Management accounting refers to a specific branch of accounting responsible for providing information and data to a company’s management to assist in decision making processes. They create detailed managerial accounting reports at regular intervals providing specific information to management so they are able to make informed and timely decisions.
Because this area of accounting is so specialized, many small firms and enterprises are not able to have a certified management accountant on staff at all times. This means they are missing out on valuable financial reporting and information.
Accountor CPA seeks to bridge that gap and provide managerial accounting services to corporations and small businesses in Canada that can benefit from them. Our outsourced management accounting and dedicated team of Chartered Professional Accountants (CPA) can help you answer questions about your company’s productivity, profits, and performance.
Get a free consultation for your business to learn how our scalable and customized services can help you achieve your corporate goals.
What is Managerial Accounting?
Basic management accounting is accounting for decision making. Management accountants take financial data, figures, and statements, and help translate it into understandable and actionable advice to directly assist management in making decisions about their business.
In many industries, quick decision making is essential for a company to succeed. Too often, companies are slowed down by waiting on meetings, reports, analyses, and conclusions - meaning important opportunities can pass them by.
Accounting and management accounting more specifically address this problem by providing financial reports and easily digestible analysis directly to management at regular intervals. More access to easy-to-understand information means more room to take advantage of business opportunities as they arise.
Our team of CPAs can help you harness the power behind your financial data with management accounting.
Are Financial Accounting and Management Accounting the Same?
Financial and managerial accounting are closely related, but not one in the same. Financial accounting is concerned with creating external financial statements for shareholders, investors, and other interested parties concerned with the company’s value. Information is objective and presented in a way that external parties can understand the figures and information and draw their own conclusions about the company.
Managerial accounting provides financial information internally to the management team of a company. This financial information and reports are not the same as the official financial statements issued in financial accounting, but may use information from them. It is used primarily by management to make timely and sound business decisions for the company and generally stays completely within a company. This means managerial accounting reports are more specialized and industry-specific, as they are intended to be only understood by management.
Cost Accounting and Management Accounting - What’s the Difference?
Cost accounting and management accounting have overlaps and require knowledge of each other, but are two separate accounting functions.
Cost accounting focuses on recording and reporting measurements regarding costs of goods and services in aggregate and in detail. It is concerned with the accumulation of costs incurred and allocating these costs to the appropriate products or departments to determine cost value.
Managerial accounting takes these figures and this financial information into account when creating financial reports to present to management. The financial information compiled in managerial accounting from cost accounting and financial accounting help paint a bigger picture to help management make appropriate decisions.
A good accounting firm will have team members with experience in each branch of accounting to give your company the detailed reports it needs to succeed.
Certified Management Accountant: What Sets Them Apart?
Certified Management Accountants, or CMAs, is a professional certification credential in management accounting and financial accounting. It signifies in particular that an individual has knowledge and certification in areas like financial planning, analysis, ethics, and control.
Prior to 2015, Canada, the USA, and Australia offered certified management accountant designations. The requirements to be awarded CMA designation included:
- A Bachelor’s degree from an accredited university
- Two continuous years of professional experience employing the principles of financial and managerial accounting
- Annual CPE credits and an active IMA membership
- Passing the rigorous CMA exam
Chartered management accountants with the CGMA designation are governed by a similar set of competencies and rules, but this designation is not available in Canada.
There are a number of competencies that a CMA is expected to achieve during and after designation, including:
- Preparation of financial statements
- Financial planning & analysis
- Strategic management
- Auditing (external or internal)
- Manage general ledger and balance sheets
- Forecasting and analysis
- Company investment decision making
- Costing analysis
- Risk evaluation and management
Certified management accountants in particular are seen as not only accountants, but financial managers, leading a company to success through sound financial planning and ethical decision making.
Management Accounting Outsourcing Services from Accountor CPA
Accountor CPA is the choice of corporations across Canada for management accounting outsourcing services. Whether you need comprehensive accounting services, including financial accounting and cost accounting, or simply need a qualified CPA to handle your management accounting annually, we can help.
The basic and advanced management accounting services our advisors offer include:
- Compiling and creating managerial reports monthly, quarterly, and/or annually
- Analyzing the company budget and financial reports
- Analyzing performance reports and making recommendations
- Calculating gross margins and profit margins
- Cash flow planning and management
- Production line and sales process analysis
- Analyzing capital expenditure
- Performing trend analysis and forecasting
- Product valuation consulting
- Financial statement analysis and consulting
- Providing advice and consulting for minimizing costs and simplifying business operations
- Processing payroll
- Bank reconciliations and prepare and lodge Business Activity Statements
- Accounting software integration and management
- Presenting managerial reports to management as required
- General accounting activities
With fully remote services, we can work on your schedule to provide the flexibility and support you need.
Part Time Management Accountants
In many cases, small businesses and enterprises can benefit from basic management accounting reports and information, but do not have the resources or need to expand their in-house accounting team. In other cases, corporations with small management teams have a good handle on their finances and do not need to work with a regular management accounting firm.
If these situations sound like your business, you could benefit from a part time management accountant. With scalable and customizable options, a part time management accountant is qualified and experienced and can generate reports and analysis to help inform your decision making - without the cost of a full time employee.
Just because you do not have a need for a full time managerial accountant does not mean you have no options. Learn more about our virtual part time management accounting services and how they can help your business at your scale.
Management Accounting Consulting Services
If your business is growing rapidly, you often realize you need a certified management accountant quickly. However, if your enterprise is experiencing slow and steady growth, it can be difficult to determine whether or not you need full time management account services. This is where management accounting consulting comes in.
At Accountor CPA, we offer management accounting consulting services to provide you with valuable information and direction regarding your financial planning, cost analyses, financial management, and decision making. Management accounting consultants can also help you make the best decisions for your business’ finances during an audit or to fulfil legal obligations in situations like mergers and acquisitions.
What are the Benefits for Outsourcing A Certified Management Accountant?
Management accounting is a highly effective process for competitive and fast-paced business environments where quick decisions need to be made regularly. It allows management to understand operational data and implement solutions to situations quickly.
Working with the management accountants at Accountor CPA comes with a number of benefits for your business.
Create a better budget
Using operational data and financial statements strategically, you can better understand your profit margins, expenses, and overhead costs. This data paired with historical information can create accurate forecasts to plan budgets that actually suit your goals and needs. Don’t create budgets based off just one factor - managerial accounting takes everything into account.
Financial statements help you see areas where you are spending the most money, but how do you know the consequences of cutting these costs? Managerial accounting provides detailed information to help you decide the risks and benefits of minimizing specific costs, so you can reduce expenses to best benefit your company.
Find innovative sales tactics
Management accounting gives you a clear idea of your cash flow and budgeting, so you can choose innovative sales tactics to boost brand recognition, sales, and reputation. You have the freedom to experiment with creative sales strategies knowing the financial risks and consequences.
Move on new products fast
Does your industry rely on new technology or trendy products? You can make decisions about new tech and products quickly to be the first on the market with them.
Beat out the competition
If you are not working with a management accounting firm, your competitors probably are. Don’t let your competitors beat you to the latest trend or newest products because they had the ability to execute decisions more quickly than you. Get ahead of the competition with good managerial accounting and reports.
Manage cash flow more easily
Increase the control you have over your cash flow. Always know where your money is, how it can be accessed, and how it can be maximized. Managerial accounting allows you to free up more cash flow so you do not get caught by unexpected costs.
Scale your services as you grow
Management accounting outsourcing allows you to scale your services as your enterprise grows. You do not have to worry about hiring internally or downsizing as your needs change. We can meet your company’s ever changing needs to provide the reports and information you need, when you need it.
Not only does managerial accounting make the decision making process quicker, it also improves productivity throughout your business operation. Simplify workflows, fill in gaps where needed, and ensure your teams have the support they need to work efficiently.
What are the Different Types of Management Accounting?
There are five main types of management accounting that a corporation can implement to streamline and simplify their business operations financially. Each comes with its own purpose and sets of benefits to help managers and directors achieve their business’ goals.
This report analyzes the incremental benefit of increased production. This flows into the breakeven analysis which calculates the contribution margin on the sales mix to determine the unit volume at which the business’ gross sales equal total expenditures.
This can be used to determine the price point for products and services.
This analysis indicates limitations within a sales process or production line. Management accountants can determine where constraints occur and calculate the impact they will have or have had on the cash flow, profit, and revenue.
Managerial accountants use Generally Accepted Accounting Principles to help corporations determine when, where, and how to spend their money. Standard capital budgeting metrics help decision makers weigh whether or not to embark on costly projects or take on risks.
With sound capital budgeting, management can also anticipate future costs and benefits by analyzing product or service demand.
Trend Analysis / Forecasting
This is one of the most essential types of management accounting. Decisions are made based on historical information - pricing, sales volumes, geographic locations, customer trends, and financial data. Managerial accountants use this data and investigate unusual variances or deviations to calculate and project future financial situations.
Product Cost / Valuation
It is imperative to determine the actual cost of products and services to better understand sales and profit margins. Overhead costs and direct costs are used to assess the cost of goods sold and inventory that may be at different stages of production.
Could your company benefit from these types of management accounting?
Managerial Accounting Reports
There are a number of types of management accounting reports to help guide managers to offer better employee benefits or incentives, cut costs, or renegotiate terms and contracts.
Some of the most common types of managerial reports are:
Account receivable aging reports
If your business relies on extending credit to clients or has long payment periods, this report breaks down remaining balances into specific time periods to identify debtors and potential issues. This can help provide clarity on if your company needs to tighten credit policies or shorten payment schedules.
The performance of the entire company, specific departments and teams, and individuals must be measured at regular intervals to identify underperformers, gaps in workflow administration, or areas that need more or less support to succeed.
Cost managerial accounting reports
This report shows the cost prices of items versus their selling prices for managers. Raw materials, overhead, labour, and other costs are taken into consideration to determine and monitor profit margins and make decisions about a product and its associated costs.
There are also other managerial reports that a corporation may need, including competitor analyses, project reports, and order information reports. An experienced management accountant will have the skills to create the report that you need to make informed decisions for your company.
Get the Benefits of a Professional Management Accounting Firm
If you or your management are looking to make more informed and timely decisions at your company, management accounting services can be the solution you need.
The team of qualified and certified management accountants at Accountor CPA offer personalized outsourced managerial accounting services to corporations, SMEs, small businesses, and start-ups across Canada. We use our years of experience to analyze existing financial statements and costs, compile informative reports, and provide invaluable advice to you firm’s management.
We will help you grow your business like never before and achieve your financial goals.
Contact Accountor CPA for a free consultation today. Let us show you what management accounting services can do for your business.