Management accounting enables senior executives within a firm to make informed decisions about the long term future of the business. The action is normally used to forecast potential sales figures and turnover projections.
Management accounts are normally confidential reports that are used by members of a board of directors to predict the profitability of a company and therefore make informed decisions regarding its long term future.
Different to financial accounting, management accounting is more focused upon looking forward rather than processing current figures relevant to the organization. The financial accountant has skill in presenting the current financial picture whereas the management accountant offers the future scenario.
The skills offered by such a role vary from firm to firm but the most common processes include some of the following activities: cost analysis, cost benefit analysis, price modeling, annual budgeting and sales and financial forecasting.
Management accountants are often seen as the most valuable resource within an organization as they can predict a firmís financial future, therefore enabling key decisions to be made that will drive the business forward.
The role of the financial accountant often precedes that of the management accountant and is viewed as a stepping stone position. The business depends upon manipulation of the organizations financial situation and as such needs the accountant to be very experienced in this process.