Things You Must Know
Managerial vs Financial

Managerial accounting is directed towards providing information to managers 
     inside the organization.      

Examples of activities performed by managerial accountants are:
       1. Determining the cost of providing a service or making a product
       2. Assist management in profit planning and formalizing the plans into budgets
       3. Determine the behavior of costs and how profit will change as sales and 
            production volumes change
       4. Compare actual costs and financial results with budgeted costs and results
       5. Providing cost and sales information necessary for management to use to 
            make a decision.

Managerial accountants prepare reports and analyze data.
       Reporting and analysis is often related to parts/departments/functions of the 
       company rather than reporting on the entire organization as a whole.

There are no required specific formats for reporting – 
       the management accountant provides the report that gives the most useful information.

Management Functions:
Planning:
       Identify objectives the company wants to accomplish which will add value to the
          company and increase profits.
       Discuss ways to accomplish the objectives
       Prepare budgets to accomplish the profit objective
       
Directing/Motivating:
       Coordinating the activities to produce a smooth running operation.
       Oversee day to day activities and keep the organization functioning smoothly
       Assign jobs/tasks – answer questions – solve problems 
Controlling:
       
       Make sure the plans are being followed and objectives are accomplished
       Performance reporting – compare actual results to the budget
       Implement changes when objectives and goals are not being accomplished
Decision Making:
       Use all information provided to make good business decisions.

Comparison of Financial Accounting and Managerial Accounting:
FINANCIAL ACCOUNTING: 
       Reports are provided outside the organization – external reports 
       Reports past activities – based on a historical perspective 
       Reliability of data is emphasized – reports take more time to provide	       
       Focus on precise information since they are used outside the company 
       Summarized data for entire company as a whole 
       Must follow GAAP which has specific required external reports 

MANAGERIAL ACCOUNTING:
       Does not follow GAAP and there are no reporting regulations
       Prepares reports only for management’s internal use
       Provides information to make decisions regarding the future
       Relevance of data is emphasized over reliability
       Focuses on timeliness of information
       Nothing is required to be reported, reports what management needs to see
       Reporting is focused on parts of the organization such as departments or        
       divisions and not on the organization as a whole.

    
The Institute of Management Accountants:
       Goal is to assist those working in managerial accounting positions to 
          develop professionally. Provide general guidelines and assistance 
          for managerial accountants
       Sponsors the Certified Managerial Accountant certification
       Developed the Standards for Ethical Conduct for Practitioners of
          Management Accounting and Financial Management:
       The 4 components of this ethical standard are:
       Competence        - maintain competence by ongoing development of
                                   knowledge and skills
                                 - perform duties in accordance with relevant laws,
                                   regulations and technical standards
                                 - prepare complete and clear reports and recommendations
                                   after appropriate analysis of relevant and reliable information
       
       Confidentiality      - refrain from disclosing confidential information except
                                   where authorized to do so
       
       Integrity               - avoid actual or apparent conflicts of interest and always advise
                                     of any conflicts of interest that arise
                                   - refuse any gift or favor that would appear to influence your actions
                                   - recognize and communicate any professional limitations that
                                    would preclude you from doing an adequate job
       Objectivity          - communicate information fairly and objectively
                                   - disclose all relevant information that could influence the
                                    decision maker
- communicate unfavorable as well as favorable information and do not be biased towards one outcome or another

    
       Resolving an ethical delimna:
       				1st – follow the established procedures within your organization
       				2nd – if the issue is not resolved to your satisfaction,
       					   – present problems to the next higher management level
       					   -- if you are not clear on the issues, discuss with an objective 
       						  advisor to clarify your alternatives and solutions
       				3rd – if the issue can not be resolved, resign from your position

These other issues are often mentioned in the first chapter of a managerial
accounting text book. Please check your notes to make sure you are not overlooking
the following things that your professor may have discussed in class which are not
noted on this review sheet. These items are not often discussed:
       1. Just in time inventory
       2. Total quality management
       3. Enterprise resource planning
       4. Supply chain management
       5. Benchmarking
       6. The accounting organizational structure – Chief financial officer, controller,
           managerial accountant, general ledger accountant
       7. Cost Accounting Standards Board