accountants play a key role in making sure the right decisions are made for a business in any given situation.
Cost-benefit analysis can be a major part of a managerial accounting role. This is how companies lay out all of the data and decide whether a decision will be profitable upon considering all of the available information on the subject. This is important when considering new investments or additions to the business.
This is also an important perspective when auditing current practices for financial feasibility. Management accountants can look at a situation objectively and assess whether the status quo will be profitable, both in the short term and the long term.
When a business wants to take a closer look at how fiscally efficiently their operations are running, they can hire an internal auditor. If the company already has a management accountant on staff, internal auditing is just another responsibility they can handle.
There are a number of reasons a business might want to enlist the services of a managerial accountant for internal auditing. Both job descriptions involve making sure business is running as efficiently as possible, with as little wasted capital as possible.
Particularly if executives want to keep the number of eyes on potentially sensitive internal finances to a minimum, it makes sense to have a trusted accounting manager who is able to handle the tasks of an internal auditor.
If students wish to obtain the minimum education required to land an entry level job, they may be able to earn an associate’s degree in management accounting. However, a bachelor’s degree or higher is required to be eligible for further certification in the field.
Accounting, business, and finance are good degree concentrations to prepare for a career in management accounting. Students should aim to take several business courses, as well as classes in statistics, economics, ethics, and operations management.
Students may also choose to pursue a master’s or doctoral degree in management accounting. This will build on the core business and accounting education received in the undergraduate program, while adding additional skills for research, critical thinking, and outside the box problem solving.
Certifications for Management Accountants
Managerial accountants have two major options for professional certification.
The Certified Management Accountant (CMA) certification is offered by the Institute of Management Accountants. To qualify for eligibility, students must complete a minimum education of a bachelor’s degree from an accredited university. Upon receiving their diploma, CMA candidates can sit for the CMA exam.
The CMA exam is a two-part test that typically takes four hours to complete. The first exam tests students’ knowledge of Financial Planning and Performance Analysis, and the other deals with Control and Financial Decision Making.
CMA candidates must complete two years of relevant professional experience before receiving their certificates. They are also required to take thirty hours of continued professional education every year following certification.
Chartered Global Management Designation
The Chartered Global Management Accountant designation is offered jointly by London’s Chartered Institute of Management Accountants and the American Institute of Certified Public Accountants (AICPA).
To qualify for the designation, candidates must complete a series of ten exams. This generally takes place over several years, with many individuals opting to take a few tests each year. In addition to passing the CGMA exam, candidates must complete three years of management accounting experience before being eligible for certification.
Salary and Career Outlook
Many people who are interested in management accounting view it as a key step in a senior management career path.
Management accounting experience is a natural fit for promotions into executive positions, such as Chief Financial Officer (CFO) of a corporation. Many CFOs started out as a managerial accountant and learned the tricks of the trade through the day to day handling of corporate finances and operations. Owners and board members are more likely to promote a high-ranking staff member that has already earned their trust, especially when the job involves overseeing their company’s finances.
According to the Bureau of Labor Statistics, management accounting jobs are projected to grow by a whopping 19 percent by 2026. Specific growth projections, however, are expected to widely vary by industry.
The job outlook is especially bright for management accountants who are especially skilled at risk assessment and management. This is a rapidly growing concentration, due largely in part to recent financial crises and economic instability on both a global and national level.
As of May 2017, the median pay for members of financial management was $125,080. The lowest ten percent of the group brought in under $67,000, while the top ten percent made over $208,000.
Management accountants in the professional, scientific, and technical industries bring home the highest salaries by far, with a median pay of #147,040. Management accountants employed by the corporate management and manufacturing industries were the runners up, with respective median salaries of $141,890 and $124,120.